By Dia Jhelah Rojo
Abstract
Most Filipino government workers have been subject to contractualization or endo contractualization, which refers to a short-term employment practice in the Philippines. Such employment started during the Marcos administration in 1974, when a decree was passed that gave the provisions and grounds for the contractualization of workers in the Philippines. Contractualization slows down the economy due to the termination of workers every 5 to 6 months, making them jobless. No employee benefits, low pay and employee manipulation which creates a disruptive workplace environment. However, the Makabayan bloc in the House of Representatives filed a “proworker” bill that seeks to end all forms of contractual arrangements, which they said violate laborers’ constitutional right to security of tenure. House Bill 2173 seeks to ban all kinds of contractualization, fixed-term employment, job contracting and the direct hiring of contractual workers which the proposal classifies as unfair labor practices. The said bill covers the security of tenure of all Filipino workers. Pursuant to Article XIII Section 3 of the 1987 Constitution which states that “The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all. It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled to security of tenure, humane conditions of work, and a living wage. They shall also participate in policy and decision-making processes affecting their rights and benefits as may be provided by law. The State shall promote the principle of shared responsibility between workers and employers and the preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce their mutual compliance therewith to foster industrial peace. The State shall regulate the relations between workers and employers, recognizing the right of labor to its just share in the fruits of production and the right of enterprises to reasonable returns to investments, and to expansion and growth.”
According to the government data on August 31, 2021, there were 582,378 contracts of service or job orders personnel out of the 2,337,802 government employees.
This research seeks to identify the guidelines stated in the Security of Tenure Act or the House Bill 2173 and to promulgate the advantageous outcome, not only to the Filipino people but also for the country, if such bill will be enacted.
Introduction
The contractualization started during the rule of Ferdinand Marcos when Ernesto Herrera helped in drafting Presidential Decree 442 which was eventually passed into law. Under the Labor Code of 1974, “employers are allowed to hire people under a probationary status for up to six months. These 6 months are used as a trial period for the employee. If the employee is allowed to work after the 6 month of the probationary period, he/she will be considered a regular employee.” which upon further reading continues as follows “the services of an employee who has been engaged on a probationary basis may be terminated for a just cause or when he fails to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the time of his engagement.”
During Cory Aquino’s Administration, Republic Act 6715 of 1989, also known as the Herrera Law, was passed. During the Aquino Administration, Article 279 of the Labor Code was amended. The article states that:
“In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. An Employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement.”
According to the Senate, contractualization can be referred to as the act of “subcontracting” under Articles 106 and 109 of the Labor Code of the Philippines. It can also be referred to as the wide spectrum of non-regular or irregular “precarious work”, which can include “project-based”, “seasonal”, and “casual” employees. Other variants of non-regular work arrangements pertain to “job orders”, “consultancies” and other forms of contractual arrangements which are purposefully designed to avoid or preempt the full application of security of tenure laws and the attendant benefits that flow from regular employment.
According to the Labor Code of the Philippines, A regular employee is the defined as the one who is“engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer,”
According to Global South, The estimates put the figure anywhere from 1.2 million to as many as 20 million contractual workers or non-regular workers in 2016. The low end looks at non-regular workers (which include probationary, casual, contractual or project based, seasonal workers, and apprentices/learners) in establishments with 20 or more workers (partly small, and medium to large enterprises). The higher estimate, on the other hand, looks at contractual work based on overall employment including in micro and small establishments. Contractual work therefore represents around 27-45 percent of total employment in the country.
As of August 31, 2021, there had been an estimate of 582, 378 contractual workers out of 2,337,802 government workers in the Philippines.
Contractualization deprives the people of their right to security of tenure pursuant to Article XIII Section 3 of the 1987 Constitution which states that “The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all. It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled to security of tenure, humane conditions of work, and a living wage. They shall also participate in policy and decision-making processes affecting their rights and benefits as may be provided by law. The State shall promote the principle of shared responsibility between workers and employers and the preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce their mutual compliance therewith to foster industrial peace. The State shall regulate the relations between workers and employers, recognizing the right of labor to its just share in the fruits of production and the right of enterprises to reasonable returns to investments, and to expansion and growth.”
The regularization of Filipino workers will give them their rights to enjoy the benefits of of secure and stable employment.
However, in 2022, the Makabayan bloc in the House of Representatives filed a “pro-worker” bill that seeks to end all forms of contractual arrangements, which they said violate laborer’s constitutional right to security of tenure.
House Bill 2173 seeks to ban all kinds of contractualization, fixed-term employment, job contracting and the direct hiring of contractual workers which the proposal classifies as unfair labor practices.
The proposed law also seeks to amend Article 294 of the Labor Code.
Objectives of the study
The objectives of this research are:
- To promote the importance of the right to security of tenure of every Filipino Citizen
- To identify the proposed amendments found in House Bill 2173 to the Labor Code of the Philippines
Methodology
The researcher conducts this study by using qualitative research which focuses on collecting and analyzing data. The sources to be used in this research are the 1987 Philippine Constitution, proposed House Bill 2173, Labor Code of the Philippines, and the Official Gazette. The aim is to collect and analyze data relevant to this study.
