New DOLE policy to abolish subcontracting

Subcontracting will be prohibited under the proposed new policy of the Department of Labor Employment (DOLE) on contractual employment, which will be out by next week.

“We intend to come out with a department order that will strengthen the statutory provision on contractualization so that if you are a contractor,.. you will no longer be allowed to subcontract,” Labor Secretary Silvestre Bello III said in a press conference Wednesday. In subcontracting, companies hire workers from a manpower agency to complete the terms of their contract with their principal.

Labor Undersecretary Dominador Say said the new policy will protect contractual workers from fly-by-night contractors.

“If they (contractors) are financially capable then they should be able to finish the service on their own account,” Say said.

Bureau of Labor Relations (BLR) Director Benjo Benavidez said subcontracting has been the “breeding ground for labor standards and occupational safety and health standards violations,” since it leads to multiple employers within a principal.

In such an arrangement, DOLE will have a hard time determining which employer should be held responsible for the welfare of a contractual worker.

The ban is one of the salient points of the draft department order, which DOLE will present to President Duterte for approval before implementing it on December 28.

Say said other notable changes in the proposed order is the requirement for contractors to post higher bonds, which will be used as a contingency fund for providing assistance for their workers.

The new bond rate will be equivalent to the total number of employees of a contractor multiplied by 50 percent of their monthly minimum wage.

“Before we could call them legitimate contractors or businessmen, they should have a decent capital, in which case we will be requiring them to post a bond registration,” Say said.

In the draft order, contractors must also provide new employment opportunities to their contractual workers once their service agreement with the principal is completed.

“Within three months, if the contractor fails to provide an alternate job for their employees the contractor will be required to pay their separation pay,” Say said.

He disclosed they are also studying the possibility of requiring contractors to provide financial assistance to unemployed workers equivalent to half their monthly salary until they could be deployed to a new principal.

“The given amount will then be deducted from the salary of workers once they are placed again,” Say said.

The new order will authorize the DOLE regional offices to regularize workers.