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DO 174 Series of 2017 DO 18-A

Guiding Principles: Guiding principles

Non permissible terms of contracting and subcontracting Contracting and subcontracting arrangements are
arrangements undermine the Constitutional and statutory expressly allowed by law and are subject to regulations
right to security of tenure for the promotion of employment and observance of
rights or workers to just and humane conditions of work,
security of tenure, self-organization, and collective
bargaining

Labor-only contracting is prohibited


SUBSTANTIAL CAPITAL SUBSTANTIAL CAPITAL

Paid-up capital of at least 5 Million Pesos (5,000,00.00) in Paid-up capital of Three Million Pesos (3,000,000.00) in
the case of corporations, partnerships and cooperatives case of corporations
partnerships and cooperatives
In case of single proprietorship- a net worth of at least Five
Million Pesos (5,000,000.00) In case of single proprietorship- a net worth of at least
Three Million Pesos (3,000,000.00)
Absolute Prohibition of Labor-only Contracting Prohibition of Labor-Only Contracting
Other Illicit Forms of Employment Arrangement. Other Prohibitions for being contrary to law or public
policy:
a. When the principal farms out of work to a “Cabo”
b. Contracting out of job or work through an in house a. Contracting of jobs, works or services when not
agency done in good faith and not justified by the
c. Contracting out of job or work through an in- exigencies of the business such as the following:
house cooperative which merely supplies workers 1. Contracting out of jobs, works or services
to the principal when the same results in the termination
d. Contracting out of job or work by reason of a strike or reduction of regular employees and
whether actual or imminent reduction of work hours or reduction or
e. Contracting out of a job or work being performed splitting of the bargaining unit
by union members and such will interfere with, 2. Contract out of work with a “Cabo”
restrain or coerce employees in the exercise of 3. Taking undue advantage of the
their rights to self-organization as provided in Art economic situation or lack of bargaining
259 of the Labor Code strength of the contractor’s employees
f. Requiring contractor’s subcontractor’s employees and/or undermining their security of
to perform functions which are currently being tenure or basic rights, or circumventing
performed by the regular employees of the the provisions of regular employment
principal a. Requiring them to perform
functions which are currently
being performed by the regular
employees of the principal
b. Requiring them to sign as a
precondition to employment or
continued employment an
antedated resignation letter,
blank payroll, a waiver of labor
standards including minimum
wages and social benefits or a
quitclaim releasing the principal
and contractor from any liability
as to payment of future claims.
b. Contracting out of job or work through an in
house agency
c. Contracting out of job or work through an in-
house cooperative which merely supplies workers to the
principal
d. Contracting out of job or work by reason of a
strike whether actual or imminent
e. Contracting out of a job or work being
performed by union members and such will interfere
with, restrain or coerce employees in the exercise of
their rights to self-organization as provided in Art 259 of
the Labor Code
f. repeated hiring of employees under an employment
contract of short duration under a Service Agreement
of short duration with the same or different contractors.