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COMPARATIVE ANALYSIS

dole D.O. 18-A and dole d.o. 174


LABOR CODE DOLE DEPARTMENT ORDER NO. DOLE DEPARTMENT ORDER NO.
18-A, Series of 2011 174, Series of 2017

Art. 106. Contractor or (a) Bond/s refers to the Section 3. Definition of Terms.
(a) Bond refers to the bond
subcontractor. Whenever bond under Article 108 of under Art. 108 of the Labor
an employer enters into a the Labor Code that the Code that the principal may
contract with another principal may require from require from the contractor to be
posted equal to the cost of labor
person for the performance the contractor to be posted under contract.
of the formers work, the equal to the cost of labor (g) In-house cooperative
employees of the under contract. The same refers to a cooperative which is
managed, or controlled directly or
contractor and of the may also refer to the indirectly by the principal or one
latters subcontractor, if security or guarantee where the principal or any of its
any, shall be paid in posted by the principal for officers owns/represents any
equity or interest, and which
accordance with the the payment of the services operates solely or mainly for the
provisions of this Code. of the contractors under the principal.
Service Agreement.
In the event that the (l) Substantial capital (l) Substantial capital
contractor or subcontractor refers to paid-up capital refers to paid-up capital
fails to pay the wages of his stocks/shares of at least stock/shares at least Five
employees in accordance Three Million Pesos Million Pesos
with this Code, the (P3,000,000.00) in the case (P5,000,000.00) in the case
employer shall be jointly of corporations, of corporations,
and severally liable with his partnerships and partnerships and
contractor or subcontractor cooperatives; in the case of cooperatives; in the case of
to such employees to the single proprietorship, a net single proprietorship, a net
extent of the work worth of at least Three worth of at least Five Million
performed under the Million Pesos Pesos (P5,000,000.00).
contract, in the same (P3,000,000.00).
manner and extent that he
is liable to employees
directly employed by him.
The Secretary of Labor and Section 6. Prohibition against labor- Section 5. Absolute Prohibition against
Employment may, by only contracting. Labor-only Labor-only Contracting. Labor-only
contracting is hereby declared contracting, which is totally prohibited,
appropriate regulations, restrict refers to an arrangement where:
prohibited. For this purpose, labor
or prohibit the contracting-out of
only contracting shall refer to an
labor to protect the rights of arrangement where: a) i. The contractor or subcontractor
workers established under this does not have substantial capital,
Code. In so prohibiting or or
(a) The contractor does not have
restricting, he may make substantial capital or investments in ii. The contractor or
appropriate distinctions between the form of tools, equipment, subcontractor does not have
labor-only contracting and job machineries, work premises, among investments in the form of tools,
contracting as well as others, and the employees recruited equipment, machineries,
and placed are performing activities supervision, work premises,
differentiations within these
which are usually necessary or among others,
types of contracting and desirable to the operation of the and
determine who among the company, or directly related to the
parties involved shall be main business of the principal within iii. The contractors or
considered the employer for a definite or predetermined period, subcontractors employees
purposes of this Code, to regardless of whether such job, work recruited and placed are
or service is to be performed or performing activities which are
prevent any violation or directly related to the main
circumvention of any provision of completed within or outside the
business operation of the
premises of the principal; or
this Code. principal.
Or
(b) The contractor does not exercise
the right to control over the b) The contractor or subcontractor
performance of the work of the does not exercise the right to
employee. control over the performance of
the work of the employee.
There is "labor-only" contracting Section 7. Other Prohibitions. Notwithstanding Section 6. Other Illicit Forms of Employment
Section 6 of these Rules, the following are Arrangements.
where the person supplying hereby declared prohibited for being contrary to In addition to Section 5 of these Rules, the
workers to an employer does not law or public policy: following are hereby declared prohibited for
