INTENT

• INCREASE LEVEL OF AWARENESS ON THE CONSTITUTIONAL RIGHT OF

WORKERS TO SECURITY OF TENURE
• GOVERN SITUATIONS WHERE A PRINCIPAL ASSIGNS A PART OF THE BUSINESS
TO BE PERFORMED BY A CONTRACTOR OR A SUB-CON, WITH EMPLOYEES
• PASS-ON THE RESPONSIBILITY TO THE PRINCIPAL TO EXERCISE OVERSIGHT
OVER THE CONTRACTOR TO COMPLY WITH LABOR LAWS ON ITS EMPLOYEES
• MAKE THE PRINCIPAL ACCOUNTABLE FOR VIOLATION OF ITS CONTRACTOR OF
THE LABOR LAWS
 ACCOUNTABILITY OF PRINCIPAL
(FAILURE OF OVERSIGHT)

Contractor does
not fulfil
Contractor violates Contractor fails
employment
labor laws LOC test
contract with
worker

Contractor does Principal enters

not perform into a contract
contract per with delisted
Service Agreement contractor
• SEC.7.
WHEN CONTRACTOR, SUB-CONTRACTOR OR SERVICE PROVIDER IS
ENGAGED IN L.O.C.(SEC 5) & OTHER PROHIBITED ACT (SEC. 6), PRINCIPAL
BECOMES THE EMPLOYER
• SEC 9. PRINCIPAL IS SOLIDARILY LIABLE TO EMPLOYEES OF PROVIDERS FOR THEIR
FAILURE TO PAY WAGE & FOR ANY VIOLATION OF THE LABOR CODE, TO THE
EXTENT OF CONTRACTED WORK UNDER THE EMPLOYMENT CONTRACT.
PROHIBITED LABOR-ONLY CONTRACTING

Insufficient
capital OR

Contractor No
is de-listed, investment
principal in equipt,
absorbs tools, etc.
employees AND

Employees
No control do work of
on employees principal
 OTHER PROHIBITED PRACTICES
• CABO (GUISE OF LABOR ORGANIZATION, COOPERATIVE OR OTHER ENTITY THAT SUPPLIES WORKERS)
• IN-HOUSE AGENCY (OR COOPERATIVE THAT IS A LABOR SUPPLIER)
• CONTRACTING OUT DURING STRIKE/LOCKOUT, UNION SHOPS, OCCUPIED REGULAR
POSITIONS
• EMPLOYMENT DOCUMENTARY PRE-CONDITIONS THAT ARE PRE-JUDICIAL TO THE INTEREST
OF WORKERS(ANTEDATED RESIGNATION, WAIVERS, ETC), OR MEMBERSHIP TO A COOPERATIVE)
BEFORE EMPLOYMENT
• REPEATED HIRING ON SHORT-DURATION CONTRACTS (555, ENDO), CIRCUMVENT SOT
• EMPLOYMENT SHORTER THAN SERVICE AGREEMENT OF CONTRACTOR TO PRINCIPAL;
 Contractor able
to perform

LEGITIMATE activity at his

own accord

JOB Capital of
CONTRACTING contractor is
sufficient
SEC. 8. PERMISSIBLE CONTRACTING
OR SUB-CONTRACTING Contractor
ARRANGEMENT controls the
assigned
activity

Compliant
with labor
standards
 SERVICE
CONTRACT Terms &
conditions,
ESSENTIAL ELEMENTS OF A Place of Description contract
work & of work amount,
SERVICE CONTRACT (REQUIRED TO BE duration 10%+ admin
PRESENTED TO AN LLCO) fees
CONTRACT SHALL ENSURE COMPLIANCE
WITH ALL RIGHTS & BENEFITS OF
EMPLOYEES UNDER THE LABOR LAW
 Job description

EMPLOYMENT
CONTRACT
PART OF THE REQUIRED Place of
Wage
CONTRACTS UNDER THE work
DEPARTMENT ORDER

Terms &
conditions of
employment
 • SAFE & HEALTHFUL WORK CONDITIONS
(OSH)

RIGHTS OF • LABOR STANDARDS (SIL, REST DAYS, OT

PAY, HOLIDAY PAY, 13TH MO.,SEPARATION
EMPLOYEES PAY)
*SECURITY OF TENURE*
• SSS RETIREMENT BENEFITS OR
CONTRACTORS’ RETIREMENT PROGRAM
• SSS AND WELFARE BENEFITS
• SELF-ORGANIZATION
REGISTRATION OF CONTRACTORS
GROUNDS FOR CANCELLATION
Did not submit
Service Agreement

Did not submit semi-Annual

Report

Final LOC Findings

Did not follow

Labor Standards

Violated the Labor Code

CONTRACTOR’S CANCELLATION
TIMELINE(33D)
7 workdays to
answer/affidavit

7 calendar days
clarificatory hearing,
counter
• Affidavit, rectify/correct

10 calendar days
terminate hearing

7 days to resolve
case
APPEAL TIMELINE (56D)
10 days
from
receipt,
Final &
executory

30
workdays
for OSEC
to resolve

10 days to
appeal
EFFECTIVITY & EFFECTS

• EFFECTIVE FROM 03 APRIL 2017

• D.O. 162-16 (SUSPENSION OF REGISTRATION OF NEW APPLICANT) IS
LIFTED
• REGISTATION UNDER 18-A SHALL REMAIN VALID UNTIL EXPIRATION
• APPLICATION FOR RENEWAL FILED BEFORE 03APR17 SHALL BE
PROCESSED UNDER 18-A-11
• CONTRACTS & AGREEMENTS EXECUTED UNDER 18-A SHALL BE
RESPECTED UNTIL EXPIRATION
EFFECT
• RESOLUTION OF PENDING GLS CASES BEFORE 03APR17 SHALL BE
GOVERNED BY 18-A
• ON CROSS-REGIONAL OPERATION BY CONTRACTORS; SUBMISSION OF
AUTHENTICATED COPY OF C.O.R.FROM MAIN OFFICE LOCATION, TO THE
REGION OF OPERATION, WITH COPY OF SERVICE AGREEMENT
• THERE WILL BE A REGISTRY OF LEGITIMATE
CONTRACTORS/SUBCON/SERVICE PROVIDERS IN THE REGIONS