I.

Background

A. Preliminary Discussion

According to the 2015 Integrated Survey of Labor and Employment (ISLE) of

the Philippine Statistics Authority (PSA), an estimated 7 million Filipino workers in the
country are in uncertain employment conditions that usually fall under either the
exploitative end of contract (ENDO) or labor-only contracting (LOC) arrangements.1
An “Endo” is a short-term employment practice in the Philippines and also
known as End of Contract. It is a practice of giving an initial six-month contract before
making an employee into a regular one with benefits. It is also referred to as “5-5-5”
which still falls as contractualization.

The industries of manufacturing, retail and accomodation are usually engage

in such form of scheme. Because of this abusive and exploitative employment
relationships, labor groups in the country are pushing for total prohibition of all forms of
contractualization by virtue of direct hiring as a basic principle of employment. This is
due to abject poverty, the lack of employment opportunities, and the generally
ambivalent perception of employees towards joining unions, which forces workers to
merely suffer in silence rather than face the possibility of unemployment.

In the year 2016, during the time of President Rodrigo Duterte’s campaign, he
promised to phase out contractualization and improve the labor in the Philippines. Upon
his election, President Duterte still continued his stand against contractualization. And
on May 1, 2018 President Duterte signed the Executive Order (EO) Implementing
Article 106 of the Labor Code of the Philippines, as ammended, to protect the right to
security of tenure of all workers based on social justice in the 1987 Philippines
Constitution.2 It’s purpose is to put an end to contractualization.

President Rodrigo Duterte argued that the bill effectively banned other forms
of contractualization that do not particularly harm employees. After President Duterte
signed the Executive Order, the issue of the Endo Bill ensued.

“Indeed, while labor-only contracting must be prohibited, legitimate job-

contracting should be allowed, provided that the contractor is well capitalized,” the
president told lawmakers.3

Above all, the main purpose of this Endo Bill is to strengthen provisions of the
Labor Code of the Philippines that prohibit labor-only contracting and give assurance to
the employees of recieveing their rights.

1
https://www.rappler.com last accessed 15 September 2019
2 Executive Order No. 51 (s.2018)
3 https://www.philstar.com last accessed 15 September 2019

1
II. Issues in the Society

1.) Advantage and Disadvantage

This topic of Endo Bill has been the subject of many debates in the
country. Others concluded that contractualization is essential to economic growth but
others believe that it affects a lot of workers who are subject to it. Companies in the
Philippines have strongly criticized of maintaining the practice of contractualization or
the endo. But a lot of employees protested about the lack of benefits and bonuses they
are recieving because they are not regularized. Some of the benefits that they are not
receiving include: PhilHealth, SSS, Pag-IBIG, Home Development and Mutual fund
along with many others.

On the otherhand, business groups opposed to this contractualization

because this would lead to unintended adverse consequences like business closures
and/or eventual reduction in job opportunities. According to the PALSCON4 President
Rhoda Caliwara, outlawing the practice of contractualization can throw about a million
workers out of a job.5 Because businesses cannot hire them contractually, this will also
cause a drought for companies as the latter will lose an option to hire workers for the
short term.

2.) Application of Endo or Contractualization in the Society

Here in the Philippines, law requires companies to regularize their workers

after six months. But with the practice of Endo, corporations terminate their workers a
month or two before their sixth month of employment. What corporations do is just hire
then terminate their contracts within this five-month period and continually repeat this
process to create a vicious cycle of ‘end of contract’.

This kind of cycle prevent these laborers from enjoying the full benefits of
regular employment such as 13th month pay and allow companies to utilize the skills
and talents of workers without properly paying them.

However, some companies in certain industries hire contractual laborers for

various reasons that do not necessarily violate the basic rights of these workers. For
example, a publishing company hire contractual workers during the last month of
school, throughout summer, and up until the first few months of a new school year.
During this period of time, schools will be making their orders and textbooks have to be
delivered swiftly. With that, demand for book deliveries are high. In those instances, the
contractualization is necessary and does not only benefit the company but the
employers as well.

However, in view of this example, some employers still operates under the
guise of contractualization to exploit workers. In this unfair labor practice, many Filipinos
are very much affected and abused in their rights.

4
Philippine Association of Local Service Contractor Inc.- is a legitimate local service contractors
organized primarily to further the cause of the government and labor sectors by providing employment via
sub-contracting activities geared towards the upliftment of labor standards of the country
5 Top 3 ways the End of “Endo”will affect Business in the Philippines, Nix Eniego, 2016, last accessed 15

September 2019

2
B. Legal Bases

On 23 May 2019, the Senate passed Senate Bill 1826 also known as the
"Security of Tenure and End of Endo Act of 2018.”6 entitled “An Act of Strengthening
Workers Right To Security Of Tenure, Amending For The Purpose of Articles 106, 107,
108, And 109 Of Book III, And Articles 294, 295, 296, And 297 Of Book VI Of
Presidential Decree No. 442, Otherwise Known As The Labor Code Of The Philippines,
As Amended,” The bill seeks to strengthen provisions of the Labor Code of the
Philippines that prohibit labor-only contracting by: providing penalties against violators,
limiting job contracting to licensed and specialized services, classifying workers into
regular and probationary employees while treating project and seasonal employees as
regular employees in terms of benefits, providing security of tenure for workers,
clarifying standards on probationary employment.

