Scrap Herrera Law which allowed

'contractualization' - labor research

group
By: InterAksyon.com
March 3, 2014 11:45 AM

FILE PHOTO

InterAksyon.com
The online news portal of TV5
MANILA - Twenty-five years after legalizing contractualization, the so-called Herrera Law that
amended the Labor Code in 1989 must be repealed, labor group Ecumenical Institute for Labor
Education and Research (EILER) said Monday.
The Herrera Law, which created the legal grounds for contractual work arrangements that
cheapened workers wages, also introduced the concept of Assumption of Jurisdiction (AJ), which is
(the) labor departments signal fire for police-military crackdown of workers strikes, said EILER in a
statement.
These provisions have made Filipino workers vulnerable to exploitation and suppression, the labor
research group said.
The Herrera Law constitutes Filipino workers worst nightmare in a period supposedly marked by
restoration of democracy following the EDSA 1 uprising, said EILER executive director Anna Leah
Escresa.
For the first time, the law legalized contractualization, which has become a grave threat to workers
right to job security and decent wages, she added.
Under Articles 106-109 of the Herrera Law, the labor secretary is given the power to issue orders
that will promote hiring of contractuals and other non-regular workers such as Department Order 18A issued in 2011.
The Herrera Law legalized the plague that is contractualization. What was initially a work
arrangement for janitorial and other casual jobs became the normal labor arrangement that cuts

across all economic sectors from manufacturing to wholesale and retail trade up to business process
outsourcing (BPO), Escresa said.
Herrera Law promotes child labor
Contractualization and other forms of flexible employment also contribute to the employment of child
labor in plantations, as the pakyawan system is massively used to evade hiring of regular
agricultural workers, EILER said.
Under the system, child laborers are forced to help the family meet the production quota.
Moreover, the Herrera Law also infringes on workers right to strike and peaceful assembly.
The laws Article 263 authorizes the labor secretary to issue an Assumption of Jurisdiction (AJ)
order that will serve as basis for the swift deployment of police and military forces in companies with
labor disputes -- a government crackdown that was demonstrated during the Hacienda Luisita
massacre where seven striking farmworkers were killed and dozens injured, Escresa said.
Assumption of Jurisdiction is clearly a fascist government instrument to quell democratic actions of
unions. It has clearly no place in a democratic society we all aspire to live in, she added.
EILER also noted that Herrera Law provided the framework for tripartism in the labor sector, a
mechanism that uses bogus social dialogue among representatives from labor, government, and
companies to implement anti-labor policies.
With all the ill effects of Herrera Law to workers right to security of tenure, right to strike and decent
wages, it is but timely for the government to repeal the law and replace it with a genuinely pro-labor
Labor Code, Escresa said.
Herrera Law is named after Senator Ernesto Herrera, who once headed the Trade Union Congress
of the Philippines.

Employees who get endo (end of contract and thus end of job) after four to five months
still populate the employed in the Philippines, six months after the labor department
issued an order that it claimed would have ended contractualization. It is the
employment scheme that has helped employers cut down wages, benefits and undercut
unions, but which workers have been complaining of as illegal and anti-worker.
When the labor department issued the Department Order 18-A Series of 2011 last Nov,
it said it will end the prevalent 5-5-5 employment scheme where workers are hired for
just five months and then, after the end of their five-month contract, they are rehired for
another five months. Six months have passed since the department order was issued,
the KMU said, the Department of Labor and Employment still failed to effect the
regularization of contractual workers.
To mark the six-month confirmation of the uselessness of Department Order 18-A
Series of 2011 in protecting job security, workers led by progressive labor center
Kilusang Mayo Uno (KMU) picketed the labor departments office Monday May 14 and
condemned the Aquino government for promoting the exploitative employment scheme
rather than seeking to stop it.
Its been six months and were still not seeing contractuals being regularized en masse,
said Roger Soluta, secretary general of KMU. Instead, he noted that capitalists have

just shortened contracts with service contractors or fired workers before they reach five
or six months.
Aquino consistent in cutting down workers wages

