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Philippine Labor Code DO 174, Series of 2017 DO 18-A, Series of 2011 DO 19, Series of 1993 Remarks
	
Title Book III, Condi...
Philippine Labor Code DO 174, Series of 2017 DO 18-A, Series of 2011 DO 19, Series of 1993 Remarks
	
related to the princi...
Philippine Labor Code DO 174, Series of 2017 DO 18-A, Series of 2011 DO 19, Series of 1993 Remarks
	
contracting as define...
Philippine Labor Code DO 174, Series of 2017 DO 18-A, Series of 2011 DO 19, Series of 1993 Remarks
	
or controlled directl...
Philippine Labor Code DO 174, Series of 2017 DO 18-A, Series of 2011 DO 19, Series of 1993 Remarks
	
against Labor-only Co...
Philippine Labor Code DO 174, Series of 2017 DO 18-A, Series of 2011 DO 19, Series of 1993 Remarks
	
the following:
	
b) C...
Philippine Labor Code DO 174, Series of 2017 DO 18-A, Series of 2011 DO 19, Series of 1993 Remarks
	
releasing the princip...
Philippine Labor Code DO 174, Series of 2017 DO 18-A, Series of 2011 DO 19, Series of 1993 Remarks
	
interpretation of the...
Philippine Labor Code DO 174, Series of 2017 DO 18-A, Series of 2011 DO 19, Series of 1993 Remarks
	
circumstances concur....
Philippine Labor Code DO 174, Series of 2017 DO 18-A, Series of 2011 DO 19, Series of 1993 Remarks
	
The Court thus laid d...
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Comparative Table: DO 174, DO 18A, DO 19 and the Labor Code

Comparative table prepared by Ely Ypilan

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Comparative Table: DO 174, DO 18A, DO 19 and the Labor Code

