Anti-endo and Contracting Law

TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES First Regular Session 25 JUL -7 P12:04 SENATE S.B. No._ 212 INTRODUCED BY SENATOR RISA HONTIVEROS AN ACT AGAINST THE PRACTICE OF "ENDO" AND CONTRACTING, AMENDING FOR THIS PURPOSE ARTICLES 106 TO 109, 294 TO 296 OF AND ADDING A NEW PROVISION TO PRESIDENTIAL DECREE NO. 442, OTHERWISE KNOWN AS THE LABOR CODE OF THE PHILIPPINES, AS AMENDED EXPLANATORY NOTE This measure frees our workers from the threat and dangers inherent in non- regular work arrangements. For so long, workers are forced to suffer poor working conditions and unable to exercise their Constitutional right of self-organization, collective bargaining and negotiations, and their right to concerted activities including the right to strike. This measure comes at a critical time, given the Philippines' sizable youth population that is vulnerable to precarious work and endo practice. A 2020 ILO study projected that by 2025, 10.8M Filipino youth will become part of the working-age population. 1 A worrisome trend is that individuals aged 15 to 34 account for 70.4% of unemployed Filipinos. 2 A key factor for youth unemployment is their dependence on short-term or contractual employment, which offer little insecurity and long-term prospects. 3 Another major challenge for the Filipino youth is the jobs-skills mismatch and the limited available jobs for new job-seekers. * These conditions may increase the vulnerability of young people to contractualization and job insecurity which deprive them of the full benefits of regular employment that are essential for securing their futures. " International Labour Organization, 2020, Decent Work and Youth in the Philippines 2 https://psa.gov.ph/statistics/labor-force-survey 3https://ntucphl.org/2019/09/problems-faced-by-young-filipino-workers/; https://www.jil.go.jp/english/fjli/documents/2017/003- 06.pdf#:~:text=42%20Japan%20Labor%20|ssues%2C%20vol,comprises%20of%20young%20people %20who 4 Ibid.

This measure stops the abuse of all workers by prohibiting anti-worker practices such as contracting arrangements and fixed term employment. With this measure, the State upholds its guarantee to promote direct, regular employment for all. This way, the life of the individual worker will be improved, the workers' family will be uplifted, benefiting in turn the nation's economy. The present bill has the following features designed to achieve this: • Establishes a prohibition against contracting or subcontracting, except where a determination has been made by the National Tripartite Industrial Peace Council (NTIPC) that a specific activity may be legitimately contracted or subcontracted out; • Imposes solidary liability on the employer for violations committed by the contractor or sub-contractor; • Prohibits fixed-term employment contracts; • Requires that all employees, except those under valid written probationary contracts, are deemed regular, including project and seasonal employees; • Imposes penalties in the form of fine and imprisonment for violations The passage of this bill is earnestly sought. a retire sarapil RISA HONTIVEROS Senator

TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES First Regular Session JUL -7 P12:04 SENATE S.B. No. _ INTRODUCED BY SENATOR RISA HONTIVEROS AN ACT AGAINST THE PRACTICE OF "ENDO" AND CONTRACTING, AMENDING FOR THIS PURPOSE ARTICLES 106 TO 109, 294 TO 296 OF AND ADDING A NEW PROVISION TO PRESIDENTIAL DECREE NO. 442, OTHERWISE KNOWN AS THE LABOR CODE OF THE PHILIPPINES, AS AMENDED Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

SECTION 1. Short Title. - This Act shall be known as the "Anti-ENDO and

Contracting Law".

