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LABOR LAWS AND SOCIAL LEGISLATION

THE LABOR CODE OF THE PHILIPPINES

BOOK I: PRE-EMPLOYMENT

Title I
RECRUITMENT AND PLACEMENT OF WORKERS

Chapter II
REGULATION OF RECRUITMENT AND PLACEMENT ACTIVITIES

Article 25. Private sector participation in the recruitment and placement of workers.

Pursuant to national development objectives and in order to harness and maximize the use of private
sector resources and initiative in the development and implementation of a comprehensive
employment program, the private employment sector shall participate in the recruitment and
placement of workers, locally and overseas, under such guidelines, rules and regulations as may be
issued by the Secretary of Labor.

Philippine Overseas Employment Agency (POEA)

- main government agency assigned to monitor and supervise overseas recruitment and manning
agencies in the Philippines
- POEA performs regulatory, enforcement, and limited or special adjudicatory functions
 R.A. No. 8042 transferred from POEA to NLRC the jurisdiction over OFWs’ claims arising from
employer-employee relationship
 But POEA retains original and exclusive jurisdiction over cases involving violations of POEA rules
and regulations, disciplinary cases and other cases that are administrative in character involving
OFWs
- POEA regulations have the force and effect of law (principle of subordinate legislation)

Private Sectors that can participate in recruitment and placement of workers:

1) Shipping or manning agents or representatives
2) Private recruitment offices
- Private recruitment entity with authority
 refers to any person or association engaged in the recruitment and placement of workers,
locally or overseas, without charging, directly or indirectly, any fee from the workers or
employers
3) Public employment offices
4) Construction contractors if authorized by the DOLE and Construction Industry Authority.
5) Persons that may be authorized by the SOLE
6) Private employment agencies (Sec. 1, Rule VII, Book I, IRR of the LC)
- Private employment agency with a license
 refers to any person or entity engaged in the recruitment and placement of workers for a
fee which is charged, directly or indirectly, from the workers or employers or both

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Qualifications for Participation

1) Citizenship Requirement

a. Filipino citizens
b. Partnerships or corporations with at least 75% of the authorized capital stock is owned and
controlled by Filipino citizens(LC, Art. 27);
Article 27. Citizenship requirement. Only Filipino citizens or corporations, partnerships or
entities at least seventy-five percent (75%) of the authorized and voting capital stock of
which is owned and controlled by Filipino citizens shall be permitted to participate in the
recruitment and placement of workers, locally or overseas.

2) Capitalization (LC, Art. 28)

Article 28. Capitalization. All applicants for authority to hire or renewal of license to recruit are
required to have such substantial capitalization as determined by the Secretary of Labor.
a. Local employment
- A minimum networth/paid-up capital of P1 million for single proprietorship and
partnership/corporation;
b. Overseas employment
- A minimum capitalization/paid-up capital of P5 million for single proprietorship and
partnership/ corporation (Sec. 2, Rule 1, Part II, Revised POEA Rules of 2016).

3) Not otherwise disqualified by law or other government regulations to engage in the recruitment and
placement of workers for overseas employment (Rule 1, Part II, Revised POEA Rules of 2016)*

4) Payment of registration fees

Article 30. Registration fees. The Secretary of Labor shall promulgate a schedule of fees for the
registration of all applicants for license or authority.

5) Posting of surety or cash bonds

Article 31. Bonds. All applicants for license or authority shall post such cash and surety bonds as
determined by the Secretary of Labor to guarantee compliance with prescribed recruitment
procedures, rules and regulations, and terms and conditions of employment as may be appropriate.
- Upon approval of the application for license, the applicant for license to operate a private
recruitment or manning agency shall:
a. Submit an Escrow Agreement in the amount of one million pesos (P1,000,000.00), with
confirmation of escrow deposit with an accredited reputable bank; and
b. Post a surety bond in the amount of one-hundred thousand pesos (P100,000.00) from a
bonding company acceptable to the POEA and accredited with the Insurance Commission
- Purposes:
 to guarantee compliance with prescribed recruitment procedures, rules and regulations,
and terms and conditions of employment as may be appropriate
 to answer for all valid and legal claims arising from violations of the conditions for the
grant and use of the license and/or accreditation and contracts of employment

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*Persons and entities disqualified to engage in the business of recruitment and placement of workers:

1) Travel agencies and sales agencies of airline companies(LC, Art. 26);

Article 26. Travel agencies prohibited to recruit. Travel agencies and sales agencies of airline
companies are prohibited from engaging in the business of recruitment and placement of workers
for overseas employment whether for profit or not.