Members of Kilusang Mayo Uno stage a picket in front of the Department of Labor and
Employment, branding as hoax the Aquino administrations order against
contractualization.(Photo by Marya Salamat/ bulatlat.com)
Contrary to the supposed intent of the labor department order, the progressive labor
center said it is actually a license for contractual employment. It is not the first time the
DO 18, or an order with similar content, was released by the labor department. In all its
versions, though, labor groups complained that its supposed role in banning unfair
employment schemes is just an empty promise. The KMU calls its promise a hoax.
It was easy to see that DOLEs hype for regularization is just a hoax, Soluta said. He
pointed to workers experience in Philippine Air Lines, where the Aquino government
helped the Lucio Tan-led airline to ram contractualization down the throats of at least
2,600 more regular employees.
Contractual workers in the Philippines work under worse conditions compared to their
regular fellow workers. They receive lower wages and little to no benefits, which
periodically stop, too, along with their work contract. Because of their pre-defined length
of employment, they have narrower room for forming unions, the KMU and various labor
advocates have said numerous times before. Worse, when contractuals form unions,
they are more easily fired.

The labor departments order joins the regional wage boards in the labor groups list of
anti-worker instruments. The protesters said during their picket that the department
order is only being used by employers to legally implement wage-cutting employment
schemes. The regional wage boards, they also said, are formed not to decide wage
hikes but to slow or cut it down.
- See more at: http://bulatlat.com/main/2012/05/14/workers-call-labor-department
%E2%80%99s-order-against-contractualization-a-%E2%80%98hoax
%E2%80%99/#sthash.vBezI99x.dpuf

Dole acts on contracting scheme

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Friday, December 2, 2011

THE Department of Labor and Employment (Dole) has issued clear-cut rules
on contracting and subcontracting to curb abuses and boost workers
protection.
Department Order (DO) 18-A-2011 or the rules implementing Articles
106 to 109 of the Labor Code, as amended, aims to promote employment
and encourage full compliance with minimum wages and general labor
standards, including safe and healthful conditions of work, security of tenure,
self-organization and collective bargaining.
It covers all parties of contracting and subcontracting as well as cooperatives
engaged in contracting or subcontracting. It also spells out the retirement
benefits of the contractors employees under the SSS or retirement plans of
the contractor.
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Contractors or subcontractors are now required to submit proof of payment
of remittances to the SSS, Pag-Ibig, PhilHealth and BIR due to contractors
employees including amortization of declared loans, said the new order
signed last week by Dole Secretary Rosalinda Dimapilis-Baldoz.
Prohibited acts, meanwhile, include the repeated hiring of employees for a
five-month duration or what has become known as 5-5-5 and endo, the
street lingo for end of contract.
Repeated hiring of workers for a five to six months employment contract
under the same employer or even under a service agreement of the same
duration or under a service contract or agreement of a principal with the

same or different contractor or subcontractor, is prohibited as per Section 7

of the DO since this is a violation of Article 280 of the Labor Code.
In such a case, all benefits due the employee as a regular worker shall be
the liability of the principal. On the other hand, the registration of the
subcontractor shall be cancelled upon complaint, after due process, it
added.
Contractors are also banned from requiring employees under a
subcontracting arrangement to sign a contract fixing the period of
employment to a term shorter than the term of the service agreement,
unless the contract is divisible into phases for which substantially different
skills are required. In such a case, the employee should be informed of such
at the time of the engagement.
As per Section 13, the right of the contractors employees to unpaid wages,
including legal mandatory contributions, shall be borne by the party at fault
without prejudice to the liability of the parties in case the termination of
employment is caused by the pre-termination of the service
agreement. (CGC)

ix months after the Labor Department issued a directive which it claimed will
end contractualization, workers led by labor center Kilusang Mayo Uno
picketed the departments office in Intramuros, Manila to condemn the
Aquino government for promoting the employment scheme.
When it released Department Order 18-A Series of 2011 last Nov. 14, the
Department of Labor and Employment claimed that the directive would end
the prevalent 5-5-5 employment scheme in which workers are hired for just
five months and then re-hired for another five months.
KMU said the DOLE failed to regularize contractual workers after six months
of implementing the DO.
Its been six months since the DO was released and we are not seeing
contractuals being regularized en masse, even under service contractors.
Capitalists have just shortened contracts with service contractors or laid off
workers before they reach five or six months, said Roger Soluta, KMU
secretary-general.

