Trade and labor officials, business leaders and lawmakers have come up with what they deemed a “win-win situation” to end the unfair and abusive practices under labor contractualization and the highly controversial end-of-contract or “endo” scheme.
Trade Secretary Ramon Lopez explained in a briefing Friday that the Duterte administration would want to see two main ways of hiring workers in order to finally put an end to endo, a practice that required employees to sign a contract fixing the period of employment to a term shorter than that of the service agreement. This is regarded as unlawful under the current provi sions of the Labor Code, along with the so-called “5-5-5 hiring practice,” or the repeated hiring of employees for a short duration with the same or different contractors.
Lopez said one legal way would be direct hiring, wherein the company itself takes in the worker as a permanent employee. The second way is through outsourcing wherein a company taps a service provider or an agency for the supply of workers on a project basis.
In the “win-win” setup, however, the workers will be hired by the service providers and agencies as regulars, receiving full benefits such as leave credits, 13th month pay as well as retirement, social security and health insurance plans, among others.
Companies, meanwhile, will have the flexibility to either directly hire workers as regular employees or outsource them through the service providers in view of seasonal job functions, he said.
Data from the Department of Labor and Employment showed that to date, there are 5,150 registered contractors and subcontractors deploying more than 416,000 workers to not less than 26,000 principals.
What the government would look into now, according to Lopez, would be how the service providers and agencies were hiring their workers. Officials opined that service providers could afford to hire their workers on a permanent basis as they could easily deploy workers to other projects in case a service to one company has expired.
“What is critical now is the compliance of service providers in giving full benefits to the workers,” Lopez said. “Workers can be easily redeployed to other clients, and that’s why we deemed it okay to have this permanent structure between a service provider and its employees. Now in the remote possibility that these workers could no longer be redeployed, they should be entitled to separation pay.”
Presidential adviser for entrepreneurship Joey Concepcion added that in case a company terminated a service provider for reason of non-performance, the service provider would still have to continue to pay their employees until they are redeployed. Otherwise, the employees will be given the legally mandated separation pay.
The DOLE would thus have to zero in now on the different service providers to ensure that they will be making their hires as permanent employees entitled to the full benefits under the law.
Lopez also encouraged the private sector to ensure that the service providers they tap would be compliant with these laws safeguarding rights of the workers. Specifically, the trade chief asked the different business groups to ensure that their members would be outsourcing from companies duly accredited by the DOLE and compliant with the Labor Code.
Concepcion noted that this “win-win” solution has secured the approval not only of President Duterte and government officials, but also of the employers who deemed the proposal to be in line with the idea of inclusive growth, assuming that all service providers implement it properly.
The recent meeting among DTI, DOLE, Office of the Presidential Consultant for Entrepreneurship, lawmakers and business groups also touched on the “four-fold test” as determinant of employer-employee relationship. Its elements include the right to hire, payment of wages, power of dismissal or power to impose disciplinary actions and the power of control, which is considered the most important of the four elements.