The Department of Labor and Employment (DOLE) XI is set to suspend the application of contractors and subcontractors in the region upon the effectivity of DOLE Department Order (DO) 162, series of 2016 signed by Labor Secretary Silvestre H. Bello III on Monday, July 25, 2016.

Section 1 of DO 162, which shall take effect after the required publication period, will be suspending applications of new contractors and subcontractors under DO 18-A, series of 2011: registration of new applicants as contractors or subcontractors.

Existing valid registrations of contractors issued prior the issuance of the order “shall be respected, unless otherwise revoked through the exercise of the enforcement of the adjudicatory powers of the Secretary of Labor and Employment or his duly authorized representative.”

In line with this, Secretary Bello also issued Labor Advisory 10, series of 2016 on the same day (July 25, 2016) which reiterates the “prohibition against labor-only contracting.”

“Labor only-contracting,” as defined by the advisory, refers to a work arrangement wherein the contractor or subcontractor “merely recruits, supplies or places workers to perform a job, work or service for a principal.”

The Labor Advisory, also gives authority to the Regional Directors to “declare the existence of labor-only contracting between the contractors and subcontractors, and the principals” provided that the following elements are present:

“a) The contractor or subcontractor does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such person are performing activities which are directly related to the principal business of such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him ; or

  1. b) The contractor does not exercise the right of control over the performance of the work of the employee.”

The issuances are aimed at Secretary Bello’s pronouncement to reduce “endo” practice by 50% by the end of 2016.

As of June 30, 2016 there are a total of 416 existing contractors/subcontractors in Davao Region.

Industries covered out of the total number include 223 from manpower and services, 42 from service cooperatives, 91 from trucking and hauling, 50 from security agencies, 8 from construction, and 2 from janitorial services.