SEC. 2. Article 106 is hereby deleted and replaced as follows:

"ART. 106. Prohibition Against Contracting or Subcontracting 7 CONTRACTING, WHERE A PERSON OR ENTITY FARMS OUT THE PERFORMANCE OF ITS BUSINESS OR ANY PART THEREOF TO ANOTHER, IS HEREBY STRICTLY PROHIBITED EXCEPT AS PROVIDED IN THE FOLLOWING PARAGRAPH. THE SECRETARY OF LABOR AND EMPLOYMENT MAY, UPON THE UNANIMOUS RECOMMENDATION OF THE NATIONAL TRIPARTITE INDUSTRIAL PEACE COUNCIL (NTIPC) UNDER ART. 290 (C) OF THE LABOR CODE, AS AMENDED, DETERMINE BY APPROPRIATE REGULATIONS SPECIFIC ACTIVITIES WHICH MAY BE CONTRACTED OUT. NATURAL OR JURIDICAL PERSONS ENGAGED IN ANY ARRANGEMENT ACTING AS PRINCIPALS IN VIOLATION OF THE PROHIBITION AGAINST CONTRACTING OR SUBCONTRACTING SHALL AUTOMATICALLY BE CONSIDERED THE WORKER'S DIRECT EMPLOYER AND THE LATTER SHALL BE DEEMED AS DIRECT EMPLOYEES FOR ALL PURPOSES INCLUDING MEMBERSHIP IN THE APPROPRIATE BARGAINING UNIT. NATURAL OR JURIDICAL PERSONS ACTING AS CONTRACTORS IN VIOLATION OF THE PROHIBITION AGAINST CONTRACTING OR SUBCONTRACTING SHALL BE CONSIDERED MERELY AS AN AGENT OF THE EMPLOYER."

SEC. 3. Article 108 of the Labor Code is hereby deleted and replaced to read as

follows: "ART. 107. CONDITIONS ON CONTRACTING. - CONTRACTING ALLOWED UNDER THE PRECEDING ARTICLE SHALL BE DONE ONLY IF THE NATURAL OR JURIDICAL PERSON ACTING AS CONTRACTOR OBTAINS A LICENSE FROM THE DEPARTMENT OF LABOR AND EMPLOYMENT AND ONLY IF IT PERFORMS A JOB, WORK OR SERVICE IDENTIFIED BY THE SECRETARY OF LABOR AND EMPLOYMENT UPON THE UNANIMOUS RECOMMENDATION OF THE NATIONAL TRIPARTITE INDUSTRIAL PEACE COUNCIL (NTIPC) UNDER ART. 290 (C) OF THE LABOR CODE. SUCH LICENSE SHALL BE ISSUED AND MAINTAINED ONLY IF THE APPLICANT FULFILLS ALL OF THE FOLLOWING: (A) HAS A PAID-UP CAPITAL OR NET WORTH OF AT LEAST FIFTY MILLION 16 PESOS (P50,000,000.00), WHICH MAY BE INCREASED BY THE SECRETARY OF LABOR AND EMPLOYMENT AS DEEMED APPROPRIATE THROUGH TRIPARTITE CONSULTATION; (B) HAS A CORE OF REGULAR EMPLOYEES CONSISTING OF COMPETENT PROFESSIONALS OR SKILLED WORKERS ESPECIALLY TRAINED TO PERFORM THE JOB, WORK OR SERVICE TO BE CONTRACTED OUT; (C) HAS INVESTMENT IN THE FORM OF EQUIPMENT, MACHINERIES OR TOOLS WHICH ARE REASONABLY NECESSARY TO PERFORM OR COMPLETE THE JOB, WORK, OR SERVICE TO BE CONTRACTED OUT; (D) EXERCISES EXCLUSIVE CONTROL OVER THE PERFORMANCE AND COMPLETION OF THE JOB, WORK, OR SERVICE CONTRACTED OUT; (E) OBTAINS CERTIFICATION OF COMPLIANCE WITH LABOR AND SOCIAL WELFARE LAWS INCLUDING PROOF OF PAYMENT OF SOCIAL SECURITY, PHILIPPINE HEALTH INSURANCE CORPORATION, AND HOME DEVELOPMENT MUTUAL FUND (PAG-IBIG) CONTRIBUTIONS; AND (F) PAYS A LICENSE FEE, WHICH SHALL NOT BE LOWER THAN FIVE HUNDRED THOUSAND PESOS (P500,000.00). THE LICENSE SHALL BE VALID FOR A PERIOD OF ONE (1) YEAR AND MAY BE RENEWED UPON COMPLIANCE WITH THE REQUIREMENTS PRESCRIBED ABOVE AND OTHER REQUIREMENTS AS MAY BE DETERMINED BY THE DEPARTMENT OF LABOR AND EMPLOYMENT, PROVIDED THAT THE JOB, WORK, OR SERVICE TO BE PERFORMED CONTINUES TO BE DETERMINED BY THE SECRETARY OF LABOR AND EMPLOYMENT AS VALID FOR CONTRACTING BASED ON THE UNANIMOUS RECOMMENDATION OF THE NATIONAL TRIPARTITE INDUSTRIAL PEACE COUNCIL (NTIPC). IN ALL CASES, THE JOB CONTRACTOR SHALL DEMONSTRATE THAT IT HAS