have substantial capital or A. Contracting out of jobs, works or services
being contrary to the law or public policy:
investment in the form of tools, when not done in good faith and not justified by
a) When the principal farms out work to a
equipment, machineries, work the exigencies of the business such as the
following: Cabo.
premises, among others, and the
workers recruited and placed by (1) Contracting out of jobs, works or services b) Contracting out of job or work through
when the same results in the termination or an in-house agency.
such person are performing
reduction of regular employees and reduction of
activities which are directly related work hours or reduction or splitting of the c) Contracting out of job or work through
to the principal business of such bargaining unit. an in-house cooperative which merely
employer. In such cases, the supplies workers to the principal.
(2) Contracting out of work with a Cabo.
person or intermediary shall be d) Contracting out of a job or work by
considered merely as an agent of (3) Taking undue advantage of the economic reason of a strike or lockout whether
situation or lack of bargaining strength of the
the employer who shall be actual or imminent.
contractors employees, or undermining their
responsible to the workers in the security of tenure or basic rights, or
e) Contracting out of a job or work being
circumventing the provisions of regular
same manner and extent as if the employment, in any of the following instances: performed by union members and such
latter were directly employed by will interfere, restrain or coerce
him. (i) Requiring them to perform functions which are employees in the exercise of their rights
currently being performed by the regular to self-organization as provided in
employees of the principal; and Article 259 of the Labor Code, as
amended.
(ii) Requiring them to sign, as a precondition to
employment or continued employment, an f) Requiring the
antedated resignation letter; a blank payroll; a contractors/subcontractors employees
waiver of labor standards including minimum to perform functions which are currently
wages and social or welfare benefits; or a
being performed by the regular
quitclaim releasing the principal, contractor or
employees of the principal.
from any liability as to payment of future claims.
(4) Contracting out of a job, work or service
g) Requiring the
through an in-house agency.
contractors/subcontractors employees
to sign, as a precondition to employment
(5) Contracting out of a job, work or service
or continued employment, an antedated
that is necessary or desirable or directly
resignation, letter; a blank payroll; a
related to the business or operation of the
waiver of labor standards including
principal by reason of a strike or lockout
minimum wages and social or welfare
whether actual or imminent.
benefits; or a quitclaim releasing the
principal or contractor from liability as to
(6) Contracting out of a job, work or service
payment of future claims; or require the
being performed by union members when
employee to become member of a
such will interfere with, restrain or coerce
cooperative.
employees in the exercise of their rights to
self-organization as provided in Art. 248 (c) of
h) Repeated hiring by the
the Labor Code, as amended.
contractor/subcontractor of employees
under an employment contract of short
(7) Repeated hiring of employees under an
duration.
employment contract of short duration or
under a Service Agreement of short duration
i) Requiring employees under a
with the same or different contractors, which
contracting/subcontracting arrangement
circumvents the Labor Code provisions on
to sign a contract fixing the period of
Security of Tenure.
employment to a term shorter than the
term of the Service Agreement, unless
(8) Requiring employees under a
the contract is divisible into phases for
subcontracting arrangement to sign a contract
which substantially different skills are
fixing the period of employment to a term
required and this is made known to the
shorter than the term of the Service
employee at the time of engagement.
Agreement, unless the contract is divisible into
phases for which substantially different skills
are required and
this is made known to the employee at the time of
engagement.
j) Such other practices, schemes or
(9) Refusal to provide a copy of the Service
employment arrangements designed to
Agreement and the employment contracts
circumvent the right of workers to security of
between the contractor and the employees
tenure.
deployed to work in the bargaining unit of the
principals certified bargaining agent to the sole
and exclusive bargaining agent (SEBA).

