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Labor - Title II - Labor Code of the Philippines, Job Contracting - An…

- - - - Construction in Favor of Labor (LC 4) & (NCC 1702)
        
        Rule-Making Power (LC 5)
        
        Technical Rules Not Binding (LC 227)
        
        Applicability
        
        Mandatory Conciliation-Mediation (LC 228 | DO 151-16
        
        Enforcement and Sanctions
        
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        General Rule - All issues arising from labor and employment shall be subject to a mandatory (30) day conciliation-mediation.
        
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        General Rule - all rights and benefits under the LC shall apply to all workers. (LC 6)
        
        Exemptions - Government Employees - all government workers, including those under GOCCs shall be governed by Civil Service Laws. (LC 291)
        
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        Rules of Procedure - Any court, NLRC or LA the rules of evidence/procedure shall not be controlling. Spirit and intention of the LC that every and all reasonable means to ascertain the facts in each case speedily and objectively, without regard to technicalities of law or procedure.
        
        Control of Proceedings - Chairman, presiding Commissioner, Commissioner or Labor Arbiter shall exercise complete control of the proceedings before it at all stages.
        
        Agencies Empowered - DOLE and other government agencies charged with the administration and enforcement of the code shall promulgate necessary IRR. IRR effective (15) days after announcement in newspaper of general circulation
        
        Article 1702. In case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and decent living for the laborer.
        
        ARTICLE 4. Construction in Favor of Labor. — All doubts in the implementation and interpretation of the provisions of this Code, including its implementing rules and regulations, shall be resolved in favor of labor.
- - - - P --> C -- SubC --> E's of C and SC
        Liability solidary liability for P, C and SC for any violation of the LC.
        
        Employer - Employee relationship:
        
        General Rule - No E-E relationship between principal and employees of Contract/Subcontractor. E-E only between C/SC and their employees
        
        Exception - if labor only contracting OR prohibited activities then E-E exists between principal employer and employees of contractor. (DO 18-A-11)
        
        Effect of Labor-Only Contracting (LC 106-109) -
        
        (1) the creation of an employer-employee relationship between the principal and the employees of the contractor or sub-contractor; and
        
        (2) the solidary liability of the principal and the contractor to the employees in the event of any violation of the Labor Code.
        
        Solidary Liability - Employer or indirect employer shall be held solidarily liable with the contractor for violation of the code. E/IE considered as direct employer. (LC 109)
      - SOLE can restrict or prohibit contracting out of labor to protect worker's rights in LC.
        
        SOLE and Regional Directors - Can distinguish between labor only and job contracting.
        
        if Labor Only - C/SC is considered as agent of PE. PE is liable to C/SC's Es in the same way he is liable to his own Es
        
        Labor Only -
        
        ( Where contractor/Subcontractor (person supplying workers) does not have substantial capital
        
        OR
        
        Investments in the form of tools, equipment, machinery or work premises.
        
        AND
        
        Workers recruited and placed by C/SC are performing activities which are directly related to the principal business of such employer. )
        
        OR
        
        the C/SC does not exercise the right to control over the performance of the work of the employees.
        
        Substantial Capital - capital stock shares of at-least P5M in corporations, partnerships, co-ops; if single proprietorship net worth of P5M
        
        Investment in tools - must be related to work under the SA.
        
        Proof of Substantial Capital - audited financial statements - must be renewed every (2) years to maintain status as a contractor. (Polyfoam)
        
        Presumption - A C/SC is presumed to be a labor-only contractor unless they prove otherwise. (Polyfoam)
        
        Right to Labor Standards - P and C/SC must assure the contractual Es entitlement to all labor and occupational safety standards, free exercise of the right to self-organization, security of tenure, and social welfare benefits. (Petron)
        
        Certification - Certificate of registration of independent contractor only prevents the presumption of labor only contracting. (San Miguel v. Semillano)
        
        Related - Certification of DOLE must relate to the contracted work. Otherwise, presumption of labor only contracting still applies. (Quintanar v. Coca-cola bottlers)
        
        If Labor-Only worker, considered as employee of the Principal.
        
        Right to Control - alone leads to labor only contracting
      - LC 107 - Indirect Employer - Any person NOT an employer who contracts with an independent contract for the performance of any work.
        
        Not employer if no four-fold test.
        
        LC 108 - PE or IE can require C/SC to post a bond equal to cost of labor under contract OR condition that bond will answer for the wages due to the employees in case C/CS fails to pay the employees.
        
