The DOLE is exerting stronger effort to address the perennial issue of ‘contractualization’ despite its handicap demonstrated by the absence of a law amending the Labor Code that allows sub-contracting arrangements.

Labor and Employment Secretary Rosalinda Dimapilis-Baldoz said this yesterday at the Year-end Press Conference and the 4th Kapihan at Balitaan at the DOLE in Intramuros, where the labor and employment chief reported that as of October 2014, there are 4,487 contractors registered with the DOLE under D.O. 18-A.

“While a legislative bill having the consensus of both employers and workers is yet to take shape and, thus, yet to be filed in Congress, we at the DOLE are taking policy action to address the issue of ‘contractualization’, she said.

“By any indication, contractors are coming out in the open and working to be legitimate by registering themselves with the DOLE under D.O. 18-A,” said Baldoz who stated that in 2013, only 1,699 contractors registered, and 1,306 registered in 2012.

“Those that are registered are also voluntarily complying with labor laws and occupational safety and health standards under the new labor law compliance system where they undergo joint assessment to be able to get the Certificate of Compliance which their principals require in their service contracts,” Baldoz added.

“In 2014, the efforts of the Department and of its tripartite partners to address the issue of “5-5-5”, “6-6-6”, or end-of-contract (endo) work arrangements, which are forms of the so-called ‘contractualization’, paid off in terms of the increase in the number of registered sub-contractors,” Baldoz added.

Department Order No. 18-A is the executive action that Baldoz chose in 2012 to address the ticklish issue of ‘contractualization’. A tripartite-indorsed measure, D.O. 18-A was issued to amend D.O. 18-02 on subcontracting to minimize or deter the participation and activities of contractors and sub-contractors that do not have the financial and legal personality to undertake and complete specific jobs, work, or services.

Baldoz explained that when she issued D.O. 18-A, she looked into the issue of subcontracting on two aspects. The first aspect was to harmonize and set in place stricter regulations on subcontracting to eliminate the proliferation of fly-by-night subcontractors. The second aspect was how to ensure that all employers or companies and their subcontractors in the supply chain are compliant with all labor laws.

“D.O. 18-A, we believe, is leading us to achieve its aim of professional and ethical subcontracting where subcontractors are compliant with labor standards and occupational safety and health standards,” she observed. She said D.O. 18-A is supported by both labor and employers and was forged at the Tripartite Industrial Peace Council after exhaustive and extensive consultations and discussions which took five months.

D.O. 18-A squarely addresses the issue of sub-contracting and its modern-day variants by providing the following:

(1) Clarifies what the law recognize as legitimate contractors as to sufficient capital, equipment, and control over workers;

(2) Sets a P3 million paid-up capital which is not provided in the previous regulation;

(3) Directly prohibits repeated the hiring practice of ‘5-5-5’ and provides that any employer who violates this provision is obligated to ‘regularize’ the affected workers and pay all statutory benefits under the joint and solidary liability rule;
(4) Provides that the contracts of workers with their contractors should not be less or should not be less than the period of the service agreement of the contractor with its principal;
(5) Specifies and clarifies that workers of contractors have the right to self-organization, collective bargaining, and peaceful concerted activities, as well as security of tenure and that any violation of these shall be considered “unfair labor practice”.

Aside from mandatory registration, D.O. 18-A establishes a registration system implemented by the DOLE regional offices, with the Bureau of Working Conditions (BWC) as the central registry. Since the issuance of D.O. 18-A, the number of sub-contractors registered under D.O. 18-02 had been whittled down from 17,000 to only 5260 as of October 2014. Also as of this date, there are 13,691 contractors or sub-contractors whose registration had expired.

“In 2014, more legitimate contractors are complying with labor laws and are registered with the DOLE under the requirements, terms, and conditions of Department Order 18-A.

“We have removed from the list ‘fly-by-night’ subcontractors that cannot comply with the stringent requirements of the said order,” said Baldoz.

Among the 4,487 registered contractors under D.O. 18-A, about 2,153 are registered with the DOLE Regional Office-NCR; 516 contractors are in Region 3; 479 contractors are in Region 4-A; 258 contractors are registered in Region 11; 228 contractors in Region 10; 172 contractors in Region 6; 163 contractors in Region 12; 96 contractors in Region 7; 91 contractors in Region  1; 73 contractors in Region 1; 64 contractors in Region 5; 52 contractors in Caraga; 38 contractors in the Cordillera Administrative Region; and 31 contractors in Region 4-B.


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