(10) Engaging or maintaining by the principal of


subcontracted employees in
excess of those provided for in the applicable
Collective Bargaining
Agreement (CBA) or as set by the Industry
Tripartite Council (ITC).

B. Contracting out of jobs, works or services


analogous to the above when not done in good
faith and not justified by the exigencies of the
business.
Section 11. Required Contracts under these
Rules.
Section 9. Required contracts under these Rules.

b) Service Agreement between the


(b) Service Agreement between the principal and
principal and the contractor. The Service
the contractor. The Service Agreement shall
Agreement shall include the following:
include the following:
i. The specific description of the job, work or
i. The specific description of the job or work
service being subcontracted.
being
ii. The place of work and terms and conditions
governing the contracting arrangement, to
include the agreed amount of the services to be
rendered, the standard administrative fee of not
less than ten percent (10%) of the total contract
cost.
subcontracted, including its term or
iii. Provisions ensuring compliance with all the
duration;
rights and benefits of the employees under the
Labor Code and these Rules on: provision for ii. The place or work and terms and
safe and healthful working conditions; labor conditions governing the
standards such as, service incentive leave, rest contracting arrangement, to include
days, overtime pay, 13th month pay and the agreed amount of the
separation pay; retirement benefits; contributions contracted job or work as well as
and remittance of SSS, Philhealth, PagIbig Fund, the standard administrative fee of
and other welfare benefits; the right to self- not less than ten percent (10%) of
organization, collective bargaining and peaceful the of the total contract cost; and
concerted action; and the right to security of
tenure. iii. A provision on the issuance of the
bond/s as defined in Section 3(a)
iv. A provision on the Net Financial Contracting
renewable every year.
Capacity of the contractor, which must be equal
to the total contract cost.

v. A provision on the issuance of the bond/s as


defined in Section 3(m) renewable every year.

vi. The contractor or subcontractor shall directly


remit monthly the employers share and
employees contribution to the SSS, ECC,
Philhealth and Pag-ibig.
vii. The term or duration of engagement.

The Service Agreement must conform to the


DOLE Standard Computation and Standard
Service Agreement,
which form part of these Rules as Annexes
A and B.

Section 18. Approval or denial of the application. The Section 18. Approval or Denial of the Application.
Regional Office shall deny or approve the application The Regional Office shall deny or approve the
within one (1) working day after the verification application within three (3) working day after the
inspection. verification inspection.
Applications that fail to meet the requirements set
forth in Section 15 of these Rules shall be denied. Applications that fail to meet the requirements set
forth in Section 15 of these Rules shall be denied.

Section 19. Registration Fee. Payment of registration


Section 19. Registration fee. Payment of registration fee of One Hundred Thousand Pesos (P100,000.00)
fee of Twenty-Five Thousand Pesos (P25,000.00) shall be required upon approval of the application.
shall be required upon approval of the application.
Upon registration, the Regional Office shall return one Upon registration, the Regional Office shall return one
set of the duly-stamped application documents to the set of the duly-stamped application documents to the
applicant, retain one set for its file, and transmit the applicant and retain one set for its file, and transmit
remaining set to the Bureau of Working Conditions the remaining set to the Bureau of Working Conditions
(BWC) within five (5) days from registration. (BWC) within five (5) days from registration.

Section 20. Validity of Certificate of Registration.


Section 20. Validity of certificate of registration of The contractor shall be deemed registered only on the
contractors. The contractor shall be deemed date of issuance of its Certificate of Registration.
registered only on the date of issuance of its
Certificate of Registration.
The Certificate of Registration shall be effective
The Certificate of Registration shall be effective
for two (2) years, unless cancelled after due
for three (3) years, unless cancelled after due
process. The same shall be valid in the region
process. The same shall be valid in the region
where its is registered.
where it is registered.
In case the contractor has Service Agreements or
In case the contractor has Service Agreements or
operates outside the jurisdiction of the Regional
operates outside the region where it is registered,
Office where it is registered, it shall request a duly
it shall request a duly authenticated copy of its
authenticated copy of its Certificate of
Certificate of Registration from the registering
Registration from the registering Regional Office
Regional Office and submit the same to the
and submit same to the DOLE Regional Office
DOLE Regional Office where it seeks to operate,
where it seeks to operate together with a copy of
together with a copy of its Service Agreement/s in
its Service Agreement/s in the area, for purposes
the area, for purposes of monitoring compliance
monitoring compliance with these Rules.
with these Rules.