FINANCIAL CAPACITY TO CARRY ON ITS BUSINESS BASED ON FACTORS SUCH AS, BUT NOT LIMITED, TO THE NUMBER OF ITS EMPLOYEES AND THE NATURE OF ITS BUSINESS. ANY LEGITIMATE LABOR ORGANIZATION SHALL BE ENTITLED TO OBTAIN COPIES OF LICENSES ISSUED TO JOB CONTRACTORS AND ANY AND ALL SUBMISSIONS MADE IN CONNECTION WITH SUCH LICENSE. FOR THIS PURPOSE, THE SECRETARY OF LABOR AND EMPLOYMENT, IN 10 CONSULTATION WITH THE NATIONAL TRIPARTITE INDUSTRIAL PEACE COUNCIL (NTIPC), SHALL ISSUE THE APPROPRIATE REGULATIONS FOR THE LICENSING, RENEWAL, SUSPENSION, AND REVOCATION OF LICENSES OF CONTRACTORS. IN NO CASE SHALL PRIVATE RECRUITMENT AND PLACEMENT AGENCIES (PRPA) OR PRIVATE EMPLOYMENT AGENCIES (PEA) UNDER ARTICLE 25 OF THE LABOR CODE, AS AMENDED, BE ALLOWED TO ENGAGE IN CONTRACTING."

SEC. 5. Article 294 of the Labor Code is hereby amended as follows:

"ART. 294. Security of Tenure. - [In case or regular employment, the employer shall not terminate] [t]The services of an employee, IRRESPECTIVE OF EMPLOYMENT STATUS OR POSITION, SHALL NOT BE TERMINATED except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his/HER full backwages, inclusive of allowances, and to his/HER other benefits or their monetary equivalent computed from the time his/HER compensation was withheld from him/HER up to the time of his/HER actual reinstatement. IN ALL CASES WHERE EMPLOYMENT IS TERMINATED, THE EMPLOYER SHALL HAVE THE BURDEN OF PROVING THAT THE TERMINATION LEGAL, THAT IS, SUPPORTED BY LEGAL CAUSE AND THAT PROCEDURAL DUE PROCESS WAS OBSERVED."

SEC. 6. Article 295 is hereby deleted and replaced to read as follows:

"ARTICLE 295. STATUS OF EMPLOYMENT. - "AN EMPLOYER-EMPLOYEE RELATIONSHIP EXISTS WHEN A WORKER IS ENGAGED TO RENDER WORK OR SERVICE UNDER THE CONTROL OR SUPERVISION OF THE EMPLOYER, NOT ONLY AS TO THE END TO BE ACHIEVED, BUT ALSO THE MANNER, MEANS AND METHODS IN REACHING THE END. EXCEPT THOSE UNDER VALID WRITTEN PROBATIONARY CONTRACTS, ALL EMPLOYEES ARE DEEMED REGULAR INCLUDING PROJECT AND SEASONAL EMPLOYEES, AND SHALL, IN CASE OF RANK-AND-FILE OR SUPERVISORS, BE TREATED AS PART OF THE APPROPRIATE BARGAINING UNIT FOR PURPOSES OF THE EXERCISE OF THE CONSTITUTIONAL RIGHT TO SELF-ORGANISATION AND

