Press Release
August 15, 2016

Pimentel seeks end to "labor-only" contracting

Senate President Aquilino "Koko" Pimentel III today said "labor-only" contracting will soon be a thing of the past as he filed a new measure aimed at strengthening the prohibition in the 17th Congress.

Pimentel, president of the administration party PDP Laban, said the anti-people practice of labor contractualization has made it difficult for workers to attain security of tenure guaranteed by the 1987 Constitution.

"Therefore, this proposed bill expressly prohibits these prevalent practices," said Pimentel of Senate Bill 117 that would amend Presidential Decree 442, otherwise known as the Labor Code of the Philippines.

While the Constitution protects the rights of workers and promotes their welfare, some employers circumvent labor laws that prohibit the termination of workers without just or authorized cause, he said.

This is done through labor contractualization, he said, to prevent workers from attaining regular employment and security of tenure by denying employer-employee relationship through the services of placement agencies.

He said the proposed law prohibits arrangements where a manpower agency recruits, supplies or places its hires to a principal doing jobs necessary, desirable or directly related to the main business.

It also covers workers' cooperative that farms out "labor-only" jobs and personnel of the principal to where the hires of manpower agency or cooperative were placed exercise direct control and supervisions over them.

Also declared to be prohibited are contracting of "labor-only" jobs not done in good faith, or contracting of services analogous to it and not justified by the exigencies of the business.

These include contracting with a "cabo," reduction of regular employees, antedated resignation as precondition to employment, contracting through in-house agency, or short duration of contracts, among others.

Pimentel said the proposed legislation is expected to pass through Congress smoothly as no less than President Duterte himself has made it his campaign promise to seek an early end to labor contractualization.

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