EMPLOYERS are seeking the removal of their liability in cases where a service provider is found to be engaged in illegal contractualization. They said this practice scares off foreign investors as it is only the Philippines that has this labor rule.
In a letter to the Department of Labor and Employment (DOLE), a copy of which was obtained by the BusinessMirror, employers asked the labor agency to delete Section 6, Article 109, of the Labor Code of the Philippines. The provision provides that employers are to be held solidarily liable with the job contractor for any violation of labor laws.
Employers argued that any violation of a contractor should make the said contractor “solely liable for its own actions,” and that the “principal shall be free from any liability that shall arise from the shortcomings of its contractor.”
Citing Article 1311 of the Civil Code, employers said contracts should only take effect between parties, their assigns and heirs. Exception is given in cases where the rights and obligations arising from the contract are not transmissible by provision of law.
“Since the principal does not have anything to do with the contractor’s workers, the principal shall not be held liable for anything due to the workers inasmuch as it is the contractor and not the principal who is the employer of the said workers,” the employers argued.
Nowhere in the world, they said, is an employer held accountable for an act done by a third party that is completely outside of its jurisdiction and absolutely independent from its influence. If there is one third party that should be held liable, it is the DOLE, employers added.
“Considering that it is the Department of Labor and Employment which is responsible in the determination of the qualifications and approval of the registration of a legitimate job contractor, it logically follows that it should be the DOLE, and not the employer, which shall be held accountable in case an approved legitimate job contractor is subsequently found to be engaged in illegal practices,” they said.
Management should only be brought to litigation if it is found transacting services and contracts out jobs with an unregistered or unaccredited contractor, employers claimed. Outside of that, it should be the service provider’s liability only, they added.
“Lastly, to hold a principal solidarily liable for the acts of its contractor will turn off foreign direct investors as they would not understand why the Philippines, of all countries, have to have this onerous provision,” employers said.
This proposal, among others, were transmitted by businesses to the DOLE, as the labor office crafts the Cabinet version of a measure guaranteeing workers their security of tenure. The previous SOT bill, which was passed by both houses of Congress, was vetoed in July by President Duterte.
The President, in his veto message, said the measure could affect the efficiency and economy of the operations of firms, which could hinder businesses from expanding or hiring additional workers.