DOLE's new contractualization rules puzzle PALEA

The Philippine Airlines Employees Association (PALEA) is puzzled by the Department of Labor and
Employment's way of addressing the problem of labor contractualization in the country.

The DOLE announced that beginning December 5, its Department Order 18-A series 2011 (Rules
Implementing Articles 106 to 109 of the Labor Code) would take effect.

DO 18-A aims to provide clear rules on contracting and subcontracting and to put a stop to the abuses
against non-regular workers.

The new DO seeks to differentiate “legitimate” from “non-legitimate” contractors and sub-contractors, by
laying down requirements for legitimate ones such as:
• owning a distinct and independent business,
• exhibiting readiness to take full responsibility for performing a job, work or service;
• having substantial capital or investment; showing commitment to comply with labor laws; and
• registering with DOLE regional offices.

Labor Secretary Rosalinda Baldoz had said that at least 200,000 contractual workers will now enjoy
security of tenure and other benefits that regular workers get.

With the issuance of DO 18-A, PALEA expressed confusion over DOLE's earlier approval of the PAL
management‟s outsourcing scheme, which led to the dismissal of about 2,500 regular workers who were
supposed to be absorbed as contractuals by the firms contracted by the flag carrier to take charge of its
call center reservations, catering and airport services.

“What „security of tenure‟ is Baldoz talking about, especially after she removed it from us by approving
PAL management's outsourcing scheme?" said PALEA President Gerry Rivera.

According to the new DO, non-regular workers would be entitled to benefits provided under the Labor
Code such as 13th month pay and overtime pay, as well as retirement benefits. They will also be entitled
to Social Security System, Pag-IBIG, and PhilHealth benefits. Their right to self-organize or negotiate a
collective bargaining agreement is also specified in the new order.

“It appears there is no difference at all now between regular and contractual workers. Kung
pareholangsilabakit pa mag-contractual and isangkompanya? Walang logic,” Rivera added.

The difference, he said, lies in the contract as all the rights mentioned in the new rules are co-terminus
with the contract. So if a worker is hired for just five months as most contractuals are, then it is also a
temporary enjoyment of those entitlements. Unfortunately there is no such thing as a five month
collective bargaining agreement (CBA), or a five month union membership.

Rivera, who is also the vice president of PartidongManggagawa (PM), surmised that by coming out with
this new Order, Baldoz was just trying to recover lost credibility from the labor sector, the general public,
and the international community after she made an error in forcing the issue of outsourcing on PAL
workers. — JerbertBriola /MRT/LBG, GMA News

New rule on contractual employment

Manila, Philippines – Amid the proliferation of companies outsourcing their services to contractors, the
Department of Labor and Employment (DoLE) issued a new department order (DO), which will
professionalize contractual workers.

Labor and Employment Secretary Rosalinda Baldoz said during a media forum Tuesday at DoLE‟s head
office in Manila at least 200,000 contractual workers from 2,624 contractors, subcontractors, and
cooperatives will benefit from the new provision of Department Order No. 18-A, Series of 2011.

“This will address the clamor of the labor sector to clarify government policy on contractual employment
so that they could be assured this will not be used to circumvent the compliance of employers to labor
standards,“Baldoz said.

Under the DO No. 18-A, contractors, subcontractors and cooperatives are required to provide their
workers with benefits similar to their regular counterparts. “The new D.O. will promote employment and
encourage full compliance with minimum wages and general labor standards, including safe and healthful
conditions of work, security of tenure, and self-organization and collective bargaining agreement,“
Baldoz said.

It will also entitle them to social security benefits, which includes membership to SSS, Philhealth, and

The new order will also impose stricter requirements for contractors, subcontractors, and cooperatives to
ensure only qualified companies will be able to operate.

These include a P3 million paid capital to operate, possession of necessary tools and work premises to
deliver their service, an employer-employee relationship with their workers, aPR25,000 registration fees,
and the inclusion of a mandatory 10 percent administrative fee in their service contracts.

It will also require contractors, sub-contractors, and cooperatives to honor the full extent of the service
contract with a company, which will prevent them from cutting the services of their workers in short
periods per year.

“These new provisions aim to weed out fly-by-night contractors and subcontractors. It will also end short
term employment schemes like endo (end of contract) or 5-5-5 (five-month, fivemonth duration),“Baldoz

She said the D.O. will become effective on Dec. 5, which is 15 days after it has been published in a
national newspaper last Nov. 19.

Companies, which will not be able to comply with these requirements, will have its licenses cancelled.

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