Constitutional and legal policy basis
- The State affirms labor as a primary social economic force and must protect workers and promote their welfare under Section 18, Article II of the 1987 Philippine Constitution.
- The State must afford full protection to labor under Section 3, Article XIII of the 1987 Philippine Constitution, including rights to self-organization, collective bargaining, peaceful concerted activities, and security of tenure with humane conditions of work and a living wage.
- The Labor Code of the Philippines, as amended, mandates protection to labor, regulation of relations between workers and employers, and recognition of workers’ rights including security of tenure and just and humane conditions of work (Article 3).
- The Order is consistent with Article 106 of the Labor Code, which supports appropriate regulations to protect workers’ rights.
- The Order adopts the declared policy to protect workers’ security of tenure by eradicating abusive employment practices through strict implementation of the Labor Code, as amended (declared policy).
Coverage and persons covered
- The Order applies to all parties, including cooperatives engaged in any contracting and subcontracting arrangement (Section 1).
- The prohibition on illegal contracting and subcontracting applies when contracting or subcontracting is undertaken to circumvent workers’ rights (Section 2).
- The concept of security of tenure governs the protected interest throughout the Order (Section 2).
Prohibited illegal contracting and subcontracting
- Contracting or subcontracting undertaken to circumvent workers’ right to security of tenure, self-organization, and collective bargaining, and the right to peaceful concerted activities pursuant to the 1987 Constitution, is strictly prohibited (Section 2).
- Security of tenure means the right of employees not to be dismissed or removed without just or authorized cause and observance of procedural due process, consistent with the Constitution, the Labor Code, as amended, and prevailing jurisprudence (Section 2).
- The Secretary of Labor and Employment may issue appropriate issuances, after consultation with the National Tripartite Industrial Peace Council under Article 290(c) of the Labor Code, as amended, to declare activities that may be contracted out (Section 2).
Legal effect when the prohibition is violated
- When a contracting or subcontracting arrangement violates the Order, the principal is deemed the direct employer of the contractor’s or subcontractor’s workers for all purposes (Section 3).
Enforcement through labor standards inspections
- The Secretary of Labor and Employment, through duly authorized representatives, must conduct inspection of establishments to ensure compliance with all labor laws, including the Order, consistent with the visitorial and enforcement power under Article 128 of the Labor Code (Section 4).
- Inspecting authorities have full access to the employer’s records and premises, and to any personnel at any time of day or night whenever work is being undertaken in the establishment (Section 4).
- Inspecting authorities may copy records from the employer, question any employee, and investigate any fact, condition, or matter needed to determine violations or to aid enforcement of the Labor Code, as amended, and other labor laws, wage orders, and relevant rules and regulations (Section 4).
- The Secretary of Labor and Employment—or the designated representative—must issue compliance orders after due hearing to effect the labor standards provisions of the Labor Code and other labor legislation, rules, and regulations (Section 4).
- Compliance orders that are affirmed by the Secretary are immediately executory unless restrained by an appropriate court (Section 4).
- If a compliance order directs regularization of workers, the employment of those workers shall not be terminated pending appeal of the regularization order except for just or authorized cause (Section 4).
- Any termination of workers pending appeal of a compliance order involving regularization renders that compliance order involving the regularization of workers executory (Section 4).
Sanctions and penalties for violations
- Violations of the Order are penalized where appropriate according to the penalties provided under existing laws and/or regulations (Section 5).
Inter-agency cooperation
- All government agencies in the Executive Branch must cooperate and provide the Department of Labor and Employment all appropriate assistance to carry out the objective of the Order (Section 6).
Separability, repealing, and effectivity
- If any section or part of the Order is declared unconstitutional or invalid, the remaining sections or provisions not affected remain in full force and effect (Section 7).
- All orders, rules, regulations, issuances, or parts inconsistent with the Order are repealed, amended, or modified accordingly (Section 8).
- The Order takes effect 15 days after publication in a newspaper of general circulation (Section 9).