LAW/DOLE DEPARTMENT ORDERS/BILLS

ON
LABOR CONTRACTING

P.D.442

D.O. 18-A, S. 2011

Labor Code of the
Philippines
(Art 106-109)

Rules Implementing Arts.
106-109 of the LC, as
amended

D.O. 131.S.
2016
Revised Rules on
Labor Law
Compliance

SENATE BILL
117
“An Act
Strengthening
the Prohibition
Against LaborOnly
Contracting,”
(status: 1st reading,
referred to Com.on
Labor8/1/16r)

SENATE
BILL 174
“An Act
Professionalizing
the Contracting and
Subcontracting
Industry, Requiring
a Transition Support
Program, and
Prohibiting
Oppressive
Practices,”
(status: 1st reading,
referred to Com.on
Labor8/1/16r)

Salient Features
An arrangement whereby a
principal agrees to put out or
farm out with a contractor the
performance or completion of
a specific job, work or service
within a definite and
1. Definition of Labor
none
Contracting
predetermined period,
regardless of whether such
job, work or service is to be
performed or completed
within or outside the premises
of the principal
Requirements For Valid Labor-Contracting

1. Qualifications of a
Labor Contractor

Contractor must be:
1.Registered
2.Distinct and
independent business
3.Exercise control over
workers
4.Substantial capital
5. Have substantial
capital of 3M Php

amended the
capitalization reqt to
5M Php paid up or
net worth of
contractors in
Art.106

100 percent of
authorized capital stock
owned by Filipinos

or the phase of work employee is engaged 2. Term or duration of employment that is coextensive with the service agreement. Labor standards benefits 3. Rights of Contractor’s Employees 6. Place of work. collective bargaining and peaceful concerted activities 6. Retirement benefits under the SSS or retirement plans of the contractor. work or service 2. Employment Contract between contractor and employee . Required Contracts Er may require contractor to post a bond equal to the cost of the labor under the contract which shall pay for wages of ees should contractor fail to. Social Security and Welfare benefits 5. Safe and healthful working conditions 2. Posting of Bond 3. Security of Tenure 1. statement of wage rate 3.must comply with Art 279 and 280 of the Labor Code Art 279. Self-organization. Terms and conditions of employment. -added that bonds may refer to the security posted by the principal for the payment of services of the contractors under Service Agreement 1. Regular and Casual Employees -contract must contain the ff: 1. if any 4.280.Service Agreement between the principal and Mandatory posting of bond by contractor to the employer to pay for any claim by the employees .Specific description of the job.2. Security of Tenure Art.

Renewal of contractor 1. to register with the Regional Office of the DOLE where it principally operates -registration effective for 3 years 30 days before the expiration . Mandatory registration and registry of legitimate contractors 9. labor cost b.Provision on the issuance of bond renewable every year 6. administrative fee of not less than 10% of the total contract cost 3.7. Must conform to DOLE Standard Computation and Service Agreement. Term or duration of engagement 8.Provision on the Net Financial Capacity of the Contractor 5. Place of work and terms and conditions of the contracting arrangement to include the ff: a. Specific description of the job. attached as Annexes A and B Bound to observe provisions of these Rules Mandatory for all persons/entities/cooperativ es. acting as contractors. Duties of the Principal 8. work or service being contracted 2. Provisions on the rights and benefits of employees under the Labor Code 4. ECC.Direct monthly remittance of contribution to SSS. Philhealth and Pagibig 7.

of registration Registration Liability of Principal Enforcement of Labor Standards and Working Conditions Solidary Reg’l Director through authorized representatives shall: 1. (Pls see: Summary of Labor Law Compliance) . Conduct routine inspection -access to employees records and premises at any time of the day .question any employee and investigate any fact necessary 2. Issue Compliance Orders Purpose: To determine violations or/and aid in the enforcement of provisions of the Labor Code Provided different modes of enforcement of Labor Laws.