The truth is that the new policy merely serves as a license for contractual
employment. The DOLEs hype that the DO will lead to an end to
contractualization is just that, a hype, he added.
Consistent with its refusal to really increase workers wages, the Aquino
government is promoting contractualization one of the main ways
capitalists press down workers wages, he said.
The workers held up placards that read Anim na buwan na, kontraktwal pa
rin kami (It has been six months and were still contractuals), condemning
Pres. Benigno Noynoy Aquino III for promoting contractualization.
It was easy to see that the DOLEs regularization hype was just a hoax. The
government that allowed Lucio Tans contractualization via outsourcing
scheme in the Philippine Airlines, involving some 2,600 workers, cannot be
relied upon to ban the employment scheme, Soluta said.
On the issues of wage hikes and contractual employment, Aquino is
consistently pro-capitalist and anti-worker. It is clear that he is continuing
the previous governments policy of attracting foreign investors by offering
cheap and repressed labor, he added.
Contractual workers receive lower wages and do not receive benefits.
Because they can easily be laid off from work, it is more difficult for them to
exercise their trade-union rights, such as forming unions, he said.
Its all hype. The Labor Department is trying to fool the public.
This was labor center Kilusang Mayo Unos reaction to the Department of
Labor and Employments claim that its most recent order on
contractualization will lead to the regularization of contractual workers.
KMU pointed out that Department Order No. 18-A Series of 2011 guarantees
the regularization of contractuals after six months only as long as the
contract between a company and a labor agency holds.
Since the department order states that capitalists service contracts with
labor agencies should last as long as agencies contracts with individual

contractuals, capitalists can layoff workers and refuse to renew contracts

with labor agencies to refuse to regularize contractuals.
The Labor Departments order will not automatically lead to the
regularization of contractual workers. It contains loopholes that capitalists
and labor agencies will surely exploit to refuse regularization of
contractuals, said Atty. Remigio Meng Saladero, Jr., KMU chief legal
counsel.
To prevent contractual workers from being regularized, capitalists will
simply not rehire them. Capitalists can also decide not to renew service
contracts with labor agencies once these contracts expire, and substitute
them with other agencies, he added.
DO 18-A Series of 2011 will thus not end nor lessen contractualization.
Neither will it increase the chances of contractual employees of getting
regularized, he said.
Flexibility for capitalists
KMU said the department order gives capitalists and labor agencies greater
flexibility to fire workers and keep their worforces contractualized.
The department order is not good but bad news for contractuals and
workers in general. Not only will it not lead to regularization, it will lead to
frequent layoffs of workers, said Elmer Bong Labog, KMU chairperson.
DOLE and the Aquino government have just handed out to capitalists and
labor agencies in a silver platter the means to further exploit and repress
workers. Workers will remain contractuals but this time, they will be laid
off from work more often, he added.
As long as the contracting out of labor is considered legal, capitalists and
labor agencies will find ways to keep workers contractuals.
Contractualization as an employment scheme should be abolished, he said.

KMU vowed to hold protest actions in the coming weeks against DO 18-A
Series of 2011, saying contractualization is one important means by
capitalists for pressing down workers wages.
Almost two weeks after the warehouse workers of Co Ban Kiat Hardware in Paraaque
City dismantled their picketline (May 11), they had to set up a new one. The company
has reportedly reneged on its agreement with the striking workers union.
Co Ban Kiat Hardware, Inc., owned by Johnny Cobankiat and supplier of top hardware
and construction companies including SMs Ace Hardware and DMCI, reportedly did not
follow through on reinstating the workers it had illegally laid off (which prompted the first
strike last May 8).
While most of the workers went back to work, those whose contracts have expired were
terminated, even if they were listed as up for regularization in the agreement settling the
first strike.
Co Ban Kiat laid off 14 of the newly-regularized workers. The company also reportedly
did not regularize the other contractual workers. Plus, it has started pressuring workers
to sign an agreement forbidding them from joining a union.
Cobankiat doing illegal activities?
The retrenchment of newly-regularized workers is not only a violation of the agreement
between the management and the union. It is more importantly a bad precedent all
previously contractual workers might be retrenched citing the same basis, said Roger
Soluta, secretary general of KMU.
Co Ban Kiat cannot use the termination of its contract with its service agency as a
reason to terminate workers. It has signed an agreement with the workers union, in
which the service agencies play no part, Soluta added. He declared that the workers of
Co Ban Kiat have every right to strike as a result of the managements acts.
Johnny Cobankiat, owner of the large hardware supplier, was reported in 2009 to have
kept alleged smuggled goods worth P100 million ($2.3 million). According to the
workers, they had been forced to shut down for days in 2009 as government authorities
occupied the warehouse to search for alleged smuggled goods among its stocks.
It seems that Co Ban Kiat revels in undertaking illegal activities from smuggling to
violation of workers rights, Soluta of KMU said. After inflicting various injustices to
workers for many years, it is now retrenching workers and busting their union, despite
the fact that the workers have already won reinstatement, regularization, and
unionization, he added.
Labor departments order blamed
In a program held at the strikers picketline, members of the progressive labor center
Kilusang Mayo Uno (KMU) condemned the Department of Labor and Employment and
Labor Secretary Rosalinda Baldoz for having allowed and even encouraged the
proliferation of contractual employment. The KMU blamed the spate of layoffs regularly

