QuestionsQuestions (DOLE DEPARTMENT ORDER NO. 18-02, S. 2002, FEBRUARY 21, 2002)
It recognizes that contracting/subcontracting is allowed by law, but must be regulated to promote employment and protect workers’ rights to just and humane conditions of work, security of tenure, self-organization, and collective bargaining.
No. It states that placement activities through private recruitment and placement agencies under Articles 26 to 39 of the Labor Code are not covered.
There is: (1) a contract for a specific job/work/service between principal and contractor/subcontractor; (2) a contract of employment between the contractor/subcontractor and its workers; and (3) the contractor’s capacity to independently undertake the work, with the principal deciding to farm out the job/service.
An arrangement where a principal puts out/farms out the performance or completion of a specific job/work/service within a definite or predetermined period, whether performed within or outside the principal’s premises.
A prohibited arrangement where the contractor/subcontractor merely recruits/supplies/places workers, and either: (i) the contractor lacks substantial capital/investment related to the job; or (ii) the contractor does not exercise the right to control the performance of the work.
The capital stocks/subscribed capitalization (for corporations), and tools, equipment, implements, machineries, and work premises actually and directly used by the contractor/subcontractor in performing/completing the contracted job/work/service.
It refers to the right reserved by the party for whom the services are performed to determine not only the end to be achieved but also the manner and means used to reach that end.
Examples include: (1) contracting out a job/work/service not done in good faith or not justified by business exigencies that results in termination of regular employees and reduction of work hours; (2) contracting out with a “cabo” (in guise of labor-organization supplying workers to an employer); (Other examples include labor-only contracting through in-house agency, contracting related work during strike/lockout, or using union members in a manner that interferes with self-organization).
It covers taking undue advantage of the economic situation or lack of bargaining strength of contractual employees, undermining security of tenure/basic rights, or circumventing regular employment—such as requiring extra functions currently done by regular workers, requiring antedated resignation/blank payroll/waivers/quitclaims as conditions, or fixing a contract period shorter than the principal-contractor contract unless the job is divisible into phases requiring substantially different skills and properly disclosed.
When: (a) there is labor-only contracting; or (b) the contracting arrangement falls within the prohibitions under Section 6. The rules also mention that a competent authority declares such employer-employee relationship.
Rights consistent with those of regular employees, including safe and healthful working conditions; labor standards (SL, rest days, overtime, holiday pay, 13th month pay, separation pay); social security and welfare benefits (SSS, HDMF, PhilHealth, ECC); self-organization/collective bargaining/peaceful concerted action; and security of tenure.
It must include: (1) a specific description of the job/work/service; (2) the place of work and terms/conditions of employment, including the wage rate; and (3) the term/duration of employment coextensive with the principal-contractor contract or specific phase for which the employee is engaged.
If termination results from expiration of the principal-contractor contract or completion of the phase for which the contractual employee is engaged, the employee is not entitled to separation pay; however, this does not prejudice completion bonuses or other emoluments (including retirement pay if provided by law or contract).
Failure to register gives rise to the presumption that the contractor is engaged in labor-only contracting.
After due process, cancellation may be made for: non-submission of contracts with the principal when required; non-submission of annual report; findings through arbitration that the contractor engaged in labor-only contracting and prohibited activities; and non-compliance with labor standards and working conditions.
Regional Directors (through authorized representatives) may conduct routine inspections at any time while work is undertaken; access records and premises; copy records; question employees; and investigate facts/conditions for violations. The principal is also solidarily liable as direct employer for monetary claims arising from violations involving labor-only contracting, prohibitions, rights of contractual employees, or delisting, and solidarily liable when the principal-contractor contract is preterminated for reasons not attributable to the contractor.