Japanese firms told to regularize more than 1,300 workers

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Metro Manila (CNN Philippines, November 24) — Two Japanese companies were ordered to give regular employment status to more than 1,300 workers, the Labor Department said Friday.

Medical equipment manufacturer Terumo Philippines Corp. in Binan, Laguna and automotive interior parts company Toyo Seat Philippines Corp. in Santa Rosa, Laguna were found to be engaged in labor-only contracting activities, the Department of Labor and Employment (DOLE) said in a statement.

Terumo and the three contractors it got their workers from were ordered to give regular status to 1,048 persons, the Labor Department's regional director Zenaida Angara-Campita said.

Toyo Seat Corp. and its 14 contractors were ordered to regularize 284 of their workers, after they were prohibited from engaging in labor-only and subcontracting activities, the regional DOLE official said. The certificates of registration of seven of its contractors were canceled and they are no longer considered legitimate, she added.

This comes as the House Committee on Labor and Employment on Thursday said it "expanded the parameters" that define labor-only contracting in a draft bill. The draft bill consolidates 25 other bills filed in the lower house that seek to end the practice of contractualization or "endo". The yet-unnumbered bill aims to strengthen the private sector workers' security of tenure and restrict the practice of fixed-term employment, the house committee said.

Article 106 of the unnumbered bill differentiates job contracting from labor-only contracting. Job contracting is allowed.

"Under the changes to Article 106, contracting is considered labor-only if the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others; or the workers recruited and placed by such persons are performing activities which are directly related, indispensable and essential to the principal business of the employer," the house committee said in a statement.

The committee's technical working group (TWG) noted that the two parameters had to be met for contracting to be considered "labor-only."

But the bill will contain a third parameter of labor-only contracting.  "If the control over the outcome of the employee lies with the person supplying the worker, it shall also be considered labor-only contracting," said Representative Ariel Casilao of the Anakpawis party-list.

With this third condition, the house committee's technical working group said "that meeting any of the three conditions will qualify contracting as labor-only."

In the case of Terumo Corp., the DOLE said on Friday that the contractors did not have substantial capital and that the workers used Terumo's equipment and tools to perform the work they provided.

Other amendments by the house committee to the bill include Article 106-A, a condition which states that job contractors' licenses will not be renewed by the DOLE unless the department secretary determines that the industry they supply workers to is classified "as open for legitimate job contracting."

The consolidated bill will also see amendments to Article 294, on workers' security of tenure. On top of the employer being unable to terminate employment without just cause and due process, an illegally dismissed employee is entitled to reinstatement without losing seniority rights and benefits. The employer also needs to contribute its share in the Social Security System, Philippine Health Insurance Corporation, and Home Development Fund of the illegally dismissedd employee.

Lawmakers recognized the difficulty of deciding on the amendments.

"It's very hard to draw the line because of course, we don't want to stifle entrepreneurship in the country. But we also don't want our laborers to lose out," said Bukidnon Representative Manuel Zubiri during the working group meeting.

Ending "labor-only contracting" or "endo" is one of President Rodrigo Duterte's campaign promises. Labor groups and government officials were working towards this, but Labor Department order 174 issued in March fell short of labor groups' expectations.  

READ: DOLE admits failure to end contractualization