How Responsible Contractualization Helps the Country

In recent months, Filipino workers have been hounded with a plethora of problems, from unemployment caused by the closure of Boracay to the diplomatic missteps which endanger overseas jobs. Suddenly, contractual employment seems to be the least of workers’ concerns.

Labor unions and other entities have consistently clamored for the abolishment of this form of temporary employment. When President Rodrigo R. Duterte issued an executive order banning illegal contractual employment this year, it was meant to protect the welfare of workers.

The Department of Labor and Employment (DOLE) Secretary Silvestre Bello likewise issued a department order to supervise genuine contracting. Specifically, the labor department issued Department Order 174, which seeks to regulate the practice of labor-only “contractualization,” ending the perennial labor practice of “endo.” This pertains to the deliberate termination of contracts after six months for companies to avoid paying benefits provided to regular employees by law.

While labor groups have criticized this practice, it must be emphasized that the government allows genuine and legal labor contracting, such as seasonal or project-based jobs.

Fixed-time Contracting as Legal Practice

Temporary or fixed-time contracting has been a legal practice in different countries in the world. Closer to home, the Asean region allows legitimate contracting, so long as it follows the different labor codes in each territory.

Contracting is a legitimate form of employment which presents benefits to both the worker and the company. Not only does it provide employment to the otherwise unemployed, it is also helpful to companies, especially those still setting up shop. The practice allows startup companies to be more agile and more competitive, keeping them afloat.

Employers Confederation of the Philippines President Sergio Ortiz-Luis says that genuine and legal temporary work is beneficial for the country as a whole. Contractual employment has helped lower down the local unemployment rate through the years. In 2017, the rate was about 5.7 percent of the population’s workforce, or about 2.4 million. It has since gone down to only 5.4 percent in the first half of 2018.

Temporary employment, in fact, is a must for budding companies to effectively start their businesses. In particular, the manufacturing sector requires thousands of workers as it needs elbow room to adjust its processes.

Banning legitimate contractual jobs, in turn, would have a negative effect on the business appetite of prospective investors — both foreign and local. However, this should be done under what is approved under labor laws and social legislation.

Monitoring the Ranks

It is important to note that DOLE conducts regular and surprise assessments and inspections of around 937,554 small, medium, and large enterprises throughout the year through 541 labor law compliance officers, 55 social partners, five employers groups, and five other organizations trained on labor rules and social laws. Hence, a company engaged in legitimate contractual employment through service providers must ensure its compliance with government rules and regulations.

Human resource managers must also be aware and knowledgeable on labor laws and regulations to keep their workers productive and happy and their company compliant and growing.

Contractual employment is a legitimate business practice, one which would serve the objectives of both the worker and the company. It’s just a matter of keeping tabs with the law, and providing employees their lawful rights.

For more information and guidance on responsible contractualization, join us in our Forum on Security of Tenure Bill and Contractualization to be held on November 09, 2018 at Technopark Hotel, Santa Rosa City, Laguna