To understand the controversy, let`s take a hard look at what is legal and what illegal employment contracts are. In this prohibited form of supply, the contractor does not have significant capital or investment in the form of tools, equipment, machinery and workspaces, and the workers hired and placed by that person engage in activities directly related to that employer`s main activity. ▪ There are illegal forms of employment contracts that are prohibited in the case of procurement and subcontracting. Read also: How to ensure the legitimacy of employment contracts On February 1, 2010, Mr. R., one of the utility workers, was fired due to the termination of the service contract between W Gas Corp. and Q Manpower Co. In the course of the proceeding, W Gas Corp. did not provide any evidence of Q manpower Co.`s capitalization before. Although D.O. No. 3 invalidated the D.O. No. 10, existing case law still provides definitive guidance.
In two recent Supreme Court cases (Vinoy v. National Labor Relations Commission, G.R. No. 126586, February 2, 2000, and Lim v. National Labor Relations Commission, G.R. No. 124630, February 19, 1999), the definition of legitimate subcontracting in D.O. No. 10 is cited positively as follows:chanroblesvirtuallawlibrary Employment contracts have significantly changed the landscape of industrial relations. Although an employment relationship is bilateral in nature, lawful procurement is a trilateral relationship between the contracting authority, the contractor and the contractor`s employees. DO 174, s 2017 explicitly states that an entrepreneur is only involved in employment contracts if this company does not have the right to control the performance of the employee`s work. The right of control includes the right to decide how work is performed, to prescribe procedures, to supervise and correct the performance, and to control the means and manner of achieving results or results.
The party who can exercise this right is the employee`s true employer. The Labor Code and its regulations also prohibit certain contractual agreements, including the following: According to Department Order No. 174 (2017 series) of the Department of Labor and Labor (DOLE), a pure labor contract takes place if the contractor or subcontractor does not have (1) “substantial capital [at least 5 million pesos] OR (2). Investments in the form of tools, equipment, machinery, monitoring, workspaces, etc. AND (3) . Workers recruited or placed carry out activities directly related to the main activity of the contracting authority. This also happens when “the contractor . does not practice . Control of the performance of the employee`s work. The different types of pure employment contracts are as follows: Article 2 of D.O.
No. 3 states that there is a pure employment contract in which the contractor or subcontractor simply recruits, provides or places workers to perform work, work or service for a client, and the following are present: chanroblesvirtuallawlibrary Legal design of the contract. On the other hand, the “award of contracts” is undoubtedly legal, in which, in the Rasan case, “(a) the contractor or subcontractor .. an independent company and undertakes to carry out the work, work or services. under its own responsibility in its own way and free from the control and direction of the customer in all matters. except as regards the result […]; (b) the contractor. has significant capital or investment; and (c) the agreement between the contracting authority and the contractor. guarantees contract workers the right to all occupational health and safety standards, the free exercise of the right to self-organization, security of affiliation and social and social benefits. “It is clear from the foregoing that (the principal) Petron has not discharged its burden of proof that (the contractor) ABC is not a pure contractor. Consequently, the Court declares ABC to be purely contracting according to the facts. “To conclude that a contractor is a `pure agent of employment` is to conclude that there is an employer-employee relationship between the principal and the employees of the alleged contractor and that the contractor is considered to be a mere representative of the principal, the true employer.” Accordingly, in this case, Petron is declared to be the true employer of the respondents, who are considered regular employees, since they have regularly engaged for several years in activities necessary and desirable for Petron`s ordinary business. (Petron Corporation v. Caberte, G.R.
No. 182255, June 15, 2015) Since the introduction of the new guidelines, the DOLE has intensified monitoring and enforcement measures to crack down on “employment contracts.” DOLE has intensified its efforts to eliminate “labor contracts” and other forms of illegal contractual arrangements by being more proactive in conducting labor evaluations and investigations into the regularization of workers` employment status in the Philippines. The second type of liability, which derives from Article 106(3) and (4), is absolute and direct. This liability arises if there is a pure contract of employment within the meaning of the O. No. 3. In that case, the contracting authority shall be liable to the workers in the same way and to the same extent as if it were directly employing those workers. Based on the facts, it is first and foremost a pure employment contract. Employees use W`s equipment, indicating a lack of investment in tooling on the part of Q Manpower, and the task of maintaining the production facility is directly related to W`s manufacturing activity. If workers` groups insist on banning all forms of contracts and legalizing only direct hiring, they should look to Congress, not the executive branch, for help. “As a general rule, an entrepreneur is considered a pure entrepreneur unless he or she has the burden of proving that he or she has substantial capital, investment, tools and other elements.” (Allied Banking Corporation v Calumpag, G.R.
No. 219435, January 17, 2018) A subcontractor is subject to the laws and rules listed in question #4 below. A PRPA is governed by articles 25 to 39 of the Labour Code and its implementing provisions. In addition to these requirements, all persons or entities acting as contractors must register with the DOLE regional office where it primarily operates; Otherwise, it is presumed that they are pure employment contracts. The law does not prohibit all forms of procurement or subcontracting. Lawful procurement or subcontracting is permitted under the Labor Code, as implemented in Departmental Order No. 174, Series of 2017, issued by the Department of Labor and Employment (DOLE). What the law prohibits are pure employment contracts and other illegal employment contracts.
[See Permitted Procurement and Subcontracting in the Philippines] In Consolidated Building Maintenance Inc. v. Asprec Jr. (GR 217301, 6. June 2018) “the award of the contract is considered legitimate and admissible if the contractor has significant capital or investment and operates an independent business and free from the control of the contracting authority”. This “substantial capital” requirement applies to paid-up capital/shares of at least P5 million for corporations and partnerships and net assets of at least P5 million for sole proprietorships.