  1. 1. Philippine Labor Code DO 174, Series of 2017 DO 18-A, Series of 2011 DO 19, Series of 1993 Remarks Title Book III, Conditions of Employment, Chap. III Payment of Wages Art. 106. Contractor or subcontractor. Whenever an employer enters into a contract with another person for the performance of the former’s work, the employees of the contractor and of the latter’s subcontractor, if any, shall be paid in accordance with the provisions of this Code. In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract, in the same manner and extent that he is liable to employees directly employed by him. The Secretary of Labor and Employment may, by appropriate regulations, restrict or prohibit the contracting-out of labor to protect the rights of workers established under this Code. In so prohibiting or restricting, he may make appropriate distinctions between labor-only contracting and job contracting as well as differentiations within these types of contracting and determine who among the parties involved shall be considered the employer for purposes of this Code, to prevent any violation or circumvention of any provision of this Code. There is "labor-only" contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such person are performing activities which are directly Rules Implementing Articles 106 to 109 of the Labor Code, as amended Rules Implementing Articles 106 to 109 of the Labor Code, as amended Guidelines in the Employment of Workers in the Construction Industry. DO 174 has effectively repealed DO 18-A since it is the latest Implementing Rules and Regulations of Art. 106- 109.
  2. 2. Philippine Labor Code DO 174, Series of 2017 DO 18-A, Series of 2011 DO 19, Series of 1993 Remarks related to the principal business of such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him. Art. 107. Indirect employer. The provisions of the immediately preceding article shall likewise apply to any person, partnership, association or corporation which, not being an employer, contracts with an independent contractor for the performance of any work, task, job or project. Art. 108. Posting of bond. An employer or indirect employer may require the contractor or subcontractor to furnish a bond equal to the cost of labor under contract, on condition that the bond will answer for the wages due the employees should the contractor or subcontractor, as the case may be, fail to pay the same. Section 3 Definition of Terms. a) Bond- refers to the bond under Art. 108 of the Labor Code that the principal may require from the contractor to be posted equal to the cost of the labor under contract. Art. 109. Solidary liability. The provisions of existing laws to the contrary notwithstanding, every employer or indirect employer shall be held responsible with his contractor or subcontractor for any violation of any provision of this Code. For purposes of determining the extent of their civil liability under this Chapter, they shall be considered as direct employers. Section 1. Guiding Principles. Non-permissible forms of contracting and sub-contracting arrangements undermine the Constitutional and statutory right to security of tenure of workers. Section 1. Guiding Principles. Contracting and subcontracting arrangements are expressly allowed by law and are subject to regulations for the promotion of employment and observance of the rights of workers to just and humane conditions of work, security of tenure, self-organizaiton and collective bargaining. Labor-only Section 1. Coverage This issuance shall apply to all operations and undertakings in the construction industry and its subdivisions, namely: General Building Construction, General Engineering Construction and Special Trade Construction, based on the classification code of the Philippine
  3. 3. Philippine Labor Code DO 174, Series of 2017 DO 18-A, Series of 2011 DO 19, Series of 1993 Remarks contracting as defined herein is prohibited. Construction Accreditation Board of the Construction Industry Authority of the Philippines; to companies and entities involved in demolition works; and to those falling within the construction industry as determined by the Secretary of Labor and Employment. Section 3 Definition of Terms. b) “Cabo” - refers to a person or group of persons or to a labor group which, in the guise of a labor organization, cooperative or any entity, supplies workers to an employer, with or without any monetary or other consideration, whether in the capacity of an agent of the employer or as an ostensible independent contractor. Section 3 Definition of Terms. b) “Cabo” - refers to a person or group of persons or to a labor group which, in the guise of a labor organization, cooperative or any entity, supplies workers to an employer, with or without any monetary or other consideration, whether in the capacity of an agent of the employer or as an ostensible independent contractor. c) “Contracting” or “Subcontracting” – refers to an arrangement whereby a principal agrees to farm out to a contractor the performance or completion of a specific job or work within a definite or predetermined period, regardless of whether such job or work is to be performed or completed within or outside the premises of the principal. c) “Contracting” or “Subcontracting” – refers to an arrangement whereby a principal agrees to farm out to a contractor the performance or completion of a specific job or work within a definite or predetermined period, regardless of whether such job or work is to be performed or completed within or outside the premises of the principal. Section 2. 2.5 Contracting and subcontracting – The practice of contracting out certain phases of a construction project is recognized by law, particularly wage legislations and wage orders and by industry practices. The Labor Code and its Implementing Regulations allow the contracting out of jobs under certain conditions. Where such job contracting is permissible, the construction workers are generally considered as employees of the contractor or subcontractor, as the case may be, subject to Art. 109 of the Labor Code, as amended. d) “Contractor – refers to any person or entity engaged in a legitimate contracting or subcontracting arrangement providing services for a specific job or undertaking farmed out by principal under a Service Agreement. f) “In-house agency” – refers to a contractor which is owned, managed , f) “In-house agency” – refers to a contractor which is owned, managed , DO 174 falls under the definition of “Cabo”
  4. 4. Philippine Labor Code DO 174, Series of 2017 DO 18-A, Series of 2011 DO 19, Series of 1993 Remarks or controlled directly or indirectly by the principal or one where the principal owns/represents any share of stock, and which operates solely or mainly for the principal. or controlled directly or indirectly by the principal or one where the principal owns/represents any share of stock, and which operates solely or mainly for the principal. “Cabo” - refers to a person or group of persons or to a labor group which, in the guise of a labor organization, cooperative or any entity, supplies workers to an employer, with or without any monetary or other consideration, whether in the capacity of an agent of the employer or as an ostensible independent contractor. g) “In-house cooperative - refers to a cooperative which is managed , or controlled directly or indirectly by the principal or one where the principal or any of its officers owns/represents any equity or interest, and which operates solely or mainly for the principal. DO 174 falls under the definition of “Cabo” “Cabo” - refers to a person or group of persons or to a labor group which, in the guise of a labor organization, cooperative or any entity, supplies workers to an employer, with or without any monetary or other consideration, whether in the capacity of an agent of the employer or as an ostensible independent contractor. l) “Substantial Capital” – refers to paid- up capital stock/shares at least Five Million Pesos (P 5,000,000.00) in the case of corporations, partnerships and cooperatives; in the case of single proprietorship, a net worth of at least Five Million Pesos (P 5,000,000.00). l) “Substantial Capital” – refers to paid- up capital stock/shares at least Three Million Pesos (P 3,000,000.00) in the case of corporations, partnerships and cooperatives; in the case of single proprietorship, a net worth of at least Three Million Pesos (P 3,000,000.00). DO 174 and DO 18-A, difference of P 2,000,000.00 (increased). Section 4. Regulation of Contracting or Subcontracting. The Secretary of Labor and Employment shall regulate contracting and subcontracting arrangement by absolutely prohibiting labor-only contracting, and restricting job contracting allowed under the provisions of the Labor Code, as amended. Section 5. Absolute Prohibition Section 6. Prohibition against Labor- What DO 174 strictly prohibits is the
  5. 5. Philippine Labor Code DO 174, Series of 2017 DO 18-A, Series of 2011 DO 19, Series of 1993 Remarks against Labor-only Contracting. Labor-only contracting, which is totally prohibited, refers to an arrangement where: a)i. The contractor or subcontractor does not have substantial capital, or only Contracting. Labor-only contracting is hereby declared prohibited. For this purpose, labor-only contracting shall refer to an arrangement where: a) The contractor does not have substantial capital or investments in the form of tools, equipment, machineries, work premises, among others, and the employees recruited and place are performing activities which are usually necessary or desirable to the operation of the company, or directly related to the main business of the principal within a definite or predetermined period, regardless of whether such job, work or service is to be performed or completed within or outside the premises of the principal, or malpractice of labor-only contracting which is already explicitly prohibited under Art. 106 of the Labor Code ii. The contractor or subcontractor does not have investments in the form of tools, equipment, machineries, supervision, work premises, among others, and iii. The contractor’s or subcontractor’s employees recruited and place are performing activities which are directly related to the main business operation of the principal; or b) The contractor or subcontractor does not exercise the right to control over the performance of the work of the employee. b) The contractor does not exercise the right to control over the performance of the employee. Section 6. Other Illicit Forms of Employment Arrangement. In addition to Section 5 of these Rules, the following are hereby declared prohibited for being contrary to the law or public policy: a) When the principal farms out work to a “Cabo”. Section 7. Other Prohibitions. Notwithstanding Section 6 of these Rules, the following are hereby declared prohibited for being contrary to law or public policy: A. Contracting out of jobs, works or services when not done in good faith and not justified by the exigencies of the business such as “Cabo” refers to a person or group of persons or to a labor group which, in the guise of a labor organization, cooperative or any entity, supplies workers to an employer, with or without any monetary or other consideration, whether in the capacity of an agent of the employer or as an ostensible independent contractor.
  6. 6. Philippine Labor Code DO 174, Series of 2017 DO 18-A, Series of 2011 DO 19, Series of 1993 Remarks the following: b) Contracting out of job or work through an in-house agency. (1) Contracting out of jobs, works or services when the same results in the termination or reduction of regular employees and reduction of work hours or reduction or splitting of the bargaining unit. Also considered as Cabo c) Contracting out of job or work through an in-house cooperative which merely supplies workers to the principal. (2) Contract out of work with a “Cabo” Also considered as Cabo d) Contracting out of a job or work by reason of a strike whether actual or imminent. (3) Taking undue advantage of the economic situation or lack of bargaining strength of the contractor’s employees, or undermining their security of tenure or basic rights, or circumventing the provisions of regular employment, in any of the following instances: Book Five, Title VI, Unfair Labor Practices, Chap. II, Unfair Labor Practices of Employers Art. 259. Unfair Labor Practices of Employers. It shall be unlawful for an employer to commit any of the following unfair labor practice: (c) To contract out services or functions being performed by union members when such will interfere with, restrain or coerce employees in the exercise of their rights to self-organizaiton. e) Contracting out of a job or work being performed by union members and such will interfere with, restrain or coerce employees in the exercise of their rights to self-organization as provided in Article 259 of the Labor Code, as amended. (i) Requiring them to perform functions which are currently being performed by the regular employees of the principal; and DO 174 is redundant. Letter e is already prohibited under the Labor Code. f) Requiring the contractor’s/subcontractor’s employees to perform functions which are currently being performed by the regular employees of the principal. (ii) Requiring them to sign, as a precondition to employment or continued employment, an antedated resignation letter; blank payroll; a waiver of labor standards including minimum wages and social or welfare benefits; or a quitclaim
