DOLE imposes one-month moratorium on ‘endo’

MANILA, Philippines – The Department of Labor and Employment (DOLE) has declared a month-long moratorium on contractualization or the practice of “endo” by employers.

Meanwhile, the Senate is trying to balance the protection of workers’ rights and the interests of businesses in handling the issue of contractualization.

“Endo” is the term used by workers and employers to refer to end of contract.

Labor Secretary Silvestre Bello III said commercial establishments were given a month to stop hiring contractual workers and comply with labor regulations.

Bello said he met with employers’ groups who requested for additional time to learn the difference between labor-only contracting and contractualization.

“They are confused. They asked to be given a month to familiarize themselves. We will conduct seminars with the management groups,” he said.

The DOLE chief said the employers committed to police their own ranks and support the government’s campaign against contractualization.

“Our job will now be much easier because the employers will closely work with the campaign against contractualization.”

By September, Bello said the DOLE will start the strict implementation of the law and close down companies engaged in labor-only contracting or the “endo” scheme.

The DOLE earlier ordered all its regional offices to submit a list of companies found to be engaging in labor-only contracting.

Bello said all DOLE regional directors and their staff would undergo training to carry out the campaign in eliminating “endo” and all illegal forms of contracting.

DOLE defines labor-only contracting as an arrangement where the contractor or subcontractor recruits, supplies or places workers to perform jobs, work or services for a principal.

Workers’ rights vs business interest

During the initial hearing on proposals aimed at stopping the practice of “endo,” the Senate committee on labor, employment and human resources discovered that the penalties for labor-only contracting are not enough to discourage employers from engaging in such scheme.

DOLE director Benjo Benavidez said under the Labor Code, employers found guilty of labor-only contracting are merely required to hire the affected personnel as regular employees and to pay them back wages.

“At present there is no penalty either in the form of a fine or criminal liability,” Benavidez said.

To address this, Benavidez said the DOLE is studying a possible amendment of the Labor Code and would submit corresponding proposals for this purpose to Congress.

He said the agency has created a technical working group to implement a directive of President Duterte to put an end to “endo.”

Benavidez said the technical working group is working on three tracks to comply with the order of the President.

These are enforcement of existing laws, review of Department Order 18-A or the implementing rules and regulations of the Labor Code and the amendment of the Labor Code.

Benavidez said DOLE is studying a version of a proposed security of tenure bill.

“We need a clear definition of what constitutes labor-only contracting,” he said.

While the Labor Code is being reviewed, the DOLE will inspect establishments to check “endo” cases or “555.”

The term 555 refers to the employer’s practice of hiring workers for a period of five months only in order to avoid granting benefits.

Senate President Pro Tempore Franklin Drilon said labor-only contracting has been prohibited since the 1970s.

Drilon said the perennial practice stems from high labor surplus in the country.

“In this situation, there are more people looking for jobs than what the job market can accommodate, hence the widespread practice of illegal labor-only contracting,” he said.

“The companies take advantage of the skilled workers and hire them on a short-term basis. In turn the workers, in the absence of job opportunities, allowed themselves to be exploited,” he added.

Drilon said more jobs are needed to address the problem.

“We must strike a balance between protecting the rights of the workers and generating employment. We have to make the process of eliminating contractualization beneficial to both the employer and employee,” he said.

The senator said there should be win-win solutions to help both workers and the private sector.

“We must put an end to ‘endo’ not by threatening companies with penalties but by providing incentives,” he said.

Sen. Joseph Victor Ejercito, who filed the security of tenure bill, said the lack of sanctions for violators is among the reasons the contracting scheme persists. – With Marvin Sy