By Gillian M. Cortez, July 18 2019; Business World

Image Credit to Business World

MAJOR BUSINESS GROUPS in the country have made a last-ditch call for President Rodrigo R. Duterte to veto a measure now awaiting his signature that imposes tighter controls on labor contracting and which would lapse into law sans any Executive action by the end of next week.

In a July 16 joint press statement e-mailed to journalists on Wednesday, 13 local and foreign business chambers asked “the president to veto the security of tenure bill” since it “is redundant as there are previously approved laws that already protect workers from ‘endo’ (end of contract scheme), it impinges on management prerogative anchored on the constitution… it excludes contract workers hired by government agencies” and “could have a negative impact to the Philippine economy and to the workers whom the bill aims to protect.”

Groups that issued the call were the American Chamber of Commerce of the Philippines, Inc.; Australian-New Zealand Chamber of Commerce Philippines, Inc.; Canadian Chamber of Commerce of the Philippines, Inc.; European Chamber of Commerce of the Philippines; Foundation for Economic Freedom, IT and Business Process Association of the Philippines, Inc.; Japanese Chamber of Commerce and Industry of the Philippines, Inc.; Korean Chamber of Commerce Philippines; Makati Business Club; Management Association of the Philippines; Philippine Association of Multinational Companies Regional Headquarters, Inc.; Philippine Chamber of Commerce and Industry; as well as the Semiconductor & Electronics Industries in the Philippines, Inc.

The proposed law, “An Act Strengthening Workers’ Right To Security of Tenure”, bans the practice of hiring workers for five-months stints in order to circumvent the requirement that they be automatically granted regular status on the sixth month of employment. It also provides that workers performing jobs directly related to the principal business of or are under the direct control and supervision of a contracting party “shall be deemed regular employees of the contractee… retroactive to the date they were first deployed to said contractee…”

There are four types of employment status allowed under the measure: probationary, regular, project and seasonal. Project-based and seasonal workers “have the rights of regular employees for the duration of the project (e.g. construction) or season (e.g. agriculture or where there are periods of increased demand or inherent industry fluctuations)… termination of which has been determined and made known to the employee at the time of engagement.”

The Senate approved the measure on third reading on May 22, while the House of Representatives adopted Senate’s version on May 28, thus doing away with the need for a bicameral conference committee to harmonize different versions as well as ratification.

The bill was transmitted to the Office of the President on June 27, and will become law by July 27 if Mr. Duterte — who had made a 2016 campaign promise to ban labor contracting — either signs it or at least does not veto it.

In their joint statement, the business groups argued that Department Order No. 174 which the Department of Labor and Employment (DoLE) issued in March 2017 and Executive Order No. 51 which Malacañang issued in May last year “already expressly prohibit the practice of labor-only contracting or the so-called ‘endo’ and other illegal forms of contracting.”

“More than a new law that could adversely affect the country’s global competitiveness, stronger enforcement of the current [laws] and policies is essential,” they said.

The groups also recalled that DoLE had estimated in late 2016 that there were 670,000 contractual employees in the private sector and more than 700,000 in the government, and that Labor Secretary Silvestre H. Bello III announced last May that some 500,000 private sector contractual workers had been granted regular status.

Hence, they said, “regularization of the remaining workers can be achieved through the continuous implementation of both laws.”

The chambers also said that job contracting is “an exercise of management prerogative and business judgment” that “is anchored on two constitutional rights: right and freedom to contract and right to property,” as upheld by the Supreme Court.

They also noted that the tighter rules on contracting do not cover contractual workers hired by government offices “due to the potential severe fiscal challenge it may pose, as well as uncertainties over whether the contractual workers will be regularized, given Civil Service Commission requirements,” noting that there are state workers who have been on temporary status for “up to 15 years already” under the so-called “job order” scheme.

“On the other hand, equal opportunity is not given to private employers as it isolates them by increasing the cost of doing business that could hinder their operations and slow down growth,” the groups said.

Finally, the new measure may contradict the very purpose it was supposed to serve, since it “can have the opposite effect on job creation and security of tenure” as businesses may step up use of automation and artificial intelligence to eliminate jobs requiring low skills or even move “to more investor-friendly foreign destinations.”

Sought for comment, Benjo Santos A. Benavidez, DoLE assistant secretary for Labor Relations, Special Concerns and Regional Operations, said in a telephone interview that “[t]he bill is not only for the protection of workers but also the protection of businesses.”

Moreover, he added, EO 51 and DO 174 do not penalize violators, whereas, under a legislated law, “the secretary has power to issue a penalty and close establishments.”

Legislated laws are also more permanent than executive measures, since the former go through both houses of Congress while the latter can be scrapped overnight by a succeeding order. — withGillian M. Cortez