1. The Outrageous and Potentially Dangerous Provisions of the Bill on Security of Tenure Jaime S. Estrada PMAP Board Meeting May 27, 2009

2. INTRODUCTION

3. Employee Classification or Status Regular – hired for activities which are necessary and desirable in the usual trade or business of the employer Probationary – hired generally for regular positions but placed on a probationary status for a period of 6 months (as a general rule) Term – hired for a specific period and at the expiration of the contract, the employer-employee relationship is automatically terminated Project – hired for a specific project or undertaking, the termination of which has been determined at the time of hiring Seasonal – hired for work or service which is seasonal in nature and the employment is for the duration of the season Casual – hired to perform work or service which is merely incidental to the business of the employer

4. Pertinent Provisions of the Labor Code being Amended Art. 106 – provides the general guidelines on permissible contracting or subcontracting arrangements; defines “labor- only” contracting, among others Art. 109 – Solidary liability Art. 248 – Unfair labor practices of employers Art. 279 – Security of tenure Art. 280 – Regular and casual employment Art. 281 – Probationary employment Art. 288 - Penalties ======================================= Department Order No. 18-02, Series of 2002 – Rules Implementing Art. 106 to 109 of the Labor Code, as amended (governing contracting and subcontracting arrangements)

5. Employment Relationship vis-à-vis Legitimate Contractorship Four-fold test (recognized determinants of employer-employee relationship) hiring compensation (salary or wage) power to dismiss power of supervision and control Contractorship (recognized determinants or requisites of legitimate contractorship) substantial capital independent business (not supervised or controlled by the principal as to the manner or method of doing the contracted work) The subject of the contract is the performance or completion of an identified job

6. THE PROPOSED AMENDMENTS

7. Repeals Art. 106 (Contractor or Subcontractor) This will be replaced with selected provisions of Department Order No. 18-02. It looks like an amendment with a built-in IRR which is not within the scope of legislative work. Rule- making belongs to the executive branch of the government Basically, it would make prohibitive all types of employment except regular and permanent employment and whose violations would be penalized either by criminal sanctions or excessive indemnities

8. Amends Art. 248 (Unfair Labor Practice) It would make unlawful for an employer to: Engage a labor-only contractor or to contract out services or functions being performed by members of, or positions covered by, the bargaining unit and/or regular rank-and-file and supervisory employees To deny the existence of employer-employee relationship and/or to classify as casual, contractual, subcontracted employees, agency employees, or other non-regular classification those who are regular employees by virtue of Article 280 There is nothing in these proposed amendments suggesting interference in the exercise of the workers of their right to self-organization (which is the basic scope of the ULP provision)

9. The total casual and contractual employment cannot exceed 20% of the total workforce, including casual and contractual employees The proposed amendment is like “mixed nuts” – casual employment and contractual employment are totally different from each other. Casual employees are hired directly by the employer while contractual employees are those hired by the contractor or subcontractor Job contracting, either in services or manufacturing, is done by contractor carrying on an independent business and undertakes the contract with the employer or principal free from the control and the direction of the latter in the performance of said work except as to the results thereof. The performance of such contract by the contractor is undertaken by contractual employees whose tenure is co-terminus with the term of the contract If the contractor or subcontractor is pursuing an independent business, why fix a limit on the number of its employees? And, why use the total workforce of the principal or employer as the basis?

10. Project and Extra Employees It would compel employers to rehire project employees and the so-called extra employees after finishing their respective contracts upon the next project or occasion for extra employment. During the time that their services are not actually availed of, they are considered on authorized leave without pay “Extra” employment is a new invention in the proposed amendment

11. Prohibits fixed term employment The authors or sponsors are seemingly confused that fixed period employment is completely different in nature vis-à-vis project and extra employment or any other type of employment Prohibiting fixed period employment violates the freedom of contract since this is subject exclusively to the will and agreement of the parties

12. Probationary employment shall not exceed 6 months Applicable to all kinds of employment, including teaching personnel in all educational institutions, thereby shortening the probationary period of academic personnel from 3 years to 6 months The six-month probationary employment under the Labor Code is not absolute The proposed amendment shortening the probationary employment of teachers and other academic personnel in this bill is “out of place.” If at all, it should be introduced as an amendment in another law not the Labor Code

13. Imposition of penalties or indemnities Making any principal or subcontractor who violates its provisions solidarily liable to indemnify each contracted employee no less than P 50,000.00 Making any employer, who deliberately categorizes or otherwise treats regular employees to be any non-regular employees, liable to indemnify each misclassified employee no less than P 50,000.00 The proposed amendments are better left to the rule-making function of the executive

14. To sum up, this bill - is another manifestation of government intervention in running private business would deny business establishments the needed flexibility in coping with operational exigencies to stay viable and competitive The authors don’t even care about timing in view of the current global economic crisis!

15. Let’s take a courageous stand on this outrageous and potentially dangerous bill! Let’s vigorously oppose the passage of this bill to the very end!

16. Maraming salamat po!