        Definition of Terms: (1) Principal - any person (can be a employer) who puts out or farms out a job or work to a contractor
        
        (2) Contractor - any person/entity engaged in a legitimate contracting or subcontracting arrangement
        
        (3) Contracting/Subcontracting - arrangement where principal farms out to a contractor the performance of a completion of a specific job or work within a definite or predetermined period, regardless of whether work is to be performed within or outside the premises of the principal.
        
        (4) Service Agreement - contract between principal and contractor containing the terms and conditions governing the performance or completion of a specific job or work being farmed out.
    - - Permissible C/SC arrangements (DO 174-17)
        
        Rights of C/SC employees (174-17 Sec. 10)
        
        (1) Safe and healthful working conditions
        
        Required form of contracts in C/SC arrangements
        
        Employment agreement (C/SC and their Employees)
        
        (1) Governed by rules of LC, provisions on general labor standards and provisions of LC 294 and 295.
        
        (2) Specific description of job or work to be performed by the employee
        
        (3) Place of work and terms and conditions of employment, including a statement of the wage rate applicable to the individual employee
        
        Service Agreement (P and C/SC)
        
        (1) Specific description of the job or work being subcontracted including term or duration
        
        (2) Place of work and terms and conditions governing the contracting arrangement, including agreed amount of the contracted job or work and standard administrative fee of not less than 10% of total contract cost
        
        (3) A provision on the insurance of the bond/s as defined in Section 3(a) renewable every year.
        
        Effect of termination of employment - General Rule, employment contract is of the same length as the Service Agreement.
        
        Where: Termination of employment prior to the termination of the SA
        
        Where: Termination of employment due to pre-termination of SA NOT due authorized causes.
        
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        Governed by LC 297-299 (e.g. must be for cause)
        
        This applies only to non-regular employees of the C/SC. Regular employees such as accountants, etc. maintain their job.
        
        (2) Labor Standards e.g. 13th month pay, etc.
        
        (3)Retirement benefits under SSS or retirement plans of C/SC
        
        (4)Social security and welfare benefits
        
        (5)Self-organization, collective bargaining and peaceful concerted activities including the right to strike.
        
        Requirements for validity of Independent Contractor (DO 174-17)
        
        (3) Freedom - C/SC must be free from control and supervision of the Principal as regards to the manner and means for the performance of the work.
        
        (4) Compliance - Service Agreement between C/SC and P ensures compliance with all the rights and benefits for all the employees of the C/SC under the labor laws.
        
        (2) Substantial Capital - C/SC must have substantial capital OR investment in the form of tools, equipment, machinery and supervision
        
        (1) Distinct and Independent Business - C/SC must undertake to perform the job on its own responsibility, and according to its own manner and method.
    - - Registration Requirement - All C/SC must register with DOLE. Failure to do so gives rise to presumption of labor-only contracting.
        Registration system - implemented by DOLE regional offices alongside Bureau of Working Conditions - both asking as central registry.
        
        Certification by DOLE only overturns presumption of labor-only contracting; not conclusive (Quintanar)
        
        Certificate of Registration valid only for (2) years, unless cancelled after due process. Valid only in the region where it as registered.
        If C/SC operations outside the region - it shall submit an authenticated copy of the certificate to the DOLE regional office where it seeks to operate + copy of the Service Agreement/s in the area.
        
        Due Process in Cancellation of Registration - Complaints filed before the Regional Office that issued registration - RD shall give (7) day period to C/SC to answer complaint; can also conduct a hearing during the same period; during this period C/SC will make necessary corrections for immediately rectifiable issues - RD may exercise V-E powers - Proceedings before RO summary in nature, hearing within 10 calendar days from first clarification hearing.
        
        Grounds for cancellation of registration by RD -
        
        a. Misrepresentation of facts in the application;
        
        b. Submission of falsified or tampered application or supporting documents to the application for registration;
        
        c. Non-submission of Service Agreement between the principal and the contractor when required to do so;
        
        d. Non-submission of the required semi-annual report as provided in Section 22 (Semi-Annual reporting) thereof;
        
        e. Final findings that the contractor has engaged in labor-only contracting and/or other illicit forms of employment arrangements as provided in Section 6 hereof;
        
        f. Non-compliance with labor standards and working conditions;
        
        g. Findings of violation of Section 10 (Rights of contractor's employees), and Section 11 (Required contracts);
        
        h. Non-compliance with SSS, the HDMF, Pag-IBIG, PhilHealth, and ECC Laws;
        
        i. Collecting any fees not authorized by law and other applicable rules and regulations; and
        
        j. Violations of any provisions of the Labor Code.
        
        Appeal - must be made within (10) working days from the receipt of the copy of the order. To be filed before the Regional Office which cancelled. (30) day period to resolve the appeal.
        
