DEPARTMENT OF LABOR AND EMPLOYMENT

DEPARTMENT ORDER
No. 18-A
19 March 2015
This document is circulated for the participants of the 7th ECOP MGM and should NOT be used for
commercial presentation purposes partially or in its entirety without EXPRESSED permission from
the Author Atty. Benjo Santos Benavidez or HRManagement & Business Solutions Inc.
1

DIRECTLY HIRE

EMPLOYEE

REGULAR EMPLOYEE
PROBATIONARY EMPLOYEE
CASUAL EMPLOYEE
PROJECT EMPLOYEE
FIXED TERM EMPLOYEE

EMPLOYER

SEASONAL EMPLOYEE

REGULAR EMPLOYEE

PROBATIONARY EMPLOYEE
CASUAL EMPLOYEE

HIRE
THROUGH A PRPA
EMPLOYEE

PROJECT EMPLOYEE

EMPLOYER

FIXED TERM EMPLOYEE

SEASONAL EMPLOYEE

RECRUITMENT AND PLACEMENT

PRPA
Service Contract

EMPLOYER
(AGENT)
Recruitment
Contract

Employment
Contract

WORKER

DEPARTMENT
ORDER NO. 141,
series of 2014

REGULAR EMPLOYEE
PROBATIONARY EMPLOYEE
CASUAL EMPLOYEE
PROJECT EMPLOYEE
FIXED TERM EMPLOYEE
SEASONAL EMPLOYEE

CONTRACTORS
EMPLOYEES

EMPLOYER

ENGAGE A
CONTRACTOR
EMPLOYEE

CONTRACTING AND SUBCONTRACTING

(CONTRACTOR &
SUBCONTRACTOR)

Service Contract

Employment
Contract

P
R
I
N
C
I
P
A
L

COMPANY

REGULAR EMPLOYEE
PROBATIONARY EMPLOYEE
CASUAL EMPLOYEE
SEASONAL EMPLOYEE
WORKER

PROJECT EMPLOYEE
FIXED-TERM EMPLOYEE

Department Order No. 18-A, Series of 2011

Three
million
capitalization
*

* Twenty five
registration fee

(P

thousand

3,000,000.00)
(P

25,000.00)

* Term/duration of Employment co-terminus

with the Service Agreement
* Standard Administrative Fee of not less than
10%

TRIPARTITE MONITORING TEAM

Chair
Regional Director
Members
RTIPC Labor Sector Representative
RTIPC Employer Sector Representative
PALSCON
PADPAO
Local Chamber of Commerce
Local Government Unit
Federation Operating in the Region

CONTRACTING/SUBCONTRACTING

It is an arrangement whereby a
principal agrees to put out or farm out
with 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

CONTRACTING/SUBCONTRACTING

It is an arrangement whereby a
principal agrees to put out or farm out
with 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

PARTIES
T
R
I
L
A
T
E
R
A
L

R
E
L
A
T
I
O
N
S
H
I
P

PRINCIPAL

CONTRACTOR/
SUBCONTRACTOR
CONTRACTORS/
SUBCONTRACTORS
WORKER

CONTRACTING AND SUBCONTRACTING

(CONTRACTOR &
SUBCONTRACTOR)

Service Contract

Employment
Contract

P
R
I
N
C
I
P
A
L

COMPANY

REGULAR EMPLOYEE
PROBATIONARY EMPLOYEE
CASUAL EMPLOYEE
SEASONAL EMPLOYEE
WORKER

PROJECT EMPLOYEE
FIXED-TERM EMPLOYEE

CONTRACTING AND SUBCONTRACTING

COMPANY

P
R
I
N
C
I
P
A
L

(CONTRACTOR &
SUBCONTRACTOR)

Service
Contract

Service
Contract

Employment
Contract

WORKER

P
R
I
N
C
I
P
A
L

COMPANY

Employment
Contract

WORKER

CONTRACTOR/SUBCONTRACTOR
A. The contractor must be registered
B. The contractor must carry a distinct and independent
business
C. The contractor must undertake to perform the job, work
or service on its own responsibility, according to its own
manner and method, and free from control and direction
of the principal in all matters connected with the
performance of the work except as to the results thereof
D. The contractor has substantial capital and/or investment
and
E. The Service Agreement ensures compliance with all the
rights and benefits under Labor Laws

PRINCIPAL
Principal is solidarily liable with the contractor.
Principal shall be deemed the direct employer of
the contractors employee in the following cases:

1. There is finding by competent authority of

labor-only contracting
2. There is commission of prohibited activities
(Section 7)
3. There is violation of Section 8 (Rights of
Contractors Employee) and Section 9 (Required
Contracts)

LABOR-ONLY CONTRACTOR
A. The contractor does not have substantial capital or
investments in the form of tools, equipment,
machineries, work premises, among others, and the
employees recruited and placed are performing
activities which are usually necessary or desirable to
the operation of the company, or directly related to
the main business of the principal 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; or

B. The contractor does not exercise the right to

control over the performance of the work of the
employee.

CONTRACTORS EMPLOYEE

I. RIGHT TO ENTITLEMENT TO LABOR

STANDARDS
II. RIGHT TO SECURITY OF TENURE
III. RIGHT TO SELF-ORGANIZATION AND
COLLECTIVE BARGAINING

LEGISLATIVE MEASURES

HOUSE BILL No. 5415

Contracting and subcontracting as legitimate
business undertaking
Parameters of legitimate contracting and
subcontracting
Industry-based specific contracting and
subcontracting
Ownership, licensing, penalties and solidary
liability

End of Presentation

THANK YOU!