DOLE Reminds Companies to Engage with Registered Contractors Only
The Department of Labor and Employment (DOLE) continues to combat erring contractors and subcontractors carrying out illicit activities that can endanger the rights of Filipino workers. On May 14, DOLE warned companies in Central Visayas to only employ workers from legitimate contractors and subcontractors.
In a statement last May 12, DOLE-7 Director Salome Siaton urged businesses in Central Visayas to stay alert in who to engage with when recruiting additional personnel. “Establishments or principals should remain cautious in choosing service providers they would engage with as they are solely liable pursuant to the provisions of Article 109 of the Labor Code,” Siaton said.
Businesses must only deal with registered service providers, as required by Department Order 174-17 (DO 174-17). Siaton also stressed the need for mandatory registration of individuals or businesses working as contractors and subcontractors in Central Visayas.
What is Labor-Only Contracting?
DOLE has been strictly monitoring companies conducting labor contracting, also known as “Endo” (end of contract). As defined by DOLE-7, labor-only contracting happens when the contractor or subcontractor recruits, places, and supplies other companies with workers.
A company is considered an illegal contractor or subcontractor for the following reasons:
- They do not have substantial capital or investment in the form of tools, equipment, machinery, supervision, and work premises;
- The recruited employees perform activities and functions which are directly related to the principal’s main business; or
- They do not exercise the right to oversee the employees’ work performance.
The labor and employment agency only allows corporations and partnerships with a paid-up capital of at least P5 million or sole proprietorships with P5 million net worth to register as a contractor or subcontractor. This requirement ensures that the company has enough funds to pay for its employees’ wages and other benefits mandated by law.