Firms urged to blacklist erring service providers

Trade Secretary Ramon Lopez has asked the private sector to blacklist service providers that would not comply with the government’s proposal to end the abusive practices of labor contractualization and the so called “endo” (or end of contract) scheme.

The proposed win-win structure by the government is expected to ensure the security of tenure of Filipino workers but crucial to the success of this proposal would be for companies to police the compliance of service providers in terms of giving full benefits to workers, including retirement pay, Lopez told the Inquirer.

“Principal companies must conduct due-diligence and review the breakdowns of its fees to service providers to ensure the benefits are complete and remitted to workers. They can blacklist service providers not complying. Also, the association of legitimate service providers must police its ranks to ensure compliance,” the trade chief added.

Last week, government officials disclosed the planned “win-win structure” that would allow companies to either directly hire employees or outsource certain services from accredited providers. These service providers, however, must take in their hires as permanent employees who will receive full benefits such as SSS, Philhealth, 13th month pay and even a retirement or separation package.

Effectively, the main difference between the proposed win-win structure against the current practice is that the worker is regularized or granted permanent status even under the service provider. Under the current practice, workers can lose their jobs if the contract between the companies and service providers is terminated.

More importantly, Lopez said the retirement benefit or separation pay would be mandatory unlike the current practice wherein only some do this depending on their principals—normally the big companies—who would be willing to pay a little more to the service providers for the retirement fund of the workers.

“This should now become mandatory. In so doing, the workers’ tenure is secured under the service provider. The worker can be redeployed to other principals as needed. In the remote possibility that the service provider has no other customers, the workers can then get retirement or separation pay just like a regular hire in a company,” Lopez added.

According to the trade chief, the win-win structure was premised on the need to have a business policy environment that creates and encourages job and income generation.

“The win-win structure was proposed due to the feedback from the business sector that they are being required now to regularize all employees, in phases, without an option to have a contracting/subcontracting arrangement but where such arrangement should still be allowed under the current law,” Lopez said. Amy R. Remo