Philippines
Summary
The Philippines regulates contingent workforce through the Labor Code and Department of Labor and Employment (DOLE) orders, with strict rules against labor-only contracting.
Key Considerations
Monitoring Strategy
To stay updated on changes to the Philippines' contingent workforce regulations, regularly monitor the Department of Labor and Employment website for new Department Orders and advisories. Subscribe to alerts from industry associations such as the Employers Confederation of the Philippines and chambers of commerce. Legal updates from major Philippine law firms specializing in employment law are also valuable sources of information on regulatory changes and court decisions that impact contingent workforce arrangements.
What is labour-only contracting in the Philippines and why is it prohibited?
It is an arrangement where the contractor merely supplies people without substantial capital or control over the work. Under the Labor Code and DOLE Department Order 174-17, labour-only contracting is prohibited, and where it is found, the principal is deemed the direct employer of the workers with full regularisation consequences.
Do contractors need to register with DOLE in the Philippines?
Yes. Legitimate job contractors and subcontractors must register with the Department of Labor and Employment and meet substantial capital requirements. Engaging an unregistered contractor creates a presumption of labour-only contracting against the principal.
Is the principal liable for a contractor's workers in the Philippines?
Solidarily, for wages. Even in legitimate contracting, the principal is jointly and severally liable with the contractor for unpaid wages of the contractor's employees for work performed under the contract. In labour-only contracting, liability extends to full employer obligations.
What is 'endo' and how does it affect contingent staffing in the Philippines?
Endo, or end-of-contract, refers to repeatedly hiring workers on sub-six-month contracts to avoid regularisation, since employees generally attain regular status after six months. DOLE actively targets these schemes, so contingent programs must show genuine project-based or seasonal grounds for non-regular arrangements.
Can outsourced workers become regular employees of the principal in the Philippines?
Yes, if the arrangement fails the tests. Where the contractor lacks substantial capital or the principal controls the means and methods of the work, courts declare the workers regular employees of the principal from day one, with back wages and benefits. Control boundaries are the operational safeguard.