happening to Filipino workers at the end of four to five months of work on the labor
departments order that ironically claims to encourage such workers regularization on
the job.
The KMU said that while the Department Order No. 18-A Series of 2011 mandates the
regularization of contractual workers after six months of service, the policy still does
not prevent capitalists from terminating contracts with service agencies before workers
can be regularized.
In fact, the same department order has listed the ways in which companies could legally
resort to outsourcing. In the case of Co Ban Kiat hardware, Reggie Lumauag, president
of the union, shared that there are at least four agencies supplying the company with
contractual workforce. But in practice, these agencies are not independent third party
service providers.
Lumauag told Bulatlat.com that these agencies behave more like labor-only
contracting. The supplied contractuals directly work with regular workers, take orders
and directions from the same bosses who command the regular workers, and use the
same machines and equipment of the company.
Labor-only contracting is declared as illegal in the country. Unfortunately, punishment for
implementing labor-only contracting or other illegal subcontracting has been found to be
both negligible and for the workers, a lengthy process of legal redress.
The regularization which the Aquino government promised with the implementation of
DO 18-A is a sham. The department order, in fact, is leading to retrenchments of
contractuals, Soluta concluded. As with the experience in Co Ban Kiat, DO 18-A
apparently still allows service agencies to exist and capitalists to determine the length
of contracts with them. It will not lead to regularization of workers but to more frequent
layoff of contractuals.
Contractualization of employment is also one of the factors being blamed by rights
groups and independent thinktanks for the stagnation of real wages over the years. As
fewer workers are unable to form unions, being on the job only briefly and being
vulnerable to untimely layoff, their bargaining power also significantly weakens. Today,
less than one in every ten wage-and-salary workers are unionized.
- See more at: http://bulatlat.com/main/2012/05/27/cobankiat-warehouse-workers-goback-on-strike/#sthash.Aa3xBj8L.dpuf

DOLEs move vs. Eton subcontractor, too little,

too late KMU

Labor center Kilusang Mayo Uno slammed the Labor Department today for its late response to the
case of an illegal subcontractor of Eton Properties that has failed to pay its workers, saying the
workers had to act first before the agency could have done something.
The department initiated an investigation into Renie Construction (RPL Construction), a
subcontractor of real estate giant Eton Properties only after 52 of its workers trooped to a police
station to file a complaint against the company for failing to pay their wages.
The Labor Departments action against the illegal contractor of Eton Properties is just too little, too
late. The investigation and Baldozs tirades against the subcontractor are aimed at saving the
departments face for failing to do its job of ensuring that workers get their wages, KMU chairperson
Elmer Bong Labog said.
Whats the use of the Labor Department if it fails to monitor and act immediately on violations of
workers rights, especially non-payment of wages? It has continuously reduced its role in monitoring
labor rights violations and has allowed capitalists to exploit workers to the bone, he added.
KMU blamed the existence of companies like Renie Construction on the Labor Departments Order
No. 18-A Series of 2011, which legalizes contractual labor.
The problem is not simply illegitimate subcontractors, like what Baldoz says. The real problem is not
just the illegal subcontractors, but the legalization of subcontracting itself, Labog said.
Subcontracting has been used by big capitalists such as Lucio Tan for evading the most basic
responsibilities to workers. In many cases, subcontractors serve as big capitalists protection from
criminal prosecution over workers deaths, he added.
The militant labor center cited the case of the Eton Tower tragedy in Makati City as an example of
how the legalization of subcontracting made it easier for employers to evade responsibilities to
workers.
Until now, theres no justice over the death of 11 workers in Eton Makati. The culprit in the tragedy
caused by employers neglect for workers health and safety roams freely and continues to violate
workers rights through subcontracting, Labog said.
The labor center demanded the junking of DO 18-A and the legislation of House Bill 5110 or the
Regular Employment Bill, which aims to strengthen workers right to security of tenure by penalizing
various labor contracting and subcontracting schemes.

