Contracting: Contracts and Rights of of Contractual Employees

Details

Category: HR, Labor and Office

(Part 2 of a 6-part series. On 14 November 2011, the Department of Labor and Employment (DOLE) issued Department Order No. 18-A, which becomes effective fifteen (15) days after completion of its publication in a newspaper of general circulation. Considering that Department Order 18-A was published on 19 November 2011, it shall take effect on 4 December 2011.)

All contractor’s employees, whether deployed or assigned as reliever, seasonal, week-ender, temporary, or promo jobbers, shall be entitled to all the rights and privileges as provided for in the Labor Code, including the following:

1. Safe and healthful working conditions;

2. Labor standards such as but not limited to service incentive leave, rest days, overtime pay, holiday pay, 13th month pay, and separation pay as may be provided in the Service Agreement or under the Labor Code;

3. Retirement benefits under the SSS or retirement plans of the contractor, if there is any;

4. Social security and welfare benefits;

5. Self-organization, collective bargaining and peaceful concerted activities; and

6. Security of tenure.

Contracts required under the new rules

There are two contracts that are required, specifically the following:

1. Employment contract between the contractor and its employee. The contractor shall inform the employee of the foregoing terms and conditions of employment in writing on or before the first day of his/her employment. This contract shall include the following terms and conditions:

a. The specific description of the job, work or service to be performed by the employee;

b. The place of work and terms and conditions of employment, including a statement of the wage rate applicable to the individual employee; and

c. The term or duration of employment that must be co-extensive with the Service Agreement or with the specific phase of work for which the employee is engaged.

2. Service Agreement between the principal and the contractor, which shall include the following:

a. The specific description of the job, work or service being subcontracted.

b. The place of work and terms and conditions governing the contracting arrangement, to include the agreed amount of the services to be rendered, the standard administrative fee of not less than ten percent (10%) of the total contract cost.

c. Provisions ensuring compliance with all the rights and benefits of the employees under the Labor Code and these Rules on: provision for safe and healthful working conditions; labor standards such as, service incentive leave, rest days, overtime pay, 13th month pay and separation pay; retirement benefits; contributions and remittance of SSS, Philhealth, PagIbig Fund, and other welfare benefits; the right to self-organization, collective bargaining and peaceful concerted action; and the right to security of tenure.

d. A provision on the Net Financial Contracting Capacity of the contractor, which must be equal to the total contract cost.

e. A provision on the issuance of the bond/s as defined in Section 3(m) renewable every year.

f. The contractor or subcontractor shall directly remit monthly the employers’ share and employees’ contribution to the SSS, ECC, Philhealth and Pagibig.

g. The term or duration of engagement.

Duty to produce copy of contract between the principal and the contractor

The principal or the contractor shall be under an obligation to produce a copy of the Service Agreement in the ordinary course of inspection. The contractor shall likewise be under an obligation to produce a copy of any contract of employment when directed to do so by the Regional Office Director or his/her authorized representative.

You may also want to read:

New Guidelines for Contracting or Subcontracting

Contracting: Termination of Contractual Employees

Contracting: Liabilities of Principal and Contractor

Contracting: Registration of Legitimate Contractors

Contracting: Financial Relief Program

Full text of Department Order No. 18-A