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Palace issues memorandum on monitoring labor-only contracting

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By Camille A. Aguinaldo

MALACAÑANG on Friday ordered a crackdown on labor-only contracting as it directed Labor Secretary Silvestre H. Bello III to submit a list of companies engaged or suspected to be engaged in the illegal labor practice.

In a memorandum issued on April 17 and released to the media on Friday, President Rodrigo R. Duterte gave Mr. Bello 30 days to submit an inventory of erring companies and a “comprehensive report” on the implementation of the Labor Department’s policies on contractualization.

“The Department of Labor and Employment (DoLE) Secretary is hereby directed to submit to the Office of the President within thirty (30) days from issuance herof, a comprehensive report on the implementation of DOLE Department Order Nos. 174 and 183 (s. 2017), including violations thereof, and a list of companies engaged and/or suspected to be engaged in labor-only contracting,” the memorandum stated.

The National Labor Relations Commission was also ordered to coordinate with Mr. Bello and submit cases of erring companies involved in labor-only contracting.

The memorandum was released after Malacañang and Mr. Bello announced on Thursday that the President would no longer sign an executive order on contractualization, but would instead certify the Senate’s Security of Tenure bill as a priority.




During Friday’s briefing, presidential spokesperson Harry L. Roque, Jr. said the President’s orders to DoLE was meant to go after erring companies committing illegal labor practices, such as 555 (an arrangement where a contract is terminated and renewed every five months) and cabo (which refers to a group disguised as a labor organization or a cooperative).

“The promise of the President is that while not all forms of contractualization are not yet banned, he will ensure that there will no longer be 555 or cabo — 30 days,” he said.

He also called the memorandum as “Tokhang Laban sa Cabo,” a similar wording to the Philippine National Police’s anti-drug campaign called Oplan Tokhang where cops visit drug suspects at their homes. The “tokhang” campaign has drawn international concern following its rising fatalities.

“This is just a directive, so this needs to be implemented. Let’s call this as Tokhang Laban sa Cabo. In other words, in this 30 days, it’s not just for the list. It’s to tell them comply, otherwise the President will have you closed,” he said.

Labor-only contracting refers to the arrangement where the contractor or subcontractor merely recruits, supplies or places workers to perform a job for a principal. Under this practice, the contractor does not have substantial capital nor investments while employees are recruited to perform activities directly related to the business of the principal.

DoLE’s Department Order 174 issued March of last year placed absolute prohibition on labor-only contracting but also provided permissible contractualization arrangements.

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