2) Officers or members of the board of any corporation or members in a partnership engaged in the
business of a travel agency;

3) Corporations and partnerships, when any of its officers, members of the board or partners, is also an
officer, member of the board or partner of a corporation or partnership engaged in the business of a
travel agency;

4) Persons, partnerships or corporations which have derogatory records, such as but not limited to
those:
a. Certified to have derogatory record or information by the NBI or by the Anti-Illegal Recruitment
Branch of the POEA;
b. Against whom probable cause or prima facie finding of guilt for illegal recruitment or other
related cases exists;
c. Convicted for illegal recruitment or other related cases and/or crimes involving moral turpitude;
and
d. Agencies whose licenses have been previously revoked or cancelled by the POEA for violation of
R.A. 8042, P.D. 442 as amended and their IRRs.

5) Any official or employee of the DOLE, POEA, OWWA, DFA and other government agencies directly
involved in the implementation of R.A. 8042 and/or any of his/her relatives within the 4th civil
degree of consanguinity or affinity; and

6) Persons or partners, officers and directors of corporations whose licenses have been previously
cancelled or revoked for violation of recruitment laws (Sec. 2, Rule I, 2002 Rules and Regulations on
the Recruitment and Employment of Land-Based Workers)

LICENSE AND AUTHORITY TO RECRUIT

I. Purpose
- For the government to regulate the business of recruitment and replacement

II. Definition

1) Authority
- A document issued by DOLE authorizing a person or entity to operate a private employment
agency
- Does not entitle the agency to collection of fees*

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2) License
- A document issued by the DOLE authorizing a person or association to engage in
recruitment and placement activities as a private recruitment entity
- Once given, entity is authorized to collect fees*

*Fees to be paid by workers

Article 32. Fees to be paid by workers. Any person applying with a private fee-charging employment
agency for employment assistance shall not be charged any fee until he has obtained employment
through its efforts or has actually commenced employment. Such fee shall be always covered with
the appropriate receipt clearly showing the amount paid. The Secretary of Labor shall promulgate a
schedule of allowable fees.

GR: Any person applying with a private feecharging employment agency for employment assistance
shall not be charged any fee.

EXC:
1. When the worker obtained work through recruiter’s efforts; and
2. When the worker has actually commenced employment (LC, Art. 32)

Fees Chargeable to the Worker

1) Placement fee in an amount equivalent to one month basic salary of the worker (Revised POEA
Rules, Rule 5, Sec. 51);
2) Documentation costs; and
3) Membership with Philhealth, Pag-IBIG and SSS (Revised POEA Rules, Rule 5, Sec. 50).

 The above-mentioned placement and documentation costs are the only authorized payments
that may be collected from a hired worker. No other charges in whatever form, manner or
purpose, shall be imposed on and be paid by the worker without prior approval of the POEA.
 POEA has the power to order refund of illegally collected fees.

III. Validity

1) Regular license
a. Local Employment
 3 years from the date of issuance unless sooner revoked or cancelled (DO 141-4, Sec.
12).
b. Overseas Employment
 full term of 4 years from the date of issuance of the provisional license

2) Provisional license
- 2 years
- POEA may upgrade the provisional license during its validity to a regular license after the
recruiter has deployed at least one hundred workers to its new principal(s).

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IV. Non-transferability

Article 29. Non-transferability of license or authority. No license or authority shall be used directly
or indirectly by any person other than the one in whose favor it was issued or at any place other
than that stated in the license or authority be transferred, conveyed or assigned to any other person
or entity. Any transfer of business address, appointment or designation of any agent or
representative including the establishment of additional offices anywhere shall be subject to the
prior approval of the Department of Labor.

 No license or authority shall be used directly or indirectly by any person other than the one in
whose favor it was issued OR at any place other than that stated in the license or authority; nor,
 No license or authority be transferred, conveyed or assigned to any other person or entity

V. Prohibited practices in recruitment and placement (A.34, LC)

A. Under Art.34, Labor Code

ILLEGAL RECRUITMENT embodies Article 34 of the Labor Code.

Article 34. Prohibited practices. It shall be unlawful for any individual, entity, licensee, or holder of
authority:

1) To charge or accept, directly or indirectly, any amount greater than that specified in the
schedule of allowable fees prescribed by the Secretary of Labor, or to make a worker pay any
amount greater than that actually received by him as a loan or advance; (OVERCHARGING)

2) To furnish or publish any false notice or information or document in relation to recruitment or

employment; (FALSE NOTICE)

3) To give any false notice, testimony, information or document or commit any act of
misrepresentation for the purpose of securing a license or authority under this Code;
(MISREPRESENTATION TO SECURE LICENSE)

4) To induce or attempt to induce a worker already employed to quit his employment in order to
offer him to another unless the transfer is designed to liberate the worker from oppressive
terms and conditions of employment; (INDUCING WORKER TO QUIT)

5) To influence or to attempt to influence any person or entity not to employ any worker who has
not applied for employment through his agency; (INDUCEMENT TO NOT EMPLOY)

6) To engage in the recruitment or placement of workers in jobs harmful to public health or

morality or to the dignity of the Republic of the Philippines; (RECRUITMENT FOR HARMFUL
JOBS)