1 COLLECTIVE BARGAINING, AND SHALL BE ENTITLED TO ALL THE BENEFITS UNDER 2 A COLLECTIVE BARGAINING AGREEMENT (CBA), IF ANY. PROJECT AND SEASONAL EMPLOYEES ARE REGULAR FOR THE DURATION OF THE PROJECT OR SEASON, AS THE CASE MAY BE. FOR THIS PURPOSE, PROJECT EMPLOYMENT REFERS TO EMPLOYMENT IN AN EXISTING PROJECT OR UNDERTAKING THE COMPLETION OR TERMINATION OF WHICH HAS BEEN DETERMINED AND MADE KNOWN TO THE EMPLOYEE AT THE TIME OF ENGAGEMENT. SEASONAL EMPLOYMENT REFERS TO EMPLOYMENT BASED ON THE EXISTENCE OF A SEASON IN AGRICULTURAL WORK AS DETERMINED BY THE DEPARTMENT OF LABOR AND EMPLOYMENT UPON THE UNANIMOUS RECOMMENDATION OF THE NATIONAL TRIPARTITE INDUSTRIAL PEACE COUNCIL (NTIPC). WORKERS UNDER PROJECT AND SEASONAL EMPLOYMENT ARE ENTITLED TO THE RIGHT OF FIRST REFUSAL TO THE TASK, WORK, OR PROJECT IN WHICH THEY ARE EMPLOYED. ALL OTHER FORMS OF NON-REGULAR EMPLOYMENT ARE PROHIBITED. PROVISIONS IN EMPLOYMENT CONTRACTS PROVIDING FOR A FIXED TERM OR DEFINITE PERIOD OF EMPLOYMENT ARE VOID FOR BEING CONTRARY TO PUBLIC POLICY. WORKERS UNDER SUCH ARRANGEMENTS ARE DEEMED REGULAR EMPLOYEES RECKONED FROM THE FIRST DAY OF EMPLOYMENT AND SHALL, IN CASE OF RANK-AND-FILE OR SUPERVISORS, BE TREATED AS PART OF THE APPROPRIATE BARGAINING UNIT FOR PURPOSES OF THE EXERCISE OF THE CONSTITUTIONAL RIGHT TO SELF- ORGANISATION AND COLLECTIVE BARGAINING, AND SHALL BE ENTITLED TO ALL THE BENEFITS UNDER A COLLECTIVE BARGAINING AGREEMENT (CBA), IF ANY."

SEC. 7. Article 296 is hereby amended to read as follows:

"Art. 296. Probationary employment. - Probationary employment shall not exceed six (6) months from the [date the employee started working, unless it is covered by an apprenticeship agreement stipulating a longer period. The services of an employee who has been engaged on a probationary basis may be terminated for a just cause or when he fails to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the time of his engagement. An employee who is allowed to work after a probationary period shall be considered a regular employee.] FIRST DAY OF SERVICE REGARDLESS OF THE NATURE OF WORK TO BE PERFORMED PROVIDED THAT, THE PROBATIONARY PERIOD OF SCHOOL TEACHING PERSONNEL IN PRIMARY AND SECONDARY EDUCATION SHALL NOT EXCEED ONE (1) ACADEMIC YEAR AND THE PROBATIONARY PERIOD OF SCHOOL TEACHING PERSONNEL IN HIGHER EDUCATION SHALL NOT EXCEED ONE (1) SEMESTER. The services of an employee who has been engaged on a probationary basis may be terminated for a just cause or when he fails to qualify as a regular employee in accordance with reasonable standards WHICH SHALL BE made known by the employer to the employee IN WRITING at the time of his engagement. An employee who is allowed to work after a probationary period shall be considered a regular employee.

EXCEPT WHEN THE TERMINATION IS FOR JUST CAUSE, A PROBATIONARY EMPLOYEE WHO HAS RENDERED AT LEAST ONE (1) MONTH OF SERVICE IS ENTITLED TO A TERMINATION PAY OF ONE (1) MONTH SALARY."