Section 21. Renewal of registration. All registered


Section 21. Renewal of Registration. All
contractors shall apply for renewal of their
registered contractors shall apply for renewal of
Certificates of Registration thirty (30) days before
their Certificates of Registration thirty (30) days
the expiration of their registration to remain in the
before the expiration of their registration to remain
roster of legitimate service contractors. The
in the roster of legitimate service contractors. The
applicant shall pay a registration renewal fee of
applicant shall pay a registration renewal fee of
Twenty-Five Thousand Pesos (P25,000.00) to the
One Hundred Thousand Pesos (P100,000.00) to
DOLE Regional Office.
the DOLE Regional Office.
Copies of all the updated supporting documents
in letters (a) to (e) of Section 15 hereof shall be
Copies of all the updated supporting documents
attached to the duly accomplished application
in letters (a) to (e) of Section 15 hereof shall be
form, including the following:
attached to the duly accomplished application
(a) Certificate of membership and proof of
form, including the following:
payment of SSS, Philhealth, BIR, ECC and Pag-
Ibig contributions for the last three (3) years, as
well as loan amortizations; and (a) Certificate of membership and proof
(b) Certificate of pending or no pending labor of payment of SSS, Philhealth, BIR, ECC and
standards violation case/s with the National Labor Pag-IBIG contributions for the last three (3) years,
Relations Commission (NLRC) and Department as well as loan amortization; and
of Labor and Employment (DOLE). The pendency (b) Certificate of pending or no pending
of a case will not prejudice the renewal of the labor standards violation case/s with the National
registration, unless there is a finding of violation Labor Relations Commission (NLRC) and
of labor standards by the DOLE Regional Department of Labor and Employment (DOLE).
Director. The pendency of a case will not prejudice the
renewal of the registration, unless there is a
finding of violation of labor standards by the
DOLE Regional Director.

Section 23. Grounds for cancellation of Section 23. Grounds for Cancellation of
registration. The Regional Director shall, upon a Registration.
verified complaint, cancel or revoke the The Regional Director shall, upon verified
registration of a contractor after due process, complaint, cancel or revoke the registration of a
based on any of the following grounds: contractor after due process, based on any of the
(a) Misrepresentation of facts in the application; following grounds:
(b) Submission of a falsified or tampered
application or supporting documents to the a. Misrepresentation of facts in the application;
application for registration; b. Submission of falsified or tampered application
(c) Non-submission of Service Agreement or supporting documents to the application for
between the principal and the contractor when registration;
required to do so; c. Non-submission of Service Agreement
(d) Non-submission of the required semi-annual between the principal
report as
provided in Section 22 (Semi-annual reporting)
hereof; and the contractor when required to do so;
(e) Findings through arbitration that the d. Non-submission of the required semi-
contractor has engaged in labor-only annual report as provided in Section 22 (Semi-
contracting and/or the prohibited activities as Annual reporting) thereof;
provided in Section 7 (Other Prohibitions) e. Final findings that the contractor has
engaged in labor-only contracting and/or other
hereof;
illicit forms of employment arrangements as
(f) Non-compliance with labor standards and provided in Section 6 hereof;
working conditions; f. Non-compliance with labor standards
(g) Findings of violation of Section 8 (Rights of and working conditions;
contractors employees) or Section 9 g. Findings of violation of Section 10
(Required contracts) of these Rules; (Rights of contractors employees), and Section
(h) Non-compliance with SSS, the HDMF, 11 (Required contracts);
Pag-Ibig, Philhealth, and ECC laws; and h. Non-compliance with SSS, the
(i) Collecting any fees not authorized by law HDMF, Pag-IBIG, PhilHealth, and ECC Laws;
and other applicable rules and regulations. i. Collecting any fees not authorized by
law and other applicable ruels and regulations;
and
j. Violations of any provisions of the
Labor Code.