7) To obstruct or attempt to obstruct inspection by the Secretary of Labor or by his duly authorized
representatives; (OBSTRUCTING INSPECTION)

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8) To fail to file reports on the status of employment, placement vacancies, remittance of foreign
exchange earnings, separation from jobs, departures and such other matters or information as
may be required by the Secretary of Labor; (NONSUBMISSION OF REPORTS)

9) To substitute or alter employment contracts approved and verified by the Department of Labor
from the time of actual signing thereof by the parties up to and including the periods of
expiration of the same without the approval of the Secretary of Labor; (CONTRACT
SUBSTITUTION)

10) To become an officer or member of the Board of any corporation engaged in travel agency or to
be engaged directly or indirectly in the management of a travel agency; (INVOLVEMENT IN
TRAVEL AGENCY) and

11) To withhold or deny travel documents from applicant workers before departure for monetary or
financial considerations other than those authorized under this Code and its implementing rules
and regulations. (WITHHOLDING OF DOCUMENTS)

B. Other prohibited practices:

1) Failure to actually deploy a contracted worker without valid reason as determined by the
Department of Labor and Employment: (FAILURE TO DEPLOY)
2) Failure to reimburse expenses incurred by the worker in connection with his documentation
and processing for purposes of deployment, in cases where the deployment does not actually
take place without the worker's fault; (FAILURE TO REIMBURSE) and
3) Allowing a non-Filipino citizen to head or manage a licensed recruitment/manning agency (NON-
FILIPINO MANAGER).

C. Under Sec.5, RA 100221

1) Granting a loan to an OFW with interest exceeding eight percent (8%) per annum which will be
used for payment of legal and allowable placement fees (UNLAWFUL INTEREST ON LOAN);
2) Refusing to condone or renegotiate a loan incurred by an OFW after his employment contract
has been prematurely terminated through no fault of his or her own (NON-RENEGOTIATION OF
LOAN);
3) For a suspended recruitment/manning agency to engage in any kind of recruitment activity
including the processing of pending workers' applications (VIOLATION OF SUSPENSION);
4) For a recruitment/manning agency or a foreign principal/ employer to pass on the OFW or
deduct from his or her salary the payment of the cost of insurance fees, premium or other
insurance related charges, as provided under the compulsory worker's insurance coverage
(COLLECTION OF INSURANCE PREMIUM); and
5) Imposing a compulsory and exclusive arrangement whereby an OFW is required to:
a) Avail a loan only from specifically designated institutions, entities or persons (SPECIFYING A
LOAN ENTITY);

1
AN ACT AMENDING REPUBLIC ACT NO. 8042, OTHERWISE KNOWN AS THE MIGRANT WORKERS AND OVERSEAS
FILIPINOS ACT OF 1995, AS AMENDED, FURTHER IMPROVING THE STANDARD OF PROTECTION AND PROMOTION
OF THE WELFARE OF MIGRANT WORKERS, THEIR FAMILIES AND OVERSEAS FILIPINOS IN DISTRESS, AND FOR
OTHER PURPOSES

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b) To undergo health examinations only from specifically designated medical, entities or

persons, except seafarers whose medical examination cost is shouldered by the ship owner
(SPECIFYING A MEDICAL ENTITY);
c) To undergo training of any kind only from designated institutions, entities or persons,
except for recommendatory trainings mandated by principals or ship owners (SPECIFYING A
TRAINING ENTITY).

VI. Suspension/Cancellation

Article 35. Suspension and/or cancellation of license or authority. The Minister of Labor shall have the
power to suspend or cancel any license or authority to recruit employees for overseas employment for
violation of rules and regulations issued by the Ministry of Labor, the Overseas Employment
Development Board, or for violation of the provisions of this and other applicable laws, General Orders
and Letters of Instructions.

A. Grounds for Suspension of License

1. Committing any of the prohibited practices under Article 34 and other pertinent provisions of
the Labor Code;
2. Engaging in recruitment and deployment in violation of the license or authority and other
activities without prior authorization from POEA;
3. Disregard of lawful orders, notices and other processes issued by the POEA;
4. Coercing with workers to accept prejudicial arrangements in exchange of certain benefits that
rightfully belongs to workers;
5. Withholding of workers’ salaries or remittances without justifiable reasons;
6. Committing other acts similar and analogous to the foregoing.

B. Grounds for Revocation of License

1. Violation of the conditions of license;
2. Engaging in acts of misrepresentation for the purposes of securing a license or renewal thereof,
such a giving false testimonies or falsified documents;
3. Engaging in recruitment or placement of workers in jobs harmful to public health or morality or
to the dignity of the Republic of the Philippines;
4. Incurring an accumulated three (3) counts of suspension by an agency based on final and
executor orders within the validity of the license.

C. Jurisdiction to suspend/cancel license/authority

- concurrently vested with the POEA and the SOLE

1st Semester, SY 2021-2022 ~ labor omnia vincit ~ Atty. Maan Grace B. Elago