The researcher first collected data from the 1987 Philippine Constitution. Specifically Article XIII Section 3 which stated that “The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all. It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled to security of tenure, humane conditions of work, and a living wage. They shall also participate in policy and decision-making processes affecting their rights and benefits as may be provided by law. The State shall promote the principle of shared responsibility between workers and employers and the preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce their mutual compliance therewith to foster industrial peace. The State shall regulate the relations between workers and employers, recognizing the right of labor to its just share in the fruits of production and the right of enterprises to reasonable returns to investments, and to expansion and growth.”. The information collected is then compared to the Labor Code of the Philippines and the proposed House Bill 2173.
The Researcher then collected the latest data of contractual and regular government workers which is 582,378 and 2,337,802 respectively.
Together, the gathered data are then compared in order to achieve the objectives of this study.
Discussion and Findings
The Right to the Security of Tenure
This research will discuss the important topics mentioned above. Firstly, the right to the security of tenure of every Filipino citizens with regards to the proposed House Bill 2173 and in relation to the Labor Code of the Philippines.
In the said bill, workers labeled and hired in the manner of contractualization, fixed-term employment, job contracting and the direct hiring of contractual worker are considered as unfair labor practices.
The Constitution states that “The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all. It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled to security of tenure, humane conditions of work, and a living wage. They shall also participate in policy and decision-making processes affecting their rights and benefits as may be provided by law. The State shall promote the principle of shared responsibility between workers and employers and the preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce their mutual compliance therewith to foster industrial peace. The State shall regulate the relations between workers and employers, recognizing the right of labor to its just share in the fruits of production and the right of enterprises to reasonable returns to investments, and to expansion and growth.”
According to the government data as of Aug. 31, 2021, there are 582,378 contracts of service or job order personnel out of the 2,337,802 government employees.
Contractualizationas defined is “whenever an employer enters into a contract with another person for the performance of the former’s work.”. According to Senate S. No. 1499 also known as “AN ACT ERADICATING ABUSIVE CONTRACTUALIZATION PRACTICES AND PENALIZING EMPLOYERS AND CONTRACTORS WHO COMMIT SUCH ABUSES, AMENDING FOR THIS PURPOSE BOOK THREE, TITLE TWO AND BOOK SIX, TITLE I OF PRESIDENTIAL DECREE NO. 442, OTHERWISE KNOWN AS THE LABOR CODE OF THE PHILIPPINES, AS AMENDED” contractualization can also refer to the wide spectrum of non-regular or irregular “precarious work”, which can include “project-based”, “seasonal”, and “casual” employees. Other variants of non-regular work arrangements pertain to “job orders”, “consultancies” and other forms of contractual arrangements which are purposefully designed to avoid or preempt the full application of security of tenure laws and the attendant benefits that flow from regular employment.
In this regard, the contractualization, fixed-term employment, job contracting and the direct hiring of contractual workers will not provide such of their security of tenure.
Proposed Amendment on the Labor Code of the Philippines
House Bill 2173 also seeks the amendment of Article 294 of the Labor Code which states that “Security of Tenure-In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement”.
Senate S. No. 1499 also supports the said amendment.
It is stated in Senate S. No. 1499,
1. Any employee engaged for a definite period of time, under a written contract specifying the rights, terms, and conditions of employment not lower than the minimum standard set by laws or regulations, shall not be deemed a regular employee upon the expiration of said contract;
2. Subsequent engagement under any arrangement, with or without a written contract, regardless of whether the employee was directly hired or through a contractor or third party, would automatically render the employment regular: (i) when the initial contract that expired was for a period of at least six (6) months and the work desirable to the business of the employer, or (ii) when the worker has accumulated an aggregate period of at least six (6) months for successive prior contracts or arrangements of shorter duration and the work is desirable to the business
of the employer;
3. Subsequent engagement of the same employee shall deem the employee to have attained regular employment in the proper cases when the new employer is a different entity; provided, that the ownership of at least fifty percent (50%) of the total stockholding or other proprietary interest of the first and the subsequent entity belongs to one and the same juridical person or individual; or one employer exercises over the other employer complete control or domination of finances, policies, and business practices.
With regards to the dismissal of an employee with neither just cause nor due process, the regular employees who are unjustly dismissed will be restored and will be justly compensated with their privileges and benefits even when appeal is pending. The proposed amendment also seeks to provide those employees illegally dismissed with their full backwages, accrued benefits and remunerations which the law provides. As for the employers liable for the illegal termination, the fine will be double the amount of the dismissed employees’ backwages. As to the violators of the proposed law, a fine of P1 million to P10 million or six to three years of imprisonment, depending on the court.