  7. 7. Philippine Labor Code DO 174, Series of 2017 DO 18-A, Series of 2011 DO 19, Series of 1993 Remarks releasing the principal, contractor or from any liability as to payment of future claims. g) Requiring the contactor’s/subcontractor’s employees to sign, as a precondition to employment or continued employment, an antedated resignation letter; a blank payroll; a waiver of labor standards including minimum wages and social or welfare benefits; or a quitclaim releasing the principal or contractor from liability as to payment of future claims; or require the employee to become member of a cooperative (4) Contracting out of a job, work or service through an in-house agency. h) Repeated hiring by the contractor/subcontractor of employees under a employment contract of short duration. (5) Contracting out of a job, work or service that is necessary or desirable or directly related to the business or operation of the principal by reason of a strike or lockout whether actual or imminent. i) Requiring employees under a contracting/subcontracting arrangement to sign a contract fixing the period of employment to a term shorter than the term of the Service Agreement, unless the contract is divisible into phases for which substantially different skills are required and this is made known to the employee at the time of engagement. (6) Contracting out of a job, work or service being performed by union members when such will interfere with, restrain or coerce employees in the exercise of their rights to self- organization as provided in Art. 248 (c) of the Labor Code, as amended. There are two (2) contracts here, the contract between the principal and the contractor, which is the SERVICE CONTRACT; the employee-employer contract between the contractor and its employee. Following letter i, the contractual employee should have an employment contract period the same as the Service Contract Agreement. The Service Contract Agreement is co- terminus with the employment contract. If the ee contract ends in the same time as the service agreement then there is no problem. Art. 4. Construction in Favor of Labor. All doubts in the implementation and j) Such other practices, schemes or employment arrangements designed (7) Repeated hiring of employees under an employment contract of The Labor Code already provides for a catch all phrase in terms of how the
  8. 8. Philippine Labor Code DO 174, Series of 2017 DO 18-A, Series of 2011 DO 19, Series of 1993 Remarks interpretation of the provisions of this Code, including its implementing rules and regulations, shall be resolved in favour of labor. to circumvent the right of workers to security of tenure. short duration or under a Service Agreement of short duration with the same or different contractors, which circumvents the Labor Code provisions on Security of Tenure. labor code will be interpreted. (8) Requiring employees under a subcontracting arrangement to sign a contract fixing the period of employment to a term shorter than the term of the Service Agreement, unless the contract is divisible into phases for which substantially different skills are required and this is made known to the employee at the time of engagement. (9) Refusal to provide a copy of the Service Agreement and the employment contracts between the contractor and the employees deployed to work in the bargaining unit of the principal’s certified bargaining agent to the sole and exclusive bargaining agent (SEBA) (10) Engaging or maintaining by the principal of subcontracted employees in excess of those provided for in the applicable Collective Bargaining Agreement (CBA) or as set by the Industry Tripartite Council (ITC). B. Contracting out of jobs, works or services analogous to the above when not done in good faith and not justified by the exigencies of the business. Section 8. Permissible Contracting or Subcontracting Arrangement. Notwithstanding Sections 5 and 6 hereof, contracting or subcontracting shall only be allowed if all the following Under the DO 174, it is clear in Sec. 8 that contracting is still allowed.
  9. 9. Philippine Labor Code DO 174, Series of 2017 DO 18-A, Series of 2011 DO 19, Series of 1993 Remarks circumstances concur. a) The contractor or subcontractor is engaged in a distinct and independent business and undertakes to perform the job or work on its own responsibility, according to its own manner and method; b) The contractor or subcontractor has substantial capital to carry out the job farmed out by the principal on his account, manner and method, investment in the form of tools, equipment, machinery and supervision; c) In performing the work farmed out, the contractor or subcontractor is free from the control and/or direction of the principal in all matters connected with the performance of the work except as to the result thereto; and d) The Service Agreement ensures compliance with all the rights and benefits for all the employees of the contractor or subcontractor under the labor laws. Section 10. Rights of Contractor’s/Subcontractor’s Employees. Section 8. Rights of Contractor’s Employees. The employees mentioned in Section 10 is the employee of the Contractor/Subcontractor and not the principal hence as long as the minimum labor standards are followed, contractual employees are allowed. Comments: 1. DO 174 is actually an Implementing Rules and Regulations for the strict compliance of legitimate Contractors and Subcontractors and not to eliminate contractualization. It only increased the contractor’s capital from P 3,000,000.00 to P 5,000,000.00. 2. Other listed prohibitions are already existing prohibitions in our Labor Code. 3. A Human Resource Department who wants to avoid any problem in dealing with contractors may instead employ a fixed-term contract engagement with the employees. Fixed-term employment directly facilitated by the employer is not prohibited. Nowhere in the DO 174 prohibits it. Fixed-term employment must substantially follow the conditions:
  10. 10. Philippine Labor Code DO 174, Series of 2017 DO 18-A, Series of 2011 DO 19, Series of 1993 Remarks The Court thus laid down the criteria under which fixed-term employment could not be said to be in circumvention of the law on security of tenure,1 thus: 1. The fixed period of employment was knowingly and voluntarily agreed upon by the parties without any force, duress, or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent; or 2. It satisfactorily appears that the employer and the employee dealt with each other on more or less equal terms with no moral dominance exercised by the former or the latter. 1 G.R. No. 155505, 15 February 2007, EMILIO M. CAPAROSO and JOEVE P. QUINDIPAN vs. COURT OF APPEALS, NATIONAL LABOR RELATIONS COMMISSION, COMPOSITE ENTERPRISES INCORPORATED, and EDITH TAN

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