Labor dep’t orders Jollibee group to regularize over 7,000 workers

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A poster featuring Jollibee’s mascot is seen on a street in Manila in this June 22, 2011 photo. -- AFP

THE DEPARTMENT of Labor and Employment (DoLE) has ordered permanent employment status for more than 7,000 workers of Jollibee Foods Corp. (JFC) contractors and refund nearly P20 million in “illegal payment collections” to affected employees as part of ongoing checks on quick-service restaurants.

In a statement on Wednesday, DoLE cited a report to Undersecretary Joel B. Maglunsod by National Capital Region Director Henry John S. Jalbuena that the latter has ordered JFC “to regularize 6,482 workers” as well as 704 others employed by contractors operating branches of Burger King, which is one of the brands under the same company.

Aside from providing regular employment status to the workers, DoLE also ordered JFC “to return unlawful wage deductions, bonds, donations, shares and other illegal payment collections” totaling some P19.569 million.

The statement also said that DoLE’s Makati, Pasay and Quezon City field offices have either met with or are set to meet management of branches of Chowking and Mang Inasal, which are also brands under JFC.

JFC said in a statement late Wednesday afternoon that it had “received the order from DoLE and we’re following the process DoLE prescribed to appeal this order.”

Besides JFC, DoLE said it has scheduled inspection of branches of McDonald’s, which is operated by Alliance Global Group, Inc.’s Golden Arches Development Corp., and of KFC under the Ramcar Group of Companies. Alliance Global shares ended Wednesday flat at P13.60 each.

McDonald’s Philippines does not practice contractualization and has not used the services of manpower agencies since it started operations in 1981, Adi Timbol-Hernandez — the company’s senior communications manager — said in a statement.

Wednesday’s news weighed on JFC stocks which dropped 3.85% to P285 apiece by the end of trading, compared to falls of 0.53% of the industrial sectoral index under which they are listed and 0.63% for the Philippine Stock Exchange index.

Manuel Antonio G. Lisbona, president of PNB Securities, Inc., said in a mobile phone message when asked for comment that “[t]he impact on JFC will be an increase in its compensation and benefits expense, which in turn may cause a decline in its profits.”

“If it has a retirement plan in place for regular employees, the additional employees will have to be provided for by JFC and will also result in higher costs and may affect JFC’s bottom line also.”

JFC grew net income that went to parent equity holders by 15% to P7.089 billion last year from P6.165 billion in 2016, as system-wide sales — from both company-owned and franchised stores — increased by 15.2% to P171.77 billion from P149.142 billion.

The same comparative years saw general and administrative expenses increase by a slower rate compared to revenues at 14%, according to its year-end report.

JFC operated 2,875 restaurant outlets within the country as of end-December last year — 1,062 under the Jollibee brand, 526 under Chowking, 495 under Mang Inasal, 427 under Red Ribbon, 272 under Greenwich and 93 under Burger King — in addition to 922 stores abroad under various brands.

“JFC remains committed to complying with the law and DO (Department Order No.) 174, which allow contracting arrangements with legitimate service providers,” the company said in its statement to journalists.

“In compliance with regulations, we deal only with reputable service contractors that have been duly accredited and registered with DoLE. We have been cooperating and will continue to cooperate with DoLE.”

While noting that “[t]he DoLE announcement made an impact” on JFC stocks, Lexter L. Azurin, senior equity analyst at AB Capital Securities, Inc., said in a telephone interview when sought for comment that “I think, for now, investors are trying to assess also the potential impact since they (JFC) have to allocate additional provisions from the said issue.”

“But I guess, overall, we don’t see any major implications,” he said, adding that the negative reaction seen on Wednesday will likely be short-lived.

The news came amid lingering questions about the current government’s position on contractual labor arrangements.

While President Rodrigo R. Duterte had vowed to oppose all forms of such arrangements during the 2016 election campaign, his government has lately tried to straddle opposing views of organized labor and employers — who have argued for keeping contractual schemes at least for non-core and seasonal jobs — resulting in a delay in the release of a long-awaited executive order that was supposed to define the administration’s policy on this matter. — with interviews by Arra B. Francia and Reuters