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Employers close ranks versus total abolition of legitimate job contracting

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By Bernie Cahiles-Magkilat

Employers yesterday close ranks to come up with a more balanced policies on security of tenure of employees as they expressed apprehension over the passage of Senate Bill No. 1826 also known as the Security of Tenure or Anti-Endo Bill, which they said will abolish even legitimate job contracting in the country.

The 40th National Conference of Employers, which opened yesterday at Grand Ballroom Marriott Hotel, has issued Conference Resolutions with security of tenure topping the list of their concerns.

Resolution No. 1 stated that “Employers, through Employers Confederation of the Philippines (ECOP) as their voice, must collaborate with all social partners in developing more balanced policies that will ensure the security of tenure of workers, and at the same time ensure business sustainability through the adoption of more flexible work arrangements.”

Already, ECOP in a message to their members has expressed reservation over the passage of Senate Bill No. 1826 also known as the Security of Tenure Bill or the Anti-Endo Bill. The Senate voted 15-0 to approve the bill on third and final reading last Wednesday, 22 of May 2019.

The bill was certified urgent by President Rodrigo R. Duterte and is awaiting harmonization with the House version of the measure in the bicameral conference.

ECOP believes that the perennial problem of “endo” has already been addressed by Department Order No. 174 (DO174) and Executive Order No. 51 (EO51). DO174 reiterates the absolute prohibition against labor-only contracting while EO51 expressly prohibits illegal forms of contracting and subcontracting. In essence, the illegal practice of contracting out which is termed as “endo” has already been clearly prohibited not only under the Philippine Labor Code, but also under jurisprudence, DO174 and EO51.

Since the said laws are already in place, it is ECOP’s position that the problem of “endo” lies with the proper implementation and efficient enforcement of these current laws by competent authorities of the government and not in the insufficiency of existing laws.

Upon careful perusal of Senate Bill No. 1826, ECOP said the bill would have the effect of totally abolishing all forms of contracting out, including legitimate forms of job contracting. Section 2 of the said bill particularly defines “labor-only contracting” as “…or the workers recruited and supplied or placed by such person are performing activities which are directly related to the principal business of such contractee.

It is a fundamental principle in case law that all forms of contracting and subcontracting of work by the employer under Article 106 are directly related to the main business of the principal even if such may be unnecessary,
incidental or not integral to the main business of the principal simply because what is contracted out pertains to the work of the principal. If this provision is passed into a law, it is as if all forms of contracting were being abolished. The destructive impact on business, investment, as well as creation of more jobs for Filipino workers would be unimaginable.

ECOP submits that owning a business entails property rights. The right to enter into business is a right guaranteed to everyone under the Constitution. It is an exercise of right to own property and to dispose property. As such, the conduct of all forms of business invariably involves the exercise of management prerogative. Accordingly, jurisprudence has reiterated time and again that the exercise of management prerogative is not subject to interference so long as it is done in good faith.

“To abolish all forms of contracting out is a clear violation of the Constitution, jurisprudence and existing laws,” ECOP said.

“To abolish all forms of contracting out is a clear violation of the Constitution, jurisprudence and existing laws,” ECOP said.

ECOP, consistent with its mandate of ensuring that the fundamental rights of workers are protected, suggests that the word “OR” at the beginning of the above-mentioned definition of “labor-only contracting” be replaced by “AND”, in order to preserve the status quo as provided for in the Labor Code of the Philippines under Articles 106 to 109 (contracting or subcontracting) being implemented by Department Order (DO) 174 that already expressly prohibit the practice of labor-only contracting or the so-called “endo”.

Aside from “Endo”, other Conference resolutions include the need of employers to adopt more creative strategies like massive upskilling and re-skilling of workers to develop a more competitive and highly-skilled Filipino workforce; engage in dialogues to craft policies and programs that will translate to GDP into inclusive growth, especially in rural areas; develop a modus vivendi to avert the growing informality of business and encouraged growth of MSME sector; uphold tripartism in all levels of decision and policy making with government; employers to strengthen bipartism to maintain industrial peace and harmonious labor management relations; and employers to foster responsible business conduct and corporate social responsibility.

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