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Labor-Only Contracting Explained

The document discusses labor-only contracting in the Philippines. Article 106 of the Labor Code provides that if a contractor or subcontractor fails to pay wages according to the Code, the employer is jointly liable to pay those wages. The Secretary of Labor and Employment can restrict or prohibit contracting-out of labor to protect workers' rights. There is "labor-only" contracting where a person supplying workers does not have substantial capital investment and the workers perform activities directly related to the employer's main business. In such cases, the person is considered an agent of the employer, who is responsible for the workers as if they were direct employees.

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Christoffer Allan Liquigan
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70 views1 page

Labor-Only Contracting Explained

The document discusses labor-only contracting in the Philippines. Article 106 of the Labor Code provides that if a contractor or subcontractor fails to pay wages according to the Code, the employer is jointly liable to pay those wages. The Secretary of Labor and Employment can restrict or prohibit contracting-out of labor to protect workers' rights. There is "labor-only" contracting where a person supplying workers does not have substantial capital investment and the workers perform activities directly related to the employer's main business. In such cases, the person is considered an agent of the employer, who is responsible for the workers as if they were direct employees.

Uploaded by

Christoffer Allan Liquigan
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Q1. Can subcontract employees not be used for main business?

Can only subcontract, which provides only manpower to employers, not be used for main business or can other types of subcontract also not be used for main business?

Articles 106 of the Labor Code of the Philippines provide for Labor -Only Contracting, to wit;

Article 106. Contractor or subcontractor. Whenever an employer enters into a contract with another person for the performance of the formers work, the employees of the contractor and of the latters subcontractor, if any, shall be paid in accordance with the provisions of this Code. In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract, in the same manner and extent that he is liable to employees directly employed by him. The Secretary of Labor and Employment may, by appropriate regulations, restrict or prohibit the contracting-out of labor to protect the rights of workers established under this Code. In so prohibiting or restricting, he may make appropriate distinctions between labor-only contracting and job contracting as well as differentiations within these types of contracting and determine who among the parties involved shall be considered the employer for purposes of this Code, to prevent any violation or circumvention of any provision of this Code. There is "labor-only" contracting where 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, and the workers recruited and placed by such person are performing activities which are directly related to the principal business of such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him.

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