BEST PRACTICES GUIDE TO VALID JOB CONTRACTING & SUBCONTRACTING -----------------------------------------------------------------------------------------------------What Decision-Makers Must Know About Contracting Outsourced Services -----------------------------------------------------------------------------------------------------9:00 am to 5:00 pm, Thursday, April 16, 2015 EDSA Shangri-La Hotel, Mandaluyong City, Philippines COURSE OUTLINE I. Constitutional Bases of Contracting & Subcontracting a. b. c. d. e. II. Laws, Rules and Regulations Governing Contracting & Subcontracting a. b. c. d. e. f. g. h. i. j. k. l. m. n. o. III. Promotion of Welfare (Section 18, Article 2) Full Protection to Labor (Section 3, Article 13) Guarantee for Rights to Self-Organization (Section 3, par 2, Article 13) Promotion of Full employment (Section 9, Article 2) Promotion of Social Justice (Section 1, Article XIII) Article 106 of the Labor Code, as amended Article 107 of the Labor Code, as amended Article 108 of the Labor Code, as amended Article 109 of the Labor Code, as amended D.O. 18-A, Series of 2011, Rules Implementing Articles 106-109 of the Labor Code, as amended Article 248 (c) of the Labor Code, as amended, which disallows contracting out of services or functions being performed by union members when such will interfere with, restrain or coerce employees in the exercise of their rights to selforganization; Article 280 of the Labor Code, as amended which classifies employees into regular, project or seasonal employees; Article 2180 of the Civil Code, under which the principal, in a civil suit for damages instituted by an injured person, can be held liable for any negligent acts of the employees of a labor-only contractor; Republic Act No. 5487 and its implementing rules, which regulate the operation of security agencies; Jurisprudence interpreting the foregoing laws; Department Circular No. 1, Series of 2012; Department Order No. 19, Series of 1993 (Guidelines Governing the Employment of Workers in the Construction Industry); Department Order No. 13, Series of 1998 (Guidelines Governing the Occupational Safety and Health in the Construction Industry) D. O. No. 19, Series of 1993, for subcontracting arrangements in the construction industry; and Contractual stipulations provided these are not in conflict with Labor Code provisions, jurisprudence, and D. O. Nos. 18-A and 19. Important Definitions a. b. c. d. e. f. g. Contracting Subcontracting Contractor In-house agency Principal Right to control Solidary liability IV. What is Permissible Contracting? a. b. c. d. e. V. Nature of relationship of the parties on permissible contracting Permissible contracting is expressly allowed by law Requisites of legitimate job contracting or subcontracting Concept of independent contractor Difference between subcontractor and private recruitment and placement agency (PRPA) Labor-Only Contracting a. b. c. d. e. f. g. h. i. j. k. l. m. Definition of labor-only contracting Labor-only contracting is expressly prohibited Distinction between permissible contracting and labor-only contracting Power of the Secretary of Labor to determine existence of labor-only contracting Criteria for the existence of labor-only contracting The presumption is that a contractor is a labor-only contractor Elements of labor-only contracting Substantial capitalization Performance of directly related jobs Right to Control DOLE Certification that an entity is a job contractor Effect of labor-only contracting Principal may still be held liable even in the absence of labor-only contracting VI. Bond Requirement in Job Contracting VII. Concept of Reimbursement VIII. Prohibited Activities Other Than Labor-Only Contracting IX. Payment of Wages of Employees in Contracting Arrangement a. b. c. d. e. f. Payment of wages as element of employer-employee relationship Payment of wages need not be made directly to prove this element Pay slip to prove who paid the worker’s wage Joint and several liability for non-payment of wages The court takes judicial notice of the practice of employer of not issuing pay slip to evade liabilities Status in contracting relationship determines parties’ liability for payment of wages X. Dismissal from Employment of Employees in Contracting Arrangement XI. Concept of Floating Status, Off-Detail or Reserve Status XII. Rules on Registration, Renewal and Revocation of Registration XIII. Rules Governing Contracting in Construction Industry a. b. c. d. e. f. g. h. i. j. k. l. m. n. o. p. q. r. s. t. u. v. w. x. y. z. aa. Department Order (DO) No. 19-93 is the prevailing rules on contracting in construction industry Coverage Practice of contracting and sub-contracting in the construction industry is recognized by law Workers, where job contracting is permissible, are employees of the contractor Classification of employees employed in the construction industry Definition of project employees Definition of non-project employees Definition of probationary employees Meaning of regular employees Definition of casual employees Indicators of project employment Security of tenure of project employees Statutory benefits of construction employees Wage rates shall depend on the skills or level of competence but not lower than the prescribed minimum wage Basis in determining rates for workers paid by results Liability of the construction company and general contractors to the workers in their employ Wage increases shall be borne by the principal and the contract shall be deemed amended accordingly Completion of project or phase thereof and its effect on employment status of workers Bonus upon completion of the project or phase thereof when there is such an undertaking Project employees, as a rule, are not entitled to separation pay if separation is due to completion of project Instance when project employees become entitled to separation pay Situation when project employees become regular Meaning of “day” in day certain Instance where there is no regularization notwithstanding one-year duration of employment Reckoning period for the completion of the project Dismissal from employment of project employee Separation pay of employees Seminar Contact Person: Anna Andaya – Program Leader Center for Global Best Practices Manila Lines: (+63 2) 556-8968 or 69 Manila Telefax: (+63 2) 842-7148 or 59 Cebu Lines: (+63 2) 512-3106 or 07 Email: [email protected] Pls cc: [email protected] Website: www.cgbp.org
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