On 23 May 2019, the Senate passed Senate Bill 1826, also known as the "Security of Tenure and End of Endo Act of 2018.”

The bill seeks to strengthen provisions of the Labor Code of the Philippines that prohibit labor-only contracting by:

• providing penalties against violators.

• limiting job contracting to licensed and specialized services

• classifying workers into regular and probationary employees while treating project and seasonal employees as regular employees in terms of benefits.

• providing security of tenure for workers.

• clarifying standards on probationary employment

The bill defines labor-only contracting as the practice where the job contractor, whether licensed or not, merely recruits and supplies or places workers to a contractee or the workers supplied by the job contractor are performing activities which are directly related to the core business of the said contractee or are under the control and supervision of the contractee.

It also directs the contractee to regularize workers in cases where labor-only contracting is present.

A fine of P5 million is imposed against any labor-only contractor.

Under the bill, the Secretary of the Department of Labor and Employment (DOLE) is given the power to preventively or permanently close the operations of any labor-only contractor.

The bill also introduces a new Article 107 in the Labor Code, concerning the licensing and regulation of contractors for specialized work, jobs or services.

A contractor must show proof of expertise and specialization in order to be licensed. The contractor must also prove that it has a paid-up capital or net worth of P5 million, which may be increased through a tripartite consultation.

The license has a fee of at least P100,000 and is valid for three years.

The proposed measure also simplifies the classification of employees to regular and probationary. All employees, except those under probationary employment, are deemed regular, including project and seasonal employees, who are deemed to be regular employees for the duration of the project or the season.

The bill states that the probationary employment period shall not exceed six months from the first day of service regardless of the nature of work to be performed unless it is covered by an apprenticeship agreement which provides for a longer period.

Please note that this bill is not yet enacted into law. The House of Representatives has its own version of the proposed law and these two versions would have to be harmonized first before it could be presented to the President for his signature. Only when it is signed by the President and published in the Official Gazette or a newspaper of general circulation would the new law become effective.

Also, the draft provides for the issuance of implementing rules and regulations to be prepared by the Secretary of Labor. These rules will only be issued after the bill is signed into law.

Click here to read the entire text of Senate Bill No. 1826.

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