BRIEFING O N D OL E

D.O.174
L UT ION S PLU S , IN C .,
PL A C E CO MPLIA N C E & SO
WORK
 CONTRACTING ENVIRONMENT

• CHAPTER III (CONDITIONS OF WORK), ARTICLE 106-109 OF THE LABOR CODE (WAGES)
EMPOWERS SECLAB TO RESTRICT OR PROHIBIT CONTRACTING OF LABOR TO PROTECT
WORKERS’ RIGHTS.

• THERE IS A SOLIDARY LIABILITY BETWEEN A PRINCIPAL & A CONTRACTOR

• DEFINITION OF LABOR-ONLY CONTRACTING
 PREVIOUS ORDERS-D.O.10-97

• ALLOWED LEGITIMATE CONTRACTING FOR BUSINESS EXPANSION & ADAPTATION

(EMPLOYMENT CREATION)

• Allows occasional employment for intro of new products (promotions), display of products (marketing)
• Premised on contracting activity not directly related to main business of principal
• Requires specialized skills to be provided by contractor
• In an LOC case, contractor employees becomes employees of principal
 PREVIOUS ORDERS

• 2001-D.O. NO. 3.-ELIMINATED CONTRACTING; REVOKED PREVIOUS D.O.10-97

• 2002-D.O. 18-INCLUDED ELEMENT OF CONTROL IN L.O.C.; LISTED OTHER
PROHIBITED EMPLOYMENT ARRANGEMENTS; RE-INTRODUCED SOLIDARY
LIABILITY OF PRINCIPAL WITH CONTRACTOR.

• 2011-D.O. 18-A-REPEATED CONTENTS OF D.O.18, IMPOSED CONTRACTOR’S

REGISTRATION FEE.
INTENT OF DOLE ORDER 174-17

• INCREASE LEVEL OF AWARENESS ON THE CONSTITUTIONAL RIGHT OF

WORKERS TO SECURITY OF TENURE

• GOVERN SITUATIONS WHERE A PRINCIPAL ASSIGNS A PART OF THE BUSINESS

TO BE PERFORMED BY A CONTRACTOR OR A SUB-CON, WITH EMPLOYEES

• PASS-ON THE RESPONSIBILITY TO THE PRINCIPAL TO EXERCISE OVERSIGHT

OVER THE CONTRACTOR TO COMPLY WITH LABOR LAWS ON ITS EMPLOYEES

• MAKE THE PRINCIPAL ACCOUNTABLE FOR VIOLATION OF ITS CONTRACTOR OF

THE LABOR LAWS
 ACCOUNTABILITY OF PRINCIPAL
(FAILURE OF OVERSIGHT)

Contractor does
not fulfil
Contractor violates Contractor fails
employment
labor laws LOC test
contract with
worker

Contractor does Principal enters

not perform into a contract
contract per with delisted
Service Agreement contractor
 REITERATION OF PRINCIPAL’S LIABILITY
(PRINCIPAL, CONSIGNOR, LOCATOR)

• SEC.7.
WHEN CONTRACTOR, SUB-CONTRACTOR OR SERVICE PROVIDER IS
ENGAGED IN L.O.C.(SEC 5) & OTHER PROHIBITED ACT (SEC. 6), PRINCIPAL
BECOMES THE EMPLOYER

• SEC 9. PRINCIPAL IS SOLIDARILY LIABLE TO EMPLOYEES OF PROVIDERS FOR

THEIR FAILURE TO PAY WAGE & FOR ANY VIOLATION OF THE LABOR CODE, TO
THE EXTENT OF CONTRACTED WORK UNDER THE EMPLOYMENT CONTRACT.
 WHAT IS CONTRACTING?

• A PRINCIPAL FARMS OUT WITH A CONTRACTOR, THE PERFORMANCE OR COMPLETION OF

A SPECIFIC(A) JOB, (B)WORK OR (C)SERVICE, WITHIN A (D)DEFINITE OR PREDETERMINED
PERIOD, REGARDLESS OF WHETHER SUCH JOB, WORK OR SERVICE IS TO BE PERFORMED
OR COMPLETED (E)WITHIN OR OUTSIDE THE PREMISES OF THE PRINCIPAL.