        If certificate cancelled - then C/SC cant operate, cant reform under new name. However, if there were existing legitimate job-contracting arrangements prior to cancellation those will not be impaired.
        
        Contracting with a de-listed C/SC shall make P employer of employees of C/SC
        
        Appeals from cancellation of SOLE - via certiorari to CA (cert 65)
    - - Independent Contractor - individuals with uinque skills and talents that set them apart from ordinary employees. No trilateral relationship as the IC himself performs the work for the principal. (Fuji v. Espiritu)
        
        Regular Employee (not IC) if you are renewed all the time and work is necessary and desirable.(Four-fold test)
- - - - Solidary Liability of Indirect/Direct Employer (LC 107-109; DO 174-17; DO150-16)
        
        LC 106-109 - C/SC fails to pay wages of E, then P jointly and severally liable.
        If this happens C/SC can claim reimbursement from P but P can't claim reimbursement from C/SC (Eparwa v. LCDU)
        
        General Rule: Liability of P only for wages. UNLESS there is a stipulation in the contract OR P conspired with C for illegal dismissal of E. (Meralco v. NLRC)
        
        Quitclaims issued in favor of one solidary debtor, if reasonable and fair inures to the benefit of all the debtors (bc solidary liability) - Vigilia v. PH College
        
        Termination of agency does not terminate solidary liability.
        
        Because no E-E between P and Employees.
        
        I. Retaliatory Measures (DO 174-17) - FF unlawful for P/C/SC or any party privy to the contract or services provided.
        
        Pay or reduce wages and benefits
        
        Discharge
        
        Discriminate against any worker who
        has: (a) filed a complaint or instituted a proceeding on wages, labor standards violation OR (b) testified or is about to testify in said proceedings
        
        Impliedly asking such workers not to testify.
        
        J. Applicability/non-applicability of DO 174-17
        
        Does not apply to:
        
        Does not apply to business sources outsourcing/knowledge outsourcing/any form of outsourcing that is not integral to business of principal not covered by the rules on trilateral relationship.
        
        (1) IT- based services;
        
        (2) For Construction - Ph Contractors Accreditation Board registered. Solidary liability and rights in DO 174 still apply.
        
        (3) For private security agencies - Subjct to routine and compliance inspeciton, solidary liability and must register under 174 - mandatory conciliation period of 30 days.
        
        Wage Increase/Adjustments AFTER the execution of the SA
        
        Wage order should be made part of the SA i.e. SA adjusts.
        Difference in the wages must be borne by the P. (Doctrine in Eparwa)
        
        Generally, employees go after C/SC first, but so long as workers get paid. (Solidary liability)
      - Cabo - group pretending to be a labor organization/ coop or entity that supplies workers to an employer with or without consideration, whether in the capacity of an agent or an ostensible independent contractor
    - - b. Contracting out of job or work through an in-house agency
        
        c. Contracting out of job or work through an in-house cooperative which merely supplies workers to the principal.
        
        d. Contracting out of a job or work by reason of a strike or lockout whether actual or imminent
        
        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 - union busting
        
        f. Requiring the contractor’s employees to perform functions which are currently being performed by the regular employees of the principal
        
        g. Requiring the contractor’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
        
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- - - - Employee
        
        Employer
        
        LC 97 - Any person acting directly or indirectly in the interest of an employer in relation to an employee. Covers government and GOCCs and non-profits.
        
        LC 173 - any person, natural or juridical employing the services of the employee.
        
        LC 219 - Any person acting in the interest of an employer. Does not cover labor organizations unless they act as employers.
        
        LC 97 - any individual employed by an employer.
        
        LC 173 - any person compulsorily covered by the GSIS
        
        LC 219 - Any person in the employ of an employer.
      - Test - the Four-Fold test.
        
        (1) Hire - Selection and Engagement of Employee
        
        (2) Fire - Power of Dismissal
        
        (3) Wages - Payment of Wages
        
        (4) Control - Power to control the employee's conduct as regards to the means and methods of work.
        
        Exercise - Sufficient that the power exists, no need that it be exercised. (Pamplona v. Tinghil)
        
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        If the Four-Fold test applies, then the employee is considered as a regular employee entitled to all of the benefits provided in the Labor Code.
    - - Affirmative Relief - Whoever asserts the existence of an E-E relationship has the burden to prove the same via substantial evidence.
        
        Form of Evidence - can be documentary or testimonial evidence.
- - - - (3) C/SC is free from control or direction of the principal as to the manner of the performance of work except for the result
        
        (4) Service Agreement ensures compliance with all the rights and benefits for all the employees of the C/SC under labor laws.