Section 24. Due Process in Cancellation of


Section 24. Due process in cancellation of Registration.
registration. Complaint/s based on any of the Complaint/s based on any of the the grounds
grounds enumerated in the preceding Section enumerated in the preceding Section against the
against the contractor shall be filed in writing contractor shall be filed in writing and under oath
and
under oath with the Regional Office which issued
with the Regional Office which issued the
the Certificate of Registration.
Certificate of Registration.
The complaint/s shall state the following:
The complaint/s shall state the following:
(a) The name/s and address/es of the
complainant/s;
(a) The name/s and address/es of the
(b) Name and address of the contractor;
complainant/s;
(c) The ground/s for cancellation;
(b) Name and address of the contractor;
(d) When and where the action complained of
(c) The grounds;
happened;
(d) When and where the action complained of
(e) The amount of money claim, if any; and
happened;
(f) The relief/s sought.
(e) The amount of claim, if any; and
(f) The relief sought.
Upon receipt of the complaint, the Regional
Director shall direct the contractor, with notice to
Upon receipt of the complaint, the Regional
the complainant, to file a verified answer/counter
Director shall direct, with notice to the
affidavit within ten (10) calendar days without
complainant to file a verified answer/counter
extension, incorporating therein all pertinent
affidavit within seven (7) working days without
documents in support of his/her defenses, with
extension, incorporating therein all pertinent
proof of service of a copy to the complainant.
documents in support of his or her defense, with
Failure to file an answer/counter affidavit shall
proof of service of a copy to the complainant.
constitute a waiver on the part of the respondent.
Failure to file an answer/counter affidavit shall
No motion to dismiss shall be entertained.
constitute a waiver on the part of the respondent.
No motion to dismiss shall be entertained.
The Regional Director or his duly authorized
representative may conduct a clarificatory hearing
The Regional Director or his or her duly
within the prescribed ten (10) calendar days
authorized representative may conduct a
within which to file a verified answer/counter
clarificatory hearing within seven (7) calendar
affidavit.
days within which to file a verified answer/counter
affidavit.
Within the said ten (10) calendar days period, the
contractor shall make the necessary
Within the said seven (7) calendar days period,
corrections/rectifications on the violations that are
the
immediately rectifiable upon
its own initiative in order to be fully compliant. contractor shall make necessary
The Regional Director may avail himself of all corrections/rectifications on the violations that are
reasonable means to ascertain the facts of the immediately rectifiable upon its initiative in order
case, including conduct of inspection, where to be fully compliant.
appropriate, and examination of informed
persons. The Regional Director may avail himself of all
The proceedings before the Regional Office shall reasonable means to ascertain the facts of the
be summary in nature. case, including conduct of inspection, where
The conduct of hearings shall be terminated appropriate, and examination of informed
within fifteen (15) calendar days from the first persons.
scheduled clarificatory hearing. The Regional
Director shall resolve the case within ten (10) The proceedings before the Regional Office shall
working days from the date of the last hearing. If be summary in nature.
there is no necessity to conduct a hearing, the
case shall be resolved within ten (10) working The conduct of hearings shall be terminated
days from receipt of the verified answer/counter within ten (10) calendar days from the first
affidavit. scheduled clarificatory hearing. The Regional
Any motion for reconsideration from the Order of Director shall resolve the case within seven (7)
the Regional Director shall be treated as an working days from the date of the last hearing. If
appeal. there is no necessity to conduct a hearing, the
case shall be resolved within seven (7) working
days from receipt of the verified answer/counter
affidavit.

Any motion for reconsideration of the Order of the


Regional Director shall be treated as an appeal.

Section 26. Effects of Cancellation of


Section 26. Effects of cancellation of Registration. A final Order of cancellation shall
registration. A final Order of cancellation shall divest the contractor of its legitimate status to
divest the contractor of its legitimate status to engage in contracting/subcontracting.
engage in contracting/subcontracting.
Such Order of cancellation shall be a ground to
Such Order of cancellation shall be a ground deny registration an application for renewal of
to deny an application for renewal of registration to a contractor under the Rules.
registration to a contractor under the Rules.
No contractor whose registration is cancelled
The cancellation of the registration of the under these Rules or any of its officers shall be
contractor for engaging in labor-only allowed to operate, and apply for new registration
contracting or for violation of any of the as contractor under either the same or different
provisions of these Rules involving a particular name.
Service Agreement will not, however, impair
The cancellation of the registration of the
the validity of existing legitimate job-
contractor for engaging in labor-only contracting
contracting arrangements the contractor may or for violation of any of the provisions of these
have entered into with other principals prior to Rules involving a particular service agreement will
the cancellation of its registration. not, however, impair the validity of existing
legitimate job-contracting arrangements the
Any valid and subsisting Service Agreement contractor may have entered into with other
shall be respected until its expiration; principal prior to the cancellation of its
thereafter, contracting with a delisted registration. Any valid and subsisting Service
contractor shall make the principal direct Agreement shall be respected until its expiration;
employer of all employees under the Service thereafter, contracting with a delisted contractor
Agreement pursuant to Articles 106 and 109 of shall make the principal direct employer of all
the Labor Code. employees under the Service Agreement
pursuant to Articles 106 to 109 of the Labor Code,
as amended.