• A,B,C, REFERS TO TYPE OR KIND OF ACTIVITY

• D, TIME-BOUND
• E, LOCATION
PROHIBITED LABOR-ONLY CONTRACTING

Insufficien
t capital
OR

Contractor
No
is de-
investment
listed,
in equipt,
principal
tools, etc.
absorbs
AND
employees

Employees
No control do work of
on employees principal
 OTHER PROHIBITED PRACTICES

• CABO (GUISE OF LABOR ORGANIZATION, COOPERATIVE OR OTHER ENTITY THAT SUPPLIES WORKERS)
• IN-HOUSE AGENCY (OR COOPERATIVE THAT IS A LABOR SUPPLIER)
• CONTRACTING OUT DURING STRIKE/LOCKOUT, UNION SHOPS, OCCUPIED REGULAR POSITIONS
• EMPLOYMENT DOCUMENTARY PRE-CONDITIONS THAT ARE PRE-JUDICIAL TO THE INTEREST OF
WORKERS(ANTEDATED RESIGNATION, WAIVERS, ETC), OR MEMBERSHIP TO A COOPERATIVE) BEFORE
EMPLOYMENT

• REPEATED HIRING ON SHORT-DURATION CONTRACTS (555, ENDO), CIRCUMVENT SOT

• EMPLOYMENT SHORTER THAN SERVICE AGREEMENT OF CONTRACTOR TO PRINCIPAL;
 Contractor able
to perform

LEGITIMATE activity at his

own accord

JOB Capital of
CONTRACTING contractor
is sufficient
SEC. 8. PERMISSIBLE CONTRACTING
OR SUB-CONTRACTING Contractor
controls the
ARRANGEMENT assigned
activity

Compliant
with labor
standards
 SERVICE
CONTRACT Terms &
conditions,
Place of Description Performanc
ESSENTIAL ELEMENTS OF A contract
work & of work e or surety
amount,
SERVICE CONTRACT (REQUIRED TO BE duration bond
10%+
PRESENTED TO AN LLCO) admin fees
CONTRACT SHALL ENSURE COMPLIANCE
WITH ALL RIGHTS & BENEFITS OF
EMPLOYEES UNDER THE LABOR LAW
EMPLOYMENT Job description

CONTRACT
PART OF THE REQUIRED Wage Place of work
CONTRACTS UNDER THE
DEPARTMENT ORDER
Terms &
conditions of
employment
 • SAFE & HEALTHFUL WORK CONDITIONS
(OSH)

RIGHTS OF • LABOR STANDARDS (SIL, REST DAYS, OT

PAY, HOLIDAY PAY, 13TH MO.,SEPARATION
EMPLOYEES
PAY)
*SECURITY OF TENURE*
• SSS RETIREMENT BENEFITS OR
CONTRACTORS’ RETIREMENT PROGRAM

• SSS AND WELFARE BENEFITS

• SELF-ORGANIZATION
REGISTRATION OF CONTRACTORS

• NAME & ADDRESS OF APPLICANT, NATURE OF BUSINESS

• NUMBER OF REGULAR WORKERS & TOTAL WORKFORCE
• CLIENTS LIST, NO.OF WORKERS, & TYPE OF SERVICE TO PROVIDE
• DESCRIPTION OF PHASES OF CONTRACT & NO.OF EMPLOYEES
• PROOF OF SUBSTANTIAL CAPITAL COMPLIANCE
GROUNDS FOR CANCELLATION
Did not submit
Service Agreement

Did not submit semi-Annual

Report

Final LOC Findings

Did not follow

Labor Standards

Violated the Labor Code

CONTRACTOR’S CANCELLATION TIMELINE(33D)

7 calendar days clarificatory hearing, counter

• Affidavit, rectify/correct

7 workdays to answer/affidavit

10 calendar days terminate

hearing

7 days to resolve
case
APPEAL TIMELINE (56D)

30
workdays
for OSEC
to resolve

10 days to
appeal
EFFECTIVITY & EFFECTS

• EFFECTIVE FROM 03 APRIL 2017

• D.O. 162-16 (SUSPENSION OF REGISTRATION OF NEW APPLICANT) IS LIFTED
• REGISTATION UNDER 18-A SHALL REMAIN VALID UNTIL EXPIRATION
• APPLICATION FOR RENEWAL FILED BEFORE 03APR17 SHALL BE PROCESSED
UNDER 18-A-11

• CONTRACTS & AGREEMENTS EXECUTED UNDER 18-A SHALL BE RESPECTED

UNTIL EXPIRATION
EFFECT
• RESOLUTION OF PENDING GLS CASES BEFORE 03APR17 SHALL BE
GOVERNED BY 18-A

• ON CROSS-REGIONAL OPERATION BY CONTRACTORS; SUBMISSION OF

AUTHENTICATED COPY OF C.O.R.FROM MAIN OFFICE LOCATION, TO THE
REGION OF OPERATION, WITH COPY OF SERVICE AGREEMENT

• THERE WILL BE A REGISTRY OF LEGITIMATE

CONTRACTORS/SUBCON/SERVICE PROVIDERS IN THE REGIONS