On 16 March 2017, Secretary Bello issued Department Order No. 174-17, the long-awaited order governing contractualization. Said order was touted as the fulfillment of President Duterte’s campaign promise to end ENDO. Article 106 of the Labor Code grants the Secretary of Labor and Employment the discretion whether to restrict or prohibit contracting out of labor. It is unfortunate though that given this singular chance to stop contractualization, Secretary Bello instead chose to promote and further institutionalize this nefarious practice to the detriment of workers who only long for security of tenure in their workplaces.

Apart from cosmetic changes in increasing the registration fee to Php 100,000.00 and the capitalization of contractors from 3 million to 5 million pesos and reducing the validity of an agency’s certificate of registration from 3 to 2 years, the substance of Department Order 174-17 is almost a verbatim reproduction of Department Order No. 18-A. The definition of labor-only contracting, for instance, was the same definition lifted from the previous Department Order No. 18-A. Thus, for as long as an agency meets the capitalization requirement, the contractor/subcontractor is allowed to supply workers performing work/service that is directly related to main business of the principal employer. Section 6 of D.O. 174-17 likewise contains a similar enumeration found in Section 7 of D.O. No. 18-A which lists the prohibited forms of subcontracting. One notable addition in D.O. No. 174-17 is Section 6 (f) where requiring contactor/subcontractor’s employees to perform functions currently being performed by regular employees of the principal  is treated as an illicit form of subcontracting. While ostensibly added to protect/promote regularization, Section 6(f) will only encourage and abet the wholesale abolition of department/section staffed by regular employees for what will prevent the employer from outsourcing the entire department/section of a particular company in order to ensure that functions performed by the subcontracted employees are no longer the same functions currently performed by regular employees.

If the goal of Department Order No. 174-17 is to bring an end to contractualization, it is doomed to fail. Said department order is simply the latest in a series of department orders (Department Order No. 10-97, Department Order No. 3-01, Department Order No. 18-02 and Department Order No. 18-A-11) that have failed to address the problem of contractualization. This only serves to underscore the point that what is truly needed is remedial legislation. Subcontracting can not be solved by department orders when the law itself is the problem. If President Duterte is truly sincere in his desire to end ENDO, passage of House Bill 55 authored by Hon. Kaka Bag-ao and Senate Bill 217 authored by Hon. Risa Hontiveros is imperative. We call upon the President to certify as urgent these bills currently pending in Congress. Pass the Security of Tenure (SOT) Law NOW!

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