SEC. 8. Insert a new Article 303-A to read as follows:

"ARTICLE 303-A. PENALTIES. - (A) THE DEPARTMENT OF LABOR AND EMPLOYMENT SHALL IMPOSE THE FOLLOWING PENALTIES: 1. FOR EVERY PERSON OR ENTITY ENGAGED IN ANY ACTIVITY IN VIOLATION OF THE PROHIBITION AGAINST CONTRACTING OR SUBCONTRACTING, A FINE OF AT LEAST FIFTY THOUSAND PESOS (PHP 50,000.00) ASSESSED PER EMPLOYEE ENGAGED UNDER A PROHIBITED CONTRACTING ARRANGEMENT. 2. FOR EVERY PERSON WHO OR ENTITY WHICH MISCLASSIFIES AN EMPLOYEE'S STATUS OF EMPLOYMENT IN DEROGATION OF THE EMPLOYEES SECURITY OF TENURE, A FINE OF AT LEAST FIFTY THOUSAND PESOS (PHP 50,000.00) ASSESSED PER MISCLASSIFIED EMPLOYEE. 3. FOR EVERY PERSON OR ENTITY ENGAGED IN ANY ACTIVITY IN VIOLATION OF THE PROHIBITION AGAINST FIXED TERM EMPLOYMENT, A FINE OF AT LEAST ONE HUNDRED THOUSAND PESOS (PHP 100,000.00) ASSESSED PER EMPLOYEE ENGAGED UNDER SUCH PROHIBITED ARRANGEMENTS. 4. FOR EVERY PERSON OR ENTITY ENGAGED IN ANY ACTIVITY IN VIOLATION OF THE PROVISION ON PROBATIONARY EMPLOYMENT, A FINE OF AT LEAST ONE HUNDRED THOUSAND PESOS (PHP 100,000.00) ASSESSED PER EMPLOYEE ENGAGED UNDER SUCH PROHIBITED ARRANGEMENTS. THESE PENALTIES SHALL BE IMPOSED WITHOUT PREJUDICE TO OTHER DAMAGES AND PENALTIES THAT MAY BE IMPOSED UNDER THIS CODE AND OTHER LAWS AND REGULATIONS. (B) IMPRISONMENT OF NOT LESS THAN TWELVE (12) YEARS AND ONE (1) DAY BUT NOT MORE THAN TWENTY (20) YEARS SHALL BE IMPOSED UPON ANY PERSON FOUND GUILTY OF COMMITTING ANY OF THE FOLLOWING: 1. ENGAGING IN ANY ACTIVITY IN VIOLATION OF THE PROHIBITION AGAINST CONTRACTING OR SUBCONTRACTING; 2. MISCLASSIFYING AN EMPLOYEE'S STATUS OF EMPLOYMENT IN DEROGATION OF THE EMPLOYEE'S SECURITY OF TENURE; 3. VIOLATING THE PROVISION ON PROBATIONARY EMPLOYMENT; OR 4. OTHER THAN THOSE ALLOWED IN ARTICLE 295 OF THIS CODE, USING FIXED TERM EMPLOYMENT IN ENGAGING WORKERS.

N ANY OF THE FOREGOING CASES IN PARAGRAPH (B), THE PENALTY OF LIFI MPRISONMENT SHALL BE IMPOSED IF THE ACT COMMITTED PERTAINS TO A LEAST THREE (3) WORKERS.

SEC. 9. Separability Clause. - If any provision or part hereof is held invalid or

unconstitutional, the remainder of the law or the provision not otherwise affected shall remain valid.

SEC. 10. Repealing Clause. - All acts, executive orders, administrative orders,

proclamations, rules and regulations or parts thereof inconsistent with any of the provisions of this Act are hereby repealed or modified accordingly.

SEC. 11. Effectivity. - This Act shall take effect fifteen (15) days after

publication in the Official Gazette or two (2) newspapers of general circulation. Approved,