The DO 18-A is a menace that violates workers rights to security of tenure. It should be junked
immediately to prevent the ills of labor contracting and subcontracting, Labog said.
We urge the House of Representatives to pass the Regular Employment Bill to give our workers
weapon against further attacks on our job security, health and safety and other workers rights he
ended.

Issues Pertinent to DO 18-A, "The New Rules on Contracting and Sub-Contracting

Arrangements"
BusinessWorld, through Atty. Neptali B. Salvanera, raised several issues and questions arising from DO 18-A, The
New Rules on Contracting and Sub-Contracting Arrangements.
DO 18-A was issued by the Department of Labor and Employment (DOLE) on November 14, 2011 and became
effective on December 4, 2011. The Order was an offshoot of the series of deliberations conducted by a trilateral body
composed of the government (represented by DOLE), employers and employees. More than a year since it has taken
effect, several labor groups still claim that the supposed role of DO 18-A in banning unfair employment is nothing but
an empty promise.
In his article, Atty. Salvanera raised issues on 1) substantial capitalization/NFCC/service fee; 2) benefits of
contractual employees; 3) registration with the DOLE and submission of requirements; 4) cooperatives; 5) in-house
agencies and a lot more to revisit the provisions of the Order and establish why there is a need for the legislature to
address the issues identified.
Below is the article of the lawmaker, published today, December 12, 2012, on p.4/S1 of BusinessWorld:
Source: BusinessWorld
New Rules on Contracting Arrangements
Pursuant to Article 5 in relation to Articles 106-109 of the Labor Code of the Philippines, the Secretary of the
Department of Labor and Employment (DOLE), Rosalinda Baldoz, issued on November 14, 2011 Department Order
No. 180A (DO 18-A) or the New Rules on Contracting and Sub-Contracting Arrangements, which became effective on
December 4, 2011 following its publication on November 19, 2011 in a newspaper of general circulation. DO 18-A
superseded Department Order No. 18-02, the old rules on contracting.
DO 18-A was a product of deliberations conducted by a trilateral body composed of the government, through the
DOLE, the employer and employee representatives. It was basically a response to the clamor of labor and
management alike for the government to come up with rules defining and protecting the rights of workers in a
contracting arrangement and eliminating the so-called fly-by-night contractors.
The laudable purpose of DO 18-A, notwithstanding, there are several issues and questions arising from the Order that
need to be tackled and addressed, as follows:
1. SUBSTANTIAL CAPITALIZATION/NFCC/SERVICE FEE
This is by far the most legitimate and pressing concern of contractors under DO 18-A. Prior to the issuance of DO 18A, there were no fixed rules in determining whether a contractor is substantially capitalized or not. The determination

