End the Endo bill

"The rest of the world is now into more flexible work arrangements."

 

Early this month, the country’s largest and most influential business organizations, local and foreign, sent an urgent petition to President Duterte urging him to either veto or at least suspend until further studies, the “Security of Tenure and End to Endo” bill. 

Endo is end of contract—the practice of employers to subject employees, particularly temporary workers, to work contract of no longer than five months, because under the present Labor Code, anyone who has been employed for at least six months must be made permanent.

Permanent means the employee must be paid the legal minimum wage, be entitled to overtime and holiday pay, sick leave, vacation leave and other benefits. 

The effect is that instead of paying an employee just 12 months salary in a year, the employer must pay the equivalent of up to 16 months—12 months of regular salary, one month of sick and vacation leave, 13th month pay, 14th month equivalent of holidays, regular and special; and 15th month—the employer’s bonus gratis. Add to that overtime pay, free rice pay, transportation allowance, and even lodging privileges (for BPO) workers.   In effect—16 months of pay for 12 months of work, increasing labor cost by 30 percent, without the worker adding productivity.

It is very difficult to enforce a no-Endo rule given the 12-percent underemployment rate (equivalent to five-million jobs) and 5.7-percent unemployment rate (equivalent to 2.45-million jobs) or a total of 7.45 million people looking for work or working only part time.

The signatories included: Sergio Ortiz-Ruiz Jr., president, Employers’ Confederation of the Philippines and the Philippine Exporters Confederation; Alegria Sibal Limjoco, president, Philippine Chamber of Commerce and Industry of the Philippines; Edgar O. Chua, chairman, Makati Business Club; Rizalina G. Mantaring, president, Management Association of the Philippines; Henry Lim Bon Liong, president of the Federation of Filipino Chinese Chamber of Commerce of the Philippines;

Rhoda Castro Caliwara, president Philippine Association of Legitimate Service Contractors; lawyer Danilo Patron, chairman, Philippine Society of Management Services; Rey Untal, president, IT & Business Process Association of the Philippines; Dr. Carol Enriquez, president, Philippine Association of Colleges and Universities; James Wilkins, president, American Chamber of Commerce of the Philippines; Daniel Alexander, president, Australian-New Zealand Chamber of Commerce; Keiichi Matsunaga, president, Japanese Chamber of Commerce and Industry of the Philippines; Arthur Lopez, president, Philippine Hotel Owners Association of the Philippines; Julian Payne, president, Canadian Chamber of Commerce of the Philippines; Nabil Francis, president, European Chamber of Commerce of the Philippines; Ho-Ik Lee, president Korean Chamber of Commerce of the Philippines, and Evelyn Ng, president, Philippine Association of Multinational Companies Regional.

“There is no need for a new law to end Endo,” the letter insisted “It [Endo] is now prohibited by your Executive Order No. 51 and by DOLE Department Order No. 174 series of 2017.”

“If passed into law, the bill will have adverse effects on the Philippines’ global competitiveness and its capability to create more and better quality jobs for Filipinos,” the business groups warned.

The problem with this last minute petition of Big Business is that end to Endo was a campaign promise of President Duterte.

Here is the letter of the business community rejecting End to Endo:

The Security of Tenure and End to Endo Bill intends to strengthen workers’ security of tenure and to end Endo, an employment malpractice by some unscrupulous employers who hire workers for a period of less than six months at a time, to avoid making them regular employees after the six-month probationary period. Both DOLE DO No. 174-17, which took effect in early 2017, and EO No. 51, which took effect in mid-2018, already prohibit Endo. If Endo is dead, therefore, the SOT Bill is superfluous.

Security of tenure is a constitutionally guaranteed right of workers and the Labor Code recognizes this. However, the workers’ right to security of tenure is not absolute. There is no such thing as perpetual employment especially if the employee is no longer performing. The law provides that employers have the power to dismiss an employee based on just or authorized causes subject to observance of due process. In protecting the rights of workers, the law authorizes neither oppression nor self-destruction of the employers.

Passing the SOT bill is counterproductive especially for businesses which are dealing with the changing world of work. The concept of dependent employment is steadily being eroded. Under the “future of work,” there will be unprecedented rise of independent contractors, telework, and a constellation of other Internet-enabled companies.

The rest of the world is now into more flexible work arrangements. Prohibiting legitimate job contracting in the Philippines will, in the words of a respected labor law expert, “turn us back into the dark ages.” When this happens, the Philippines will become less globally competitive and investors might opt to locate their manufacturing, logistics, and other functional hubs in other countries with more investor-friendly policies. The jobless growth we have been experiencing over the years could worsen. 

In fact, the regulatory framework must be re-examined to make it more flexible to facilitate business and job creation instead of obstructing new forms of employment as what would be the consequence of the SOT bill in the event it is signed into law. Passing stringent laws that limit flexibility and encroaches on management prerogative may scare away local and foreign investors. 

We have always supported laws and policies that will truly be beneficial to the economy as a whole—those that attract investment, generate productive employment, and preserve existing jobs. As the most representative sectoral organizations in the country, we commit to foster a culture of responsible and ethical business conduct—the key to industrial peace and harmonious labor-management relations.

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