Keeping 'endo' alive:

DOLE’s Department Order

No. 174
The labor department's dilly-dallying is in stark contrast to the President’s consistent
and unequivocal stand against contractualization

From the time President Duterte won the 2016 elections, workers throughout the
country waited for the fulfillment of his campaign promise to end "endo".

The main agency in charge of this, the Department of Labor and Employment (DOLE)
headed by Secretary Silvestre Bello III, spent several months vacillating on the issue on
the pretense of implementing a triple-pronged approach at addressing the evils of
contractual employment (usually referred to its Filipino slang, "endo" or end-of-
contract).

DOLE’s dilly-dallying is in stark contrast to the President’s consistent and unequivocal

stand against contractualization.

In the end, DOLE chose to break the President’s promise and keep "endo" alive.

When Secretary Bello finally signed Department Order (DO) No. 174 (2017), he did not
end "endo." On the contrary, he ensured its continued practice and prevalence.
Workers now are worse off than ever before because DO 174 merely continues DOLE’s
failed policies to regulate contracting out of labor.

To see this fully, one properly begins with an overview of the law on contracting and the
policies which the DOLE has toyed with through the years.

What the law says

Articles 106 to 109 of the Labor Code remain to be the main law on employment
relationships which involve 3 parties, namely, a Principal which farms out work, a
Contractor or Subcontractor which accepts the responsibility to do the work and the
Worker(s) who actually do the work.
Recognizing that this so–called trilateral arrangement leaves workers vulnerable to
abuse, the law explicitly prohibits what it labels as “labor only” contracting.

This exists when “the person supplying workers to an employer does not have
substantial capital or investment in the form of tools, equipment, machineries, work
premises, among others, and the workers recruited and placed by such person are
performing activities which are directly related to the principal business of such
employer.”

To ensure that the workers know who their true employer is, the law says that under
prohibited labor-only schemes, the principal shall be responsible to the workers as if
they were directly employed by him/her/it. The contractor or subcontractor is treated
merely as an agent or no different from the Principal. (READ: No 'endo' in 2017?
Challenge of ending labor contractualization)

Fake news: DOLE cannot prohibit contracting

It is very important to know that the Labor Code gave more than sufficient authority to
the Secretary of Labor and Employment to address whatever abuse workers face under
contracting arrangements.

In very clear terms, Article 106 of the Labor Code says: “The Secretary of Labor and
Employment may, by appropriate regulations, restrict or prohibit the contracting-out of
labor to protect the rights of workers established under this Code.”

Therefore, the repeated assertion by DOLE officials that they cannot prohibit
contracting out of labor is simply not true.

Indeed, for more than 20 years, the DOLE has adopted the weak approach and has
chosen to restrict contracting arrangements instead of prohibiting it. In those many
years, DOLE’s approach has been demonstrated to be a complete failure.

D.O. 10 (1997)

In May 1997, then Secretary Leonardo Quisumbing issued Department Order No. 10
(D.O. 10). It was the expressed aim of DOLE to give employers the “flexibility” they
wanted while guarding workers’ rights. Significantly, D.O. 10 included a provision which
introduced the concept of “permissible contracting or subcontracting.”
This lax approach under D.O. 10 led to an upsurge of employment through agencies. It
also led to a proliferation of short-term and precarious employment arrangements. As a
result, countless positions which had previously been occupied by directly-hired regular
employees were given to workers hired by agencies. (Insert Figure 2)

In time, society naturally developed colloquial names for its workers’ common
experience of insecurity in employment. “End of contract” is “endo,” indirect
employees introduced themselves as “agency po ako,” and repeated employment
lasting five months is “5-5-5”.

Through time, agency-hired and "endo" workers internalized the practice that they
were worth and treated less than regular workers.

They accepted its impact on their pay, the unavailability of overtime and holiday pay,
rest day premium, leaves, and many other basic conditions of work. Their ID’s and
uniforms are constant reminders of their lesser status. And of course, forming or joining
a union means losing one’s job.

The evil in trilateral arrangements

The main evil in the agency arrangement lies in the Principal’s inherent ability to end its
contract with the Contractor/Subcontractor and in the ease by which the contractor can
pull out the worker from work and place her/her in a “floating” status.

When this happens – as it does for a wide range of reasons – the employee loses the
source of her/his livelihood. The evil is so pernicious that the threat alone of losing one’s
job is enough to render contracted workers impotent against abuse.

Thus, where agency-hired workers wish to enhance the terms and conditions of their
employment, they can act only at the cost of their very livelihood. For agency-hired
workers, keeping the job – despite poor employment conditions – is still better than
losing it altogether.

In this way, the threat of losing one’s job naturally leads to a workers’ inability to
enforce their rights.

While the best way for workers to fight for their rights is to form or join unions, this too
becomes impossible for them. Just a rumor that workers are engaged in union activities
is sufficient to cost them their jobs.
Ask yourself: have you seen any service contractor or agency which is unionized? This is
the way by which a cycle is formed which keeps workers trapped in short-term, abusive
employment relationships.

DOLE insists on failed policy

The proliferation of worker abuse under DO 10 (1997) was the principal reason why
workers demanded its repeal right after President Gloria Macapagal-Arroyo assumed
the presidency in 2001. Thus, in May 2001, then Labor Secretary Patricia Sto. Tomas
issued DO 3 (2001), which revoked DO 10.

Designed as a temporary measure, DO 3 merely paved the way for a new set of
guidelines on contracting and subcontracting.

On February 2002, Secretary Sto. Tomas issued Department Order 18 series of 2002.
Due to workers’ objection to any “permissible contracting,” DO 18 did not include any
provision on “permissible contracting.”

However, it is important to know that DO 18 merely continued DOLE’s policy to restrict

– not prohibit – contracting-out of labor.

As a result, regular employment continued to dwindle and a whole industry of “service

contracting” blossomed. The evils of DO 10 returned with a vengeance, with employers
evolving new ways to prevent workers from attaining regular status. Many agencies
were seen to disguise themselves as “cooperatives” which prevents unionization and
further confuses the availability of workers’ right to wages and basic conditions of work.

Shortly after the long incumbency of President Arