ECOP to submit ‘employer’s version’ of contractualization bill to Congress

August 22, 2017


The Employers Confederation of the Philippines (ECOP) has expressed anew concerns over certain provisions in 25 pending House of Representatives bills tackling the issues of contractualization and workers’ security of tenure.

The ECOP Technical Working Committee met August 17 to further firm up the association’s position over “questionable or objectionable prescriptions” in some of these House bills pending deliberation before the House Committee on Labor and Employment.

ECOP said it is currently drafting an “employer’s version” of the bill on contractualization and security of tenure to be submitted to the committee upon the request earlier of committee chair Rep. Randolph Ting.

The organization has listed at least 10 provisions contained in these bills that it claimed contradict “fundamental legal principles governing these two issues.”

Among these bills is House Bill No. 55 prohibiting the principal from engaging subcontracted employees in excess of 20% of the principal’s total workforce.

The group objected to the bill as constituting “undue interference in management prerogative and best business judgment to contract or outsource jobs based on its constitutional right and freedom to contract.”

House Bill No. 55 also prohibits subcontracted employees from performing work directly related to the main business of the employer.

ECOP countered that work contracted out is always directly related to employer’s main business.

“It is a fundamental principle in case law that all forms of contracting and subcontracting of work by the employer under Article 106 of the Labor Code are invariably directly related to the main business of the principal even if such may be unnecessary, incidental or not integral to the main business of the principal simply because what is contracted out pertains to the work of the principal,” said the trade group.

It is also opposed to HB No. 76 and HB No. 4444 that seek to prohibit or restrict fixed term employment and contractualization.

Aside from transgressing the right of employers to exercise prerogative and best business judgment to contract, disallowing fixed period employment “violates the freedom of contract of both parties who knowingly, willingly and without any moral pressure gave their consent to the execution of the contract guaranteed by the Constitution,” said ECOP.

HB No. 563, on the other hand, authorizes the Secretary of Labor and Employment to ban all private companies from engaging in contractualization.

“To reiterate, it is the proprietary right of employers to exercise an inherent prerogative and its best business judgment to determine whether it should contract out performance of some of its work to independent contractors,” stressed the group.

Also on ECOP’s list is HB No. 895 outlawing contracting out of jobs if this causes the termination of services or reduction in the number of regular employees and the splitting up of the bargaining unit.

ECOP insisted that job contracting may replace the services of regular workers, as ruled in the case of Asian Alcohol Corporation vs. NLRC et al., G.R. No. 131108, March 25, 1999.

The decision on the case reads in part, “We have previously ruled that reduction of the number of workers in a company made necessary by the introduction of the services of an independent contractor is justified when the latter is undertaken in order to effectuate more economic and efficient methods of production.”

As for HB No. 1208 which stipulates a fine of P1 million to P10 million for violating its provisions, ECOP said: “Excessive fines especially if imposed on employers of micro establishments (are) violative of Sec. 19 of the Bill of Rights of the Constitution which prohibits the imposition of excessive fines.”

Other bills whose provisions ECOP finds disagreeable include HB No. 1045, HB No. 1351, HB No. 3769, and HB No. 3802. PHILEXPORT News and Features



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