Some examples of such are the benefits of having a de jure "employer-and-employee relationship"-mandated SSS, Philhealth, and Pag-ibig housing fund contribution, paid time-off (leaves), and a 13th-month pay, among others.
[3] There are two types of regular employees as per the Labor Code of the Philippines: (1) those who are engaged to perform activities which are necessary or desirable in the usual business or trade of the employer; and (2) those casual (sometimes called "Fixed-term"/"Project") employees who have rendered at least one year of service, whether continuous or broken, with respect to the activity in which they are employed.
3 (series of 2001) explicitly prohibits labor-only contracting, defined to be a type of employment wherein: “the contractor or subcontractor merely recruits, supplies or places workers to perform a job, work or service for a principal, and the following elements are present:(a) The contractor or subcontractor does not have substantial capital or investment to actually perform the job, work or service under its own account and responsibility; and (b) The employees recruited, supplied or placed by such contractor or subcontractor is performing activities, which are directly related to the main business of the principal.”Contracts or subcontracts whose existence precede the effectivity of the Order are given non-impairment and non-diminution of benefits.
"[6]Contractualization has its roots tracing back to 1974 under the rule of Ferdinand Marcos when Ernesto "Boy" Herrera helped draft Presidential Decree 442.
"[7] Effectively, Article 281 and its legal loophole was spotted by companies and since then has been used as a main basis for laying off workers in order to avoid extra costs for regular employment.
It was this law that gave the first major revisions to the original Philippine Labor Code drafted earlier during the Marcos Presidency.
This revised Philippine Labor Code was amended to fight against the discrimination against women in the work place and aimed to extend the rights of workers under employment.
[citation needed] Then-DOLE Secretary Leonardo Quisumbing issued Department Order 10 in May 1997 strengthening the contracting out of labor practice by giving the employers more allowances whilst safeguarding employee rights.
[citation needed] It was also this change in provision on the Philippine Labor Code and the DOLE Department Order 10 compounded together which made the problems of Endo worse off in the administration of Fidel V.
[citation needed] During his campaign for the 2016 Presidential Election, one of Rodrigo Duterte's promises was the phasing out of contractualization and improvement to labor in the Philippines.
[8] Upon his election, he appoints Silvestre Bello III as Secretary of the Department of Labor and Employment, who considers making all companies put at least 80% of all employees under contract as per the president's orders.
[8] However, by March 16 Bello signs Department Order 174 which sets stricter guidelines on contractualization but doesn't immediately illegalize it.
3381, which sought to repeal Article 106 of the Labor Code of the Philippines and ban all forms of contractualization or labor-only contracting and fixed-term employment;[11] the bill was not passed in the Senate.
In addition, in case the company is unable to regularize them, they may hire temporary workers via principals or service contractors.
[13] In June 2016, the Department of Labor and Employment (DOLE) has started inspecting establishments nationwide as a response to President Rodrigo Duterte's issuance of an Executive Order (EO) banning endo and other similar contracting practices.
According to an initial list submitted to the Malacañang Palace, the DOLE states that there are 3,337 companies suspected of engaging in labor-only contracting.
In a statement released in response to their inclusion in a list of companies without regularized employees, Magnolia Philippines stated the affected workers are not the company's employees but are employed by an unnamed service provider:[citation needed] "We believe that our inclusion in the list stems not from our contracting of labor but from the use of certain machinery and equipment leased by a DOLE-accredited independent service provider whose workers maintain and operate them.
"[citation needed] In the same statement, the company also noted that they have always worked to protect their employees' rights and are coordinating with the DOLE: "We at Magnolia Inc. have always worked to protect the rights of our employees and workers … We acknowledge this issue and continue to coordinate with the DoLE to immediately address the matter.
Nevertheless, as a company, we believe that all our partners should exercise the same care that we do when it comes to ensuring that workers’ rights–including security of tenure and all benefits provided for in the Labor Code and prevailing laws–are fully protected.
This order came about after DOLE found out that numerous of PLDT's contractual agencies were violating the labor laws of the Philippines.
PLDT appealed to the DOLE to reconsider this decision, but this was rejected in January 2018, as Labor Secretary Silvestre Bello III said that, "his office found no merit to overturn the order."
"[17] In a 38-page decision penned by Rodil Zalameda and promulgated on February 14, 2024, the High Tribunal ordered the regularization of 7,344 "contractual employees" of PLDT engaged in line installation, repair, and maintenance.
It dismissed the consolidated petition for review on certiorari filed by Silvestre Bello III and the Mangaggawa ng Komunikasyon ng Pilipinas (Workers in Philippine Communications - a labor union of PLDT staff), affirming a Court of Appeals judgment that found PLDT and its contractor committed labor violations.
"[18] The high court finally remanded the case to the Office of the Regional Director of DOLE-NCR "to review and determine the impact of the regularization of the workers performing installation, repair, and maintenance services and to review, compute, and properly determine the monetary award on the labor standards violation, to which petitioner PLDT Inc. and the concerned contractors are solidarily liable.