LAW/DOLE DEPARTMENT ORDERS/BILLS

ON
LABOR CONTRACTING

P.D.442

D.O. 18-A, S. 2011

Labor Code of the

Philippines
(Art 106-109)

Rules Implementing Arts.

106-109 of the LC, as
amended

D.O. 131.S.
2016
Revised Rules on
Labor Law
Compliance

SENATE BILL
117
An Act
Strengthening
the Prohibition
Against LaborOnly
Contracting,
(status: 1st reading,
referred to Com.on
Labor8/1/16r)

SENATE
BILL 174
An Act
Professionalizing
the Contracting and
Subcontracting
Industry, Requiring
a Transition Support
Program, and
Prohibiting
Oppressive
Practices,
(status: 1st reading,
referred to Com.on
Labor8/1/16r)

Salient Features
An arrangement whereby a
principal agrees to put out or
farm out with a contractor the
performance or completion of
a specific job, work or service
within a definite and
1. Definition of Labor
none
Contracting
predetermined period,
regardless of whether such
job, work or service is to be
performed or completed
within or outside the premises
of the principal
Requirements For Valid Labor-Contracting

1. Qualifications of a
Labor Contractor

Contractor must be:

1.Registered
2.Distinct and
independent business
3.Exercise control over
workers
4.Substantial capital
5. Have substantial
capital of 3M Php

amended the
capitalization reqt to
5M Php paid up or
net worth of
contractors in
Art.106

100 percent of
authorized capital stock
owned by Filipinos

2. Posting of Bond

3. Rights of
Contractors
Employees

6. Required Contracts

Er may require
contractor to post a
bond equal to the
cost of the labor
under the contract
which shall pay for
wages of ees should
contractor fail to.

-added that bonds may refer

to the security posted by the
principal for the payment of
services of the contractors
under Service Agreement

1. Safe and healthful working

conditions
2. Labor standards benefits
3. Retirement benefits under
the SSS or retirement
plans of the contractor, if
any
4. Social Security and
Welfare benefits
5. Self-organization,
collective bargaining and
peaceful concerted
activities
6. Security of Tenure
1. Employment Contract
between contractor and
employee
- must comply with Art 279
and 280 of the Labor Code
Art 279. Security of Tenure
Art.280. Regular and Casual
Employees
-contract must contain the ff:
1.Specific description of the
job, work or service
2. Place of work. Terms and
conditions of employment,
statement of wage rate
3. Term or duration of
employment that is coextensive with the service
agreement, or the phase of
work employee is engaged
2.Service Agreement
between the principal and

Mandatory posting of
bond by contractor to
the employer to pay for
any claim by the
employees

7. Duties of the
Principal

8. Mandatory
registration and
registry of legitimate
contractors

9.Renewal of

contractor
1. Specific description of the
job, work or service being
contracted
2. Place of work and terms
and conditions of the
contracting arrangement to
include the ff:
a. labor cost
b. administrative fee of not
less than 10% of the total
contract cost
3. Provisions on the rights
and benefits of employees
under the Labor Code
4.Provision on the Net
Financial Capacity of the
Contractor
5.Provision on the issuance
of bond renewable every
year
6.Direct monthly remittance
of contribution to SSS,
ECC, Philhealth and Pagibig
7. Term or duration of
engagement
8. Must conform to DOLE
Standard Computation and
Service Agreement,
attached as Annexes A and
B
Bound to observe provisions
of these Rules
Mandatory for all
persons/entities/cooperativ
es, acting as contractors, to
register with the Regional
Office of the DOLE where it
principally operates
-registration effective for 3
years
30 days before the expiration

of registration

Registration
Liability of Principal

Enforcement of Labor
Standards and
Working Conditions

Solidary
Regl Director through
authorized representatives
shall:
1. Conduct routine inspection
-access to employees
records and premises at
any time of the day
- question any employee and
investigate any fact
necessary
2. Issue Compliance Orders
Purpose: To determine
violations or/and aid in the
enforcement of provisions
of the Labor Code

Provided different
modes of enforcement
of Labor Laws. (Pls
see: Summary of Labor
Law Compliance)