is made on a case to case basis, depending on the circumstances of each case. For instance, in the 1993 case of
Neri vs. NLRC, et al (GR Nos. 97008-09, July 23, 1993), the Supreme Court declared as adequate capitalization P1
million which were fully subscribed and paid for.
However, DO 18-A fixed the required capitalization of at least P3 million paid-up capital stocks/shares in the case of
corporations, and a net worth of at least P3 million for single proprietorship. Also, DO 18-A requires contractors to
show their contracting capacity. The Net Financial Contracting Capacity or NFCC, which refers to the formula to
determine the financial capacity of the contractor to carry out the job, work or services sought to be undertaken under
a service agreement, must be equal to the total contract cost. Thus, if the contract cost is P10 million, then the NFCC
should at least be P10 million also. DO 18-A likewise fixed the administrative fee to be paid to the contractor at 10% of
the total contract cost.
Given the stringent requirements on capitalization, it would not be uncommon to see contractors having problems with
meeting the required capitalization and NFCC. On the other hand, principals may also be prejudiced because they will
be paying an increased service fee of 10%.
2. BENEFITS OF CONTRACTUAL EMPLOYEES
DO 18-A assures the contractual employees of the minimum labor standard benefits under the Labor Code, such as
service incentive leave, rest days, overtime pay. In addition, they are now entitled to separation pay and retirement
benefits. Contractual employees are further assured of their right to self-organization, collective bargaining and
peaceful concerted action; and the right to security of tenure, and these should be stated in the service agreement.
This should not be an issue because even without DO 18-A, contractual employees are, by law, entitled to the
foregoing benefits and rights. On a practical note, however, contractors now are constrained to comply with the law
and more often than not, the cost is passed on to the principal. For example, the grant of separation pay and
retirement pay to the contractual employees will necessarily increase the expense of the contractor which it will pass
on to the principal.
3. REGISTRATION WITH THE DOLE AND SUBMISSION OF REQUIREMENTS
It is now mandatory for contractors to register with the DOLE and the requirements are stringent. For instance,
contractors are required to submit the list of clients, proof of compliance with the capitalization requirement, and
certified listing of facilities, equipment, tools, etc. owned or leased.
The objective of the DOLE in requiring strict compliance with the requirements, which is to eliminate the so-called flyby-night contractors, is laudable; however, even legitimate contractors may find themselves in a difficult situation
complying with the capitalization requirements.
4. COOPERATIVES
One of the more contentious issues when it comes to cooperatives is the legal issue of whether or not the personnel
to be assigned by cooperatives to their clients are either employees or just members (i.e. self-employed).
Cooperatives have cited two policy guidelines issued by the Cooperative Development Authority (CDA), i.e.,
Memorandum Circular No. 2011-24, Series of 2011, otherwise known as the Policy Guidelines for Workers
Cooperatives, and Policy Guidelines for Job Contracting/Sub-Contracting Workers of Service Cooperative and MultiPurpose Cooperative with Job Contracting/Sub-Contracting Operation, to justify their position that their members are
considered as self-employed.
It must be noted in this regard that DO 18-A requires the compliance by the contractor with labor standard benefits,
including the requirements under the SSS, PhilHealthh and Pag-IBIG laws. The question is, how can cooperatives
comply when they treat their members as sel-employed? The answer appears to be in the Policy Guidelines for Job
Contracting/Sub-Contracting Workers of Service Cooperative and Multi-Purpose Cooperative with Job

Contracting/Sub-Contracting Operation, under Section 9 thereof which provides that labor standards as defined by
the Labor Code shall (be) deemed complied with if the compensation and benefits under peculiar nomenclatures
validly adopted under a cooperatives by-laws and policies, duly paid to deployed member-workers are equivalent or
superior in value than those in the Labor Code.
5. IN-HOUSE AGENCY
The definition of an in-house agency was expanded to refer to a contractor which is owned, managed, or controlled
directly or indirectly by the principal or one where the principal owns/represents any share of stock, and which
operates solely or mainly for the principal.
While Section 7 of DO 18-A enumerates as one of the prohibitions the engagement of an in-house agency, please
note that Section 7 starts with this sentence: Contracting out of jobs, works or services when not done in good faith
and not justified by the exigencies of the business. Does this mean now that the prohibition is not absolute as it may
allow the engagement of an in-house agency when it is done in good faith and justified by business exigencies? If this
is the interpretation, then all the other enumerated prohibitions in Section 7 may be allowed as long as there is good
faith.
6. OTHER ISSUES
There are a number of legal issues arising from DO 18-A. For example, the definition of labor-only contractor has
been expanded with the addition of the phrase usually necessary or desirable to the operation of the company
which, by jurisprudence, is broader than directly related to the main business of the principal. Also, if and when the
existing service contracts expire but the certificate of registration still exists, does it mean that since DO 18-A respects
the validity of existing certificates then the parties to a contracting arrangement can just extend the service contract to
coincide with the expiration of the certificate of registration?
Notwithstanding the foregoing and other issues, on the whole, the issuance of DO 18-A is a welcome development for
both management and labor as it tries to clarify issues and concerns regarding contracting out of services. The

purpose is to protect the rights of contractual workers even as it also seeks to eliminate illegitimate contractors and
thereby assuring employers that they deal only with independent and legitimate contractors.
The question, though, remains: What should be done? It is settled that unless and until DO 18-A is declared
unconstitutional, it remains valid and enforceable. Thus, for companies that deal with contractors, the issuance of DO
18-A makes it necessary for them to conduct legal audit and review their existing arrangements with their contractors
to determine if the same comply with the new rules. This requires the review of the documentary requirements, e.g.
Service Contracts, financial capacity of contractors, employment contracts of employees, etc., as well as the actual
implementation of the contracts at the plant level. On top of that, given the issues discussed above, they should be
able to formulate or devise ways to address such issues without running afoul of the law.