Institutionalizing and not ending ‘endo’

"This is how to really put a stop to this practice."



The recently passed Senate Bill 1826, known as “Security of Tenure” Bill (SoT), is seen by the Senate and some labor organization as the beginning of the end of endo, (fixed-term contractual employment of regular jobs), a fulfillment of President Duterte’s promise of ending contractualization.

Basically, SoT amends Articles 106 to 109 and 294 to 297 of the Labor Code. Articles 106 to 109 concerns the payment of wages of workers under a third-party contractor while Articles 294 to 297 specifies the “just” and “authorized” causes for terminating employment.

Unfortunately, this new bill, if passed by the 17th Congress after a bicameral conference, might end up institutionalizing and not terminating the despicable practice that all labor unions have been decrying.

According to lawyer and Bukluran ng Manggagawang Pilipino president Luke Espiritu in his position paper “Demystifying Contractualization,” Articles 106 to 109 neither explicitly created nor legalized endo and contractualization in its most rampant form—trilateral employment (workers indirectly hired through third-party contractors/agencies). It simply states that employers should be “jointly and severally liable” with the contractor if the wages of employees of the contractor is not paid. These articles were written in 1974 at a time when trilateral employment through job contractors and manpower agencies was not rampant.

In the SoT Bill, however, the Senate explicitly legalizes trilateral employment by legislating a new Article 107, which explicitly allows the licensing of job contractors that the hitherto Labor Code does not provide. This comes at a time when trilateral employment and not endo is the main scheme for contractual employment, with thousands of third-party manpower agencies acting as “employers” for the current generation of contractual workers.

The number one complaint of many Filipino workers is that they are employed under an agency instead of being directly employed by the company where they are working. These agencies, all of which are licensed by the Department of Labor and Employment (DOLE) under Department Order 174, are notorious in not paying the proper wages benefits such as social security, PhilHealth, service incentive leave, 13th month pay, and holiday pay. These contractual workers “under agency” could not complain to the company because under a trilateral setup, the company is not the real employer but the third party.

This inane scheme is institutionalized not by the Labor Code but by various DOLE Department Orders. Hence, it is hard for workers to win regularization cases before the National Labor Relations Commission because for as long as an agency is licensed, their trilateral employment arrangement with a company is legal.

Aside from depressing wages and benefits, trilateral employment is a surgical scheme to curb unionism. Since agencies free companies from an employer-employee relationship, workers could unionize only with the contractor. If they enter into collective bargaining with the contractor to increase their wages and benefits, the contractor will naturally increase its service fee to the company. Always, businesses will go for cheaper service fees from contractors, arguing cutthroat competition. Hence, companies will go for de-unionized agencies for cheaper labor—a race to the bottom.

As for regular, directly-hired workers who may form unions, it would be likewise hard for them to bargain for higher wages, as their bargaining power through their capacity to strike is hindered when majority of their colleagues are employed under an agency. If regular workers decide to strike, they would be a lonely platoon for infantries of contractual workers employed by an agency are not compelled to join the strike and as such will continue working for the company.

With the SoT Bill, contractualization through trilateral employment will be backed by a national law—a Republic Act—and no longer by a DOLE order. This means that repealing the new Article 107 legalizing job contractors and manpower agencies should be an act of Congress—a snail-paced amendment process that could take decades unlike a DOLE order which a Labor Secretary or President could reprobate. Rather than legalizing manpower agencies, legislators ought to push for a Security of Tenure Bill that would explicitly prohibit all forms of trilateral employment. The law in its current form would only further institutionalize the trilateral work arrangement.

The SoT Bill, hence, will secure trilateral employment and strengthen contractualization. Third-party contractors such as the Philippine Association of Legitimate Service Contractors (PALSCON) and AsiaPro are now having their celebratory toast because this law will be good for their business. With them in their banquet are corporations who will be freed from their obligations to their workers.

As the bill heads into the bicameral conference, my hope is that a provision prohibiting trilateral employment arrangements is included. There might be a few exceptions but they should be rare and the presumption should be that such arrangements are illegal. This is how to end endo once and for all.

Facebook Page: Professor Tony La Viña Twitter: tonylavs

Topics: Senate Bill 1826 , Security of Tenure Bill , Labor Code , Rodrigo Duterte
COMMENT DISCLAIMER: Reader comments posted on this Web site are not in any way endorsed by Manila Standard. Comments are views by readers who exercise their right to free expression and they do not necessarily represent or reflect the position or viewpoint of While reserving this publication’s right to delete comments that are deemed offensive, indecent or inconsistent with Manila Standard editorial standards, Manila Standard may not be held liable for any false information posted by readers in this comments section.
AdvertisementGMA-Congress Trivia 1