Labor department releases policy on contractualization

March 16, 2017

After nine months of consulting with laborers and employers and still ending with an impasse, the labor department  released a department order on contractualization. In a press conference Thursday, Labor Secretary Silvestre Bello III said he is convinced it is not within his power to prohibit all forms of contractualization and fixed-term employment. “Based on the Labor Code, the DOLE Secretary has no power to prohibit all forms of contractualization and fixed-term employment. This matter is a function of legislation. While he has a quasi-legislative power, he cannot, through rules and regulations, amend or supplant existing provisions of law,” Bello said. “The Secretary of Labor can only regulate contracting and subcontracting,” he added. Labor groups said they will go back to President Rodrigo Duterte and hold mass protests. “It is still a sad day for workers. But the struggle continues. It’s time for a full court press and nationwide actions. We, thus, demand that President Duterte issue an Executive Order in place of this bad order,” said labor coalition Nagkaisa. Under DO 174, to be prohibited are labor-only contracting; “cabo” system; contracting out of job through an in-house agency; contracting jobs through in-house cooperative; contracting jobs by reason of a strike or lockout, whether actual or imminent; and contracting out jobs performed by union members in order to restrain their rights to exercise self-organization. Also outlawed are requiring contractors or subcontractors workers to perform functions performed by regular employees of the principal; requiring the contractors or subcontractors workers to sign as a precondition to employment an antedated resignation letter, a waiver of labor standards; repeated hiring by contractor or subcontractor employees under a contract of short duration; requiring employees under a contracting or subcontracting arrangement to sign a contract fixing period of employment; and other practices or employment arrangement designed to circumvent the right of workers to security of tenure. Asked how the department order follows Duterte’s directives, Bello reiterated the president was referring only to illegal and unlawful contractual arrangements. “What he was referring to are the illegal and unlawful contractual arrangements. So, this is still in line with the president's marching orders,” said Bello. Bello said he decided to sign the department order despite contrasting positions, saying it would be better if he will exercise his mandate as provided by law. “Given this impasse and taking into consideration the social and economic impact of prolonged policy uncertainties, we think that it will be for the benefit of the greater public if the Department would finally put closure to this issue, and exercise the power and discretion given to me under the law,” said Bello. He said nine months of dialogues, meetings, and consultations were not enough to narrow the contradicting positions of employers, who claim contracting and subcontracting is allowed by law; and laborers, who insist it should be totally prohibited. “We, at the Department, would have wanted a consensus DO, that is both acceptable to and endorsed by labor and employer,” said Bello. DMS