The Employers Confederation of the Philippines (ECOP) expresses reservation over the passage of Senate Bill No. 1826 also known as the Security of Tenure Bill or the Anti-Endo Bill. The Senate voted 15-0 to approve the bill on third and final reading last Wednesday, 22 of May 2019.
The bill was certified urgent by President Rodrigo R. Duterte and is awaiting harmonization with the House version of the measure in the bicameral conference.
To begin with, ECOP believes that the perennial problem of “endo” has already been addressed by Department Order No. 174 (DO174) and Executive Order No. 51 (EO51). DO174 reiterates the absolute prohibition against labor-only contracting while EO51 expressly prohibits illegal forms of contracting and subcontracting. In essence, the illegal practice of contracting out which is termed as “endo” has already been clearly prohibited not only under the Philippine Labor Code, but also under jurisprudence. It is ECOP’s position that the problem of “endo” lies in the proper implementation and efficient enforcement of DO174 and EO51 by competent authorities of the government.
ECOP submits that a careful perusal of Senate Bill No. 1826 would have the effect of totally abolishing all forms of contracting out, including legitimate forms of job contracting. Section 2 of the said bill particularly defines “labor-only contracting” as “…or the workers recruited and supplied or placed by such person are performing activities which are directly related to the principal business of such contractee”.
It is a fundamental principle in case law that all forms of contracting and subcontracting of work by the employer under Article 106 are 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. If this provision is passed into a law, it is as if all forms of contracting were being abolished. The destructive impact on business, investment, as well as creation of more jobs for Filipino workers, would be unimaginable.
ECOP submits that owning a business entails property rights. The right to enter into business is a right guaranteed to everyone under the Constitution. It is an exercise of right to own property and to dispose property. As such, the conduct of all forms of business invariably involves the exercise of management prerogative. Accordingly, jurisprudence has reiterated time and again that the exercise of management prerogative is not subject to interference so long as it is done in good faith. To abolish all forms of contracting out is a clear violation of the Constitution, jurisprudence and existing laws.
ECOP, consistent with its mandate of ensuring that the fundamental rights of workers are protected, suggests that the word “OR” at the beginning of the above-mentioned definition of “labor-only contracting” be replaced by “AND”, in order to preserve the status quo as provided for in the Labor Code of the Philippines under Articles 106 to 109 (contracting or subcontracting) being implemented by Department Order (DO) 174 that already expressly prohibits the practice of labor-only contracting or the so-called “endo”.
You may download a copy of the Senate Bill No. 1826 here:
[embeddoc url=”https://ecop.org.ph/wp-content/uploads/2019/05/3rd-Reading-of-Security-of-Tenure-bill-as-of-23-May-2019.pdf” download=”all”]
