Case Study on Jollibee Foods Corporation (JFC)
Labor Scandal
I. Background of the Company
Jollibee Foods Corporation (JFC) is the largest fast-food chain in the
Philippines and a significant player in the global fast-food industry. Founded in 1978,
Jollibee has expanded its operations internationally, acquiring various food brands such
as Chowking, Mang Inasal, and The Coffee Bean & Tea Leaf. The company is well
known for its Filipino-style fried chicken (Chickenjoy) and sweet-style spaghetti.
II. Description of the Corporate Governance Scandal or Failure
A. Key Players: Jollibee Foods Corporation Management, Department of
Labor and Employment (DOLE) and Third-party service contractors
B. Timeline of Event
Date Event Description Remarks
April 4, 2018 DOLE ordered JFC to regularize 6,482 Start of controversy
workers
May 28,2018 DOLE identified JFC as a top violator of labor Public scrutiny
laws increased
July 16, Legislative inquiry into JFC's labor practices Call for labor reform
2018
C. Nature of violations
The violation at center involved illegal labor-only contracting because
workers through temporary contractors completed crucial operational
tasks for JFC. Labor laws of the Philippines prohibited this practice by
mandating regular status and complete benefits and job security for such
workers.
III. Impact of the Scandal or Failure
● Consequences for the Company
○ Financial Losses: JFC was fined and required to adjust its
employment policies, leading to additional labor costs.
○ Stock Price and Investor Confidence: The issues led to a
short-term decline in stock value, raising governance concerns.
○ Legal Repercussions: The Philippine government and labor
organizations increased their scrutiny of Jollibee’s labor policies.
● Effects on Stakeholders
○ Employee: Thousands of contractual workers experienced
employment uncertainty because labor rights groups demanded
improved workplace conditions for Jollibee employees.
○ Investors: The order prompted investors to worry about Jollibee's
expense model and additional financial obligations.
○ Regulators: DOLE increased its inspections on other fast-food
chains for the purpose of implementing labor regulations with
greater intensity.
● Damage to Reputation and Brand Image
○ Media Exposure and Public Scrutiny: The scandal received
widespread media coverage, with news reports, investigations, and
social media discussions portraying Jollibee as a labor law violator.
This pressured the company to respond publicly.
○ Consumer Trust and Loyalty Issues: Jollibee has a strong
customer base, but the labor controversy raised ethical concerns.
Some consumers, especially those who support fair labor practices,
may have questioned their loyalty to the brand, especially when
Jollibee initially appealed DOLE’s order instead of complying.
○ Employer Reputation Impact: The issue hurt Jollibee’s image as
a good employer. Job seekers looking for stable and fair
employment may have viewed the company negatively, making it
harder to attract and retain workers in the short term.
IV. Response to the Scandal
● Appeal Against DOLE’s Order: Jollibee filed an appeal against the Department of
Labor and Employment (DOLE) to regularize over 6,000 workers.
● Termination of Contracts with Service Providers: In response to DOLE’s ruling,
Jollibee ended contracts with certain labor contractors.
● Compliance with DOLE’s Regulations: The company reviewed its labor practices
to align with DOLE regulations.
V. Analysis of the Governance Failure
● Corporate Governance Structure Before the Scandal:
○ The corporate governance structure of Jollibee involved using labor
outsourcing through independent providers which remains
applicable throughout Philippine labor markets even though it
receives widespread opposition.
● Principles Violated:
○ Stakeholder Rights:Company practices involving contractual
workers violated the rights of stakeholders along with employee job
security and rights protections.
○ Transparency: Labor law compliance along with employment
practice disclosure became points of concern regarding Jollibee's
transparency operations.
○ Accountability: Undeterminable responsibility between Jollibee
and third-party labor providers caused employment condition
accountability issues.
● Ethical and Cultural Factors:
○ The case presented the ethical issue of end-of-contract
employment also known as ‘endo’ through which employers recruit
temporary workers as a means to circumvent employee benefit
regulations.
VI. Lesson Learned
A. Insights of the Scandal
● Businesses must enforce proper ethical labor standards together
with absolute compliance to labor regulations.
● Third-party contractor arrangements need to implement strong
monitoring systems for success.
B. Recommendations for improving Corporate Governance
● Company executives need to perform periodic audits of their
service providers to validate their adherence to regulations.
● A strong internal governance system needs implementation to
achieve transparency and accountability measures.
C. Best practices for Prevention
● Employees must have access to organized systems which allow
them to disclose unethical work practices.
● The company must deliver periodic training sessions about labor
law regulations to both management personnel and all staff
members.
VII. Conclusion
The labor scandal experienced by Jollibee Foods Corporation demonstrates why
firms must hold responsibility for their labor practices. Although the company
remedied the problems the scandal demonstrated that companies should
establish better management frameworks and employ responsible labor
practices. Through this experience, JFC should develop its commitment toward
maintaining employee welfare alongside sustainable business expansion.
VIII. References
TED CORDERO,GMA News & TED CORDERO, GMA News. (2018b, April 4). DOLE
orders Jollibee to regularize 7,000 workers. GMA News Online.
https://www.gmanetwork.com/news/money/companies/648835/dole-orders-jollibee-to-re
gularize-7-000-workers/story/
ABS-CBN News. (2024b, November 11). Jollibee, Burger King told to regularize 7,000
employees | ABS-CBN News. ABS-CBN.
https://www.abs-cbn.com/business/04/04/18/jollibee-burger-king-told-to-regularize-7000
-employees
Keith a. Calayag, & Keith a. Calayag. (2018b, July 17). Probe sought on Jollibee labor
practices. SunStar Publishing Inc.
https://www.sunstar.com.ph/manila/probe-sought-on-jollibee-labor-practices
