New Labor Department Order to Benefit Contractual Employees

January 10, 2012

The Philippines’ Department of Labor and Employment issued the revised rules governing job contracting arrangements.

Under Department Order No. 18-A, which took effect last 5 December 2011, “all contractual employees, whether deployed as reliever, seasonal, weekender, temporary or promo jobbers, shall be entitled to all rights and privileges as provided for in the Labor Code, as amended, such as safe and healthful working conditions, incentive leave, rest days, overtime pay, holiday pay, 13th month pay, separation pay and social security and welfare benefits, self-organization, collective bargaining and peaceful concerted activities, and security of tenure.”

The Department Order also defined contracting or subcontracting as “an arrangement whereby a principal (or employer) agrees to put out or farm out to a contractor the performance or completion of a specific job, work or service 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.”

To qualify as legitimate contracting/subcontracting companies, individuals/entities must meet the criteria provided under the Department Order. Individuals/entities must have a minimum capitalization of PhP3 Million, proof of financial capacity to pay wages and benefits, and a payment of PhP25,000.00 registration fee.