Conclusions
Although abolishing of contractualization has been discussed multiple times, it has been agreed upon that it cannot be done immediately due to some economical issues. According to The Inquirer which was published on January 2, 2018, Some issues are: (1) regularization of employees will cost more. Since some enterprises will not be able to subsidize for the regularization. (2)Regular employees tend to become less productive and only deliver the bare minimum. (3)Less authoritarian control and management. According to some employers, it would be difficult to fire employees undeserving of the job because of the conditions stated in the Labor Code of the Philippines. (4)Regularization would provide less job for the under-skilled employees.
It is true that it is stated in the 1987 Constitution “The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all. It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled to security of tenure, humane conditions of work, and a living wage. They shall also participate in policy and decision-making processes affecting their rights and benefits as may be provided by law. The State shall promote the principle of shared responsibility between workers and employers and the preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce their mutual compliance therewith to foster industrial peace. The State shall regulate the relations between workers and employers, recognizing the right of labor to its just share in the fruits of production and the right of enterprises to reasonable returns to investments, and to expansion and growth.”, it would still take a long time for the government to implement House Bill 2173.
As to the Amendment of the Labor Code of the Philippines proposed in the Bill, Senate S. No. 1499 also supports the said amendment.
It is stated in Senate S. No. 1499,
1. Any employee engaged for a definite period of time, under a written contract specifying the rights, terms, and conditions of employment not lower than the minimum standard set by laws or regulations, shall not be deemed a regular employee upon the expiration of said contract;
2. Subsequent engagement under any arrangement, with or without a written contract, regardless of whether the employee was directly hired or through a contractor or third party, would automatically render the employment regular: (i) when the initial contract that expired was for a period of at least six (6) months and the work desirable to the business of the employer, or (ii) when the worker has accumulated an aggregate period of at least six (6) months for successive prior contracts or arrangements of shorter duration and the work is desirable to the business
of the employer;
- Subsequent engagement of the same employee shall deem the employee to have attained regular employment in the proper cases when the new employer is a different entity; provided, that the ownership of at least fifty percent (50%) of the total stockholding or other proprietary interest of the first and the subsequent entity belongs to one and the same juridical person or individual; or one employer exercises over the other employer complete control or domination of finances, policies, and business practices.
Although contractualization is not unique in The Philippines, the country still needs a law that would provide them the right to their security of tenure. This is also one way of preventing abuse and exploitation from employers. The Security of tenure is important to Filipinos since it means that the livelihood of the citizens are secured and free from termination without ‘just cause’.
Recommendations
The researcher urges the government to push through with the House Bill 2173. Although it is understood that contractualization may create more job opportunities for the unemployed. However, the downside of contractualization is that it slows down the economy due to the termination of workers every six months.
As to the security of tenure of the employees, the Filipino people has all the right of such since it is stated in Article XIII Section 3 of the 1987 Constitution which states that “The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all. It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled to security of tenure, humane conditions of work, and a living wage. They shall also participate in policy and decision-making processes affecting their rights and benefits as may be provided by law. The State shall promote the principle of shared responsibility between workers and employers and the preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce their mutual compliance therewith to foster industrial peace. The State shall regulate the relations between workers and employers, recognizing the right of labor to its just share in the fruits of production and the right of enterprises to reasonable returns to investments, and to expansion and growth.” and in Article 294 of the Labor Code which states that “Security of Tenure-In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement”.
However, it would still take a long time for the government to decide on the process of completely abolishing the contractualization in the country. The government must decide on what will be beneficial to its citizens and to the state.
As to the amendment of the Labor Code of the Philippines, the citizens must be provided by the government the equal protection and their right of security of tenure in terms of employment.
.
Bibliography
Gregorio, X. (2022, July 20). House bill seeks ban on all forms of contractualization.
Philippine Daily Inquirer. (2022, July 6).Regularization of gov’t contractual workers pushed.
Eighteenth Congress of the Philippines. (2020, May 4). An Act Eradicating Abusive Contractualization Practices and Penalizing Employers and Contractors Who Commit Such Abuses, Amending for This Purpose Book Three, Title Two and Book Six, Title I of Presidential Decree No. 442, Otherwise Known as The Labor Code of the Philippines, As Amended.
Philippine Statistics Authority. (2021, February 5). Employment Situation in 2020.
Natividad, N. (2020, December 10). The practice of “contractualization” or “endo” has employees stuck in fixed-term jobs with no benefits.
Purugganan,J. (2022, May 18). Precarious Road Ahead: The Continuing Struggle of Workers against Contractualization in the Philippineshttps://focusweb.org/precarious-road-ahead-the-continuing-struggle-of-workers-against-contractualization-in-the-philippines/
About the Researcher
My name is Dia Jhelah Rojo, a first year law student at the University of St. La Salle Bacolod. This research has been motivated by my drive to understand more the benefits and disadvantages of contractualization in relation to House Bill 2173.
This research would not have been possible without the help of my Legal Research Professor, Atty. Jocelle Batapa-Sigue. I would also like to thank my family and friends, for their unwavering support during the making of this paper.
Philippine Legal Research 