Moreover, Article 106 of the Labor Code7 allows contractualization. And on

the other hand, Article 280 also known as the “Regular and Casual Employment”8of the
same Code allows the hiring of contractuals and endos. Department orders have been
and will be issued by the Department of Labor and Employment in order to placate the
workers and labor unions affected by the endo and contractualization
arrangements. However, until Article 106 and 280 of the Labor Code are repealed or
amended, endo and contractualization will continue to dominate the Philippines.

Under the bill, the Secretary of the Department of Labor and Employment
(DOLE)9 is given the power to preventively or permanently close the operations of any
labor-only contractor. The bill also introduces a new Article 10710 in the Labor Code,
concerning the licensing and regulation of contractors for specialized work, jobs or
services. The bill states that the probationary employment period shall not exceed six
months from the first day of service regardless of the nature of work to be performed
unless it is covered by an apprenticeship agreement which provides for a longer period.

Among the top companies, Jollibee Food Corporation, Dole Philippines Inc,
and Philippine Long Distance Telephone Corporation (PLDT) are flagged as employing
illegal practices. Labor Secretary Silvestre Bello III said a total of 3,377 companies were
found to be involved in labor-only contracting practices. From June 2016 to April 2018,
DOLE was able to inspect only 99,526 companies out of the 900,000 establishments
nationwide due to manpower constraints. DOLE said that 224,852 workers are yet to be
regularized under the establishments said to be involved in illegal contracting.11
Moreover, If companies are found practicing illegal forms and/or exploiting legal
loopholes12, then they should be dealt with accordingly and should be legally compelled
to absorb the costs of regularizing employees as legitimate costs for doing business.

6 SB 1826 (s.2018)
7 Article106 of Labor Code also known as Contractor or Subcontactor
8 Artcile 280 of Labor Code also known as Regular and Casual Employment
9 DOLE- is the executive department of the Philippine Government mandated to formulate policies,

implement programs and services, and serve as the policy-coordinating arm of the Executive Branch in
the field of labor and employment.
10 Article 107 of Labor Code also known as Licensing of Contractors and Sub-Contractors
11 https://www.rappler.com last accessed,15 September 2019
12
It is a small mistake which allows people to do something that would otherwise be illegal.

3
C. Considerations/ Recommendation

Upon the emergence of the Endo Bill in the Philippines, much controversy arose.
This Bill proposed much changes in the Labor Code on contracting arrangements and
employment relationships in the Philippines. There is no doubt that “endo” practices
violate the law. The anti-contractualization rhetoric, however, goes beyond the
condemnation of those practices but President Duterte emphasizes that the
government, after all, is mandated by the constitution to provide job security to all
workers.

Endo practice is contrary to law, thereafter the government is mandated to end

this kind of practice. This fact, however, should not prevent citizens from the practice of
regularization and from their rights.

There are two fundamental reasons why workers want to be regular employees.
First, regular workers are entitled to certain benefits that temporary employees are not.
Second, regular workers can be dismissed only for lawful or authorized cause and with
observance of due process. This means in practice, that it is very difficult and costly for
firms to dismiss regular workers (security of tenure).13

The country’s unemployment rate was preliminarily estimated at 5.1 percent as of

April,down from 5.5 percent in the same month in 2018, based on figures provided by
the Philippine Statistics Authority (PSA). 14 and through passing the Endo Bill it would
leave the practice of the Filipino workers from being unprotected, unemployed and
wihout recieving any benefits.

In the 1987 Constitutiion of th Philippines, under Article XIII “Labor”15:

Section 3. The State shall afford full protection to labor, local and
overseas, organized and unorganized, and promote full
employment and equality of employment opportunities for all.

It shall guarantee the rights of all workers to self-organization,

collective bargaining and negotiations, and peaceful concerted
activities, including the right to strike in accordance with law. They
shall be entitled to security of tenure, humane conditions of work,
and a living wage. They shall also participate in policy and decision-
making processes affecting their rights and benefits as may be
provided by law.

The State shall promote the principle of shared responsibility

between workers and employers and the preferential use of
voluntary modes in settling disputes, including conciliation, and
shall enforce their mutual compliance therewith to foster industrial
peace.

The State shall regulate the relations between workers and

employers, recognizing the right of labor to its just share in the
fruits of production and the right of enterprises to reasonable
returns to investments, and to expansion and growth.

13
https://dirp3.pids.gov.ph/, last accessed on 15 september 2019
14 ttps://www.philstar.com, last accessed on 15 September 2019
15 Section 3, Article 13 “Labor”

4
 We stand with the fact that our Constitution guarantees to all workers the right to
security of tenure, that is, the right to continue in one’s employment unless the correct
procedure to terminate employment is followed and, as important, unless there is a just
reason to terminate the worker’s services. As stated in the law, the workers have the
right of full protection and equality of employment oppportunities.

This fact, however, the government needs to carefully weigh the effects this Endo
Bill. Ending this contractualization in the Philippines would greatly give a big impact to
every employees in our country. They would be properly compensated and would be
exercising their rights as a Filipino citizen. It is in light of the above observations that the
government should address the anti-contractualization issue.

Given all the reasons for and against contractualization, I empathize with our
government and labor groups to end all forms of contractualization for the right of every
citizen. It was also understood for the position of business groups that regularizing all
employees would eventually kill businesses and reduce job opportunities. Thus, for
everyone’s fairness and just it is important to have a clear distinction between lawful
and unlawful forms of contractualization.

https://business.inquirer.net/215071/contractualization-which-meaning-do-we-mean

https://newsinfo.inquirer.net/1036356/duterte-pushes-anti-contractualization-bill