Drilon hits DOLE order giving labor-only contracting ‘false legitimacy’

Senate President Pro Tempore Franklin Drilon questioned on Wednesday the Department of Labor and Employment’s (DOLE) order, which he said gives a “facade of legitimacy” to labor-only contracting (LOC).

Drilon raised this question when the Senate committee on labor, employment and human resources development began its hearing on several bills, seeking to end the practice of “endo” or labor contractualization in the country.

DOLE Undersecretary Joji Aragon told the committee that as of 2016, there were 5,150 registered contractors and subcontractors estimated to be deploying 416,343 workers to some 26,194 principals.

But if the LOC was prohibited by law, then Drilon asked why the department has allowed the registration of the said contractors.

“Under what law is that authorized? If I am a legitimate job contractor, say I build houses, am I required to register since I could be a job contractor when I build a house for a client?” he asked.

“Under what authority are you requiring the registration of contractors? Because labor-only contracting is prohibited, job contracting is allowed. When you register contractors, that gives them legitimacy, that gives them a facade of legitimacy even if they are [practicing] labor-only contracting [which therefore is] a prohibited activity, hindi ba (is it not)?”

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Aragon said the authority was outlined in Department Order 18-A, which she said provides guidelines as the legitimate forms of contracting.

Benjo Santos Benavides, director of the Bureau of Labor Relations, came to the rescue of Aragon when Drilon asked again the basis of the order when the law was clear against the LOC.

Buenavides pointed out that under Article 5 of the Labor Code of the Philippines, the Secretary of Labor “may, by appropriate regulation, issue or restrict or prohibit contracting out of service…”

Satisfied by the response, Drilon went on and questioned the number of workers hired by the registered contractors. And when told that a contractor has an estimated 10 workers, the senator said: “Kaya naman pala nagkakagulo tayo (So that’s what causing disorder here)…”

“That’s why you come up with this kind of a situation, you have an average 10 workers and obviously they don’t have sufficient capital to undertake job-only contracting. Just looking at your own data, the conclusion is that there are about 10 workers per registered contractor,” said the senator.

“If labor-only contracting is prohibited, it’s quite obvious that these registered contractors do not have the financial capacity to engage in job-only contracting because how much is average capital of these registered contractors? Kung sasampu po ang manggagawa , e siguro wala naman silang capital dito e pinapaikot lang ang bayad sa kanila bilang contractor… (If they have ten workers, then perhaps they don’t even have capital for this and only using the money they get to run the business)”

But Buenavides said the contractors had a P3 million paid up capital, which is one of the requirements for registration.

Another root of the problem, Drilon said, was when a labor contractor has been allowed to do the job of the regular worker.

“That’s the root cause of all of this problem because when you engage a labor contractor to do the regular jobs of the regular employees,.. ‘Yan po nagkakagulo dahilan kailangan ang isang trabaho sa isang kompanya, it’s a regular job you contract it out because you say it’s job contracting even if the activity is directly related to the principal activity,” he added. CDG