The new Department of Labor and Employment or DOLE’s Department Order No. 174, Series of 2017, or the Rules Implementing Articles 106 to 109 of the Labor Code of the Philippines, as amended, also known as the new Rules on Contracting or Subcontracting Arrangement, already took effect last April 3, 2017, according to DOLE 6 Regional Director Henry John S. Jalbuena.
Jalbuena disclosed that the new DO did not abolish contractualization but it restricts or prohibits further the contracting out of workers, as well as other practices, schemes and arrangements which are contrary to law or public policy.
Labor-only contracting, which is totally prohibited by law, refers to an arrangement where the contractor or subcontractor does not have substantial capital, or investments in the form of tools, equipment, machineries, supervision, work premises, among others; and the contractor’s or subcontractor’s employees recruited and placed are performing activities which are directly related to the main business operation of the principal.
The new DO also expanded the illicit forms of employment arrangement such as contracting out of work to an in-house cooperatives; requiring employees to become members of the cooperatives; and, other schemes, practices or arrangements designed to circumvent the worker’s right to security of tenure.
Jalbuena also disclosed that in the new DO, the provision that employment contract is co-terminus with the Service Agreement is removed.
In case of expiration of the Service Agreement, the contractor or subcontractor should provide the affected employee with new employment within three months. Failure to provide employment to the affected employee within that period entitles the latter to payment of a separation pay without prejudice to his/her entitlement to other benefits, including retirement benefits whenever is applicable, he said.
With the effectivity of this new Rules, DO 162, Series of 2016, which suspends the registration of new applicants as contractor or subcontractor under DO 18-A, is lifted.
New applicant-contractor or subcontractor may already register with the DOLE Regional Office where it operates and pay P100,000.00 registration fee upon registration.
All persons or entities acting as contractors or subcontractors are mandated to register with the DOLE Regional Office where it operates.
“Unregistered contractors or subcontractors are presumed engaged in labor-only contracting,” Jalbuena said.
Contractors/subcontractors with existing Certificates of Registration under DO 18-A, Series of 2011 will remain valid until its expiration and need not have to apply for renewal under DO 174, Series of 2017.
Meanwhile, those with pending application for renewal of Certificate of Registration under DO18-A filed before the effectivity date of DO 174, or before April 3, 2017 shall be processed in accordance with the provision of the DO 18-A.
Other important features of the new DO are the validity of the Certificate of Registration which shortened from three to two years, and the substantial capital of the contractors or subcontractor which was increased from P3-million to P5-million.
Jalbuena thus encouraged those with expired registration as well as those with expiring registration to register as new applicant-contractor/subcontractor under DO 174, Series of 2017 to remain in the roster of legitimate contractors/subcontractors in the Region.
The DOLE 6 will soon publish in the local newspapers the list of contractors or subcontractors with expired or expiring registration based on the Registry of Legitimate Contractors and Subcontractors for the information of the public.