Illegal subcontractors blamed for ‘unfair’ labor practices

CEBU CITY, Philippines — A security services provider here said workers can’t be blamed for considering the practice of subcontracting as unfair because there are some subcontractors, especially "illegal" ones, who don’t pay the correct wages and benefits.

"Subcontracting is a dirty word among labor organizations. Sometimes, this is true because there are employees of subcontracting companies who suffer from lower wages, no benefits and unhealthy and hazardous working conditions," said Michelle G. Mendez-Palmares, president and general manager of Centurion Security Agency, Inc.

To avoid these and put the fears of workers to rest, she urged companies that outsource some of their business processes to be vigilant against labor law violations by subcontractors.

Among the labor laws that subcontractors are required to comply with is the minimum wage law. In Central Visayas, Ms. Palmares said the Labor department has given employers to comply with the new wage adjustment until September.

The Central Visayas wage board granted in May a P17 increase in the basic pay, bringing the daily minimum wage in the region to P267.

In a recent forum on subcontracting here, Ms. Palmares said companies that farm out some business processes must demand some documents from independent contractors.

These include a certificate of registration or business name; business permit from the local government; registration with the Department of Labor and Employment (DoLE); a sworn undertaking that contributions to the Social Security System, PhilHealth, Pag-IBIG and Bureau of Internal Revenue are remitted; and a contract of employment between the contractor and the contractual employee.

Ms. Palmares also urged employers to ensure that the right of control remains with the subcontractor.

"You can’t dismiss a contractual employee. You have to go to the subcontractor, who will dismiss or replace the employee. You can’t ask contractual employees to undertake tasks that are undertaken by regular employees," she told human resources managers from the Mactan Economic Zone 1 and 2.

Contracting and subcontracting arrangements are allowed and regulated under Department Order No. 18-02 of the Labor department.

Legitimate subcontracting is an arrangement wherein the contractor or subcontractor carries on an independent business and undertakes the outsourced job on its own account and under its own responsibility. Among the out-sourced jobs are accounting, janitorial, messengerial and security services.

It becomes illegal when the contractor or subcontractor merely recruits, supplies or places workers to perform a job, work or service for a principal and the contractor does not have substantial capital or investment to perform the task. This is referred to as labor-only contracting. — Marites S. Villamor, BusinessWorld

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