Subcontracting: Sunshine sector with rough patches

In today's competitive business environment, subcontracting has emerged as a new trend in the workplace as companies now opt to outsource specific jobs that are not among their core competencies.

However, despite the positive aspects of subcontracting, there are still several grey areas on its proper implementation as there are still HR managers who could not distinguish between a legitimate job contracting to a “labor only” contracting.

Hence, the Cebu Chamber of Commerce and Industry (CCCI) together with the Philippine Economic Zone Authority (PEZA) and Berkeley will be coming up with the first Industry Forum on Job Contracting with the theme: “How to do it right under DO 18-2” this coming July 10 at the Parklane International Hotel.

In a press conference, Edward S. Mendez, president and CEO of Berkeley Systems Management, Inc. said that the forum is aimed at educating stakeholders to do subcontracting right to make us globally competitive in this potentially emerging industry.

 "Some companies want to go into subcontracting but they do not know how to do it and there are some institutions who are doing it but in a wrong way and we want them to be guided accordingly so they would not break the law," said Mendez.

Subcontracting according to the President and General Manager of Centurion Security Agency, Inc. Atty. Michelle G. Mendez-Palmares is legal under the Department of Labor and Employment (DOLE)  Order 18-2 but there is actually a binding responsibility between the principal and the subcontractor, which has been neglected by many practitioners and even principals.

"There are some practices that are in violation between the responsibility of a principal and subcontractor. The law establishes joint liability between the principal and subcontractor in terms of payment of wages to employees. Employees employed by subcontractors are entitled to all the same benefit which the principal provides its employees," she said.

Palmares stressed the importance of accreditations and said that the principal should be vigilant so that they can do things right to put more value of service to their clients.

 Ed F. Limtingco, CCCI's VP for membership said that “fly by night” subcontractors are also rampant these days which some principal hire in the guise of cost cutting but these parties do not actually give what is due to the employees such as premiums for overtime, bonuses, among others.

"As businessmen, we have to ask the questions on registration and accreditation so that our goodwill and reputation will not be dragged and damaged. We have to always think of doing it on proper and legal manner," Limtingco pointed out.

Subcontracting if done properly is seen to create a desired ripple effect to the industry especially that it has great potential as noticed with the BPO boom in the market, which is also a form of subcontracting.

"If done properly, subcontracting can increase productivity and even employ more jobs to people and help accomplish more work. If we can do subcontracting well locally, maybe we can expand to global operations as this is another sunrise industry the country can capitalize on," said Mendez.