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Duterte strikes down stricter labor contracting rules

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By Vann Marlo M. Villegas, Reporter

PRESIDENT Rodrigo R. Duterte (PRRD) has vetoed Senate Bill No. 1826/House Bill No. 6908 or the security of tenure (SoT) measure that would have laid down stricter rules on labor contracting, after top state economic managers and major business groups warned of potential economic repercussions.

The veto ended nearly a month of speculation on Mr. Duterte’s decision on the controversial measure, with labor groups like the Trade Union Congress of the Philippines (TUCP) reminding him of his promise during the 2016 presidential campaign to end all forms of labor contracting.

Mr. Duterte had admitted he was still undecided as of Monday, while his spokesman, Salvador S. Panelo verified rumors late Thursday evening that the measure had been vetoed, only to recant less than an hour later, telling reporters in a mobile phone message: “Security [of] tenure bill not yet vetoed. PRRD still studying the pros and cons. Sorry for the error. We will know tomorrow for sure.”

The measure was to lapse into law Saturday, July 27 — 30 days after Congress transmitted it to Malacañan Palace, sans any Executive action.

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In his July 26 veto message to the Senate, Mr. Duterte said that while he stands firm in his commitment to protect workers’ right to security of tenure, the enrolled bill “unduly broadens” the scope of labor-only contracting, which is already banned by law.

“While the bill mostly codifies into law existing rules, regulations, orders and jurisprudence on matters of labor-only contraction and security of tenure, it likewise unduly broadens the scope and definition of prohibited labor-only contracting, effectively proscribing forms of contractualization that are not particularly unfavorable to the employees involved,” Mr. Duterte said.

Mr. Duterte also said that legitimate job-contracting should be allowed provided that the contractor is well-capitalized, has sufficient investments and affords its employees all benefits under law.

“Businesses should be allowed to determine whether they should outsource certain activities or not, especially when job-contracting will result in economy and efficiency in their operations, with no detriment to the workers, regardless of whether this is directly related to their business,” he said.

Major business chambers have argued that the proposed new law was superfluous in the wake of Executive issuances like Executive Order No. 51, series of 2018, and the Department of Labor and Employment’s Department Order No. 174, series of 2017, that had further fleshed out labor contracting limits.

And in a July 16 joint press statement, 13 local and foreign business chambers asked “the president to veto the security of tenure bill” since it “is redundant as there are previously approved laws that already protect workers from ‘endo’ (end of contract scheme), it impinges on management prerogative anchored on the constitution… it excludes contract workers hired by government agencies” and “could have a negative impact to the Philippine economy and to the workers whom the bill aims to protect.”

VETO OVERRIDE?
Asked if Congress would move to override the president’s veto — which under the Constitution would require a three-fourths vote of each chamber — Senate President Vicente C. Sotto III replied via text: “We could in the Senate, but doubtful in the House [of Representatives].”

“Besides, I have to check if a current Congress may act on behalf of a previous Congress” that ended on June 3, Mr. Sotto added.

Telling reporters separately that he was “crestfallen” by the veto, Mr. Sotto said he would ask Senator Emmanuel Joel J. Villanueva to refile the bill in this just-opened 18th Congress.

TUCP Vice-President Luis M. Corral said his group was disappointed with Mr. Duterte’s veto. “This is already a watered-down version of what was certified, in fact even if he had signed the SoT bill, legitimate contractualization would still be alive and, well, the bill expresses and expressed the wisdom of the representative by the people,” he said in a press conference. “We will… align with Senator Joel Villanueva who has pledged and (TUCP Partylist) Cong. Raymond (Democrito C.) Mendoza who was promised that they will not renege on their fight to end contractualization.”

Philippine Chamber of Commerce and Industry (PCCI) Chairman George T. Barcelon welcomed Mr. Duterte’s veto, saying by phone: “Were happy that the president was able to get good advice and with his judgement on what is really better for the country.”

“… (T)he private sector, given the right environment, definitely would try to hire more people… and we’re also… in the chamber… trying to attract foreign investments to the country.”

Employers Confederation of the Philippines President Sergio R. Ortiz-Luis, Jr. also welcomed Mr. Duterte’s decision, saying the vetoed measure would have been “harmful to the economy because it can drive away investment and we will lose some employment.”

“(T)he bill actually is superfluous because it contains provisions that will also eliminate some contracts that are done all over the world and if we do that we will be pricing ourselves, so to speak, out of the market,” he said in a telephone interview.

Mr. Panelo sought to assuage the negative sentiment of some sectors, saying in a statement: “The authors of the security of tenure bill, as well as the members of both houses of Congress, should not be crestfallen and disappointed, nor should the labor sector feel saddened and betrayed by the President’s veto of the SoT bill.”

“While the President has vetoed the enrolled bill which attempts to strengthen the security of tenure of our workers, his promise to end unfair practices of contractualization — such as labor-only contracting and end-of-contract (endo) schemes — remains and will be pursued, if not soonest, still within the term of the President.”

He cited the regularization of 462,428 contractual workers from August 2016 to May 2019 as proof of Mr. Duterte’s commitment in this regard.

At the same time, Mr. Panelo said, “… [t]he constitutional guarantee of security of tenure does not authorize this government to oppress or cause the self-destruction of our employers.”

“Our country cannot afford business closures as it will pain us seeing a decline of job opportunities for our labor force. While no business can survive without its employees, nor can persons be employed without a business hiring. Labor and management can not exist without each other.”

The vetoed measure, “An Act Strengthening Workers’ Right To Security of Tenure”, sought to ban the practice of hiring workers for five-months stints in order to circumvent the requirement that they be automatically granted regular status on the sixth month of employment — with corresponding benefits — which is already banned by Executive orders.

It also provided that workers performing jobs directly related to the principal business of or are under the direct control and supervision of a contracting party “shall be deemed regular employees of the contractee… retroactive to the date they were first deployed to said contractee…”

There are four types of employment status allowed under the vetoed measure: probationary, regular, project and seasonal. Project-based and seasonal workers “have the rights of regular employees for the duration of the project (e.g. construction) or season (e.g. agriculture or where there are periods of increased demand or inherent industry fluctuations)… termination of which has been determined and made known to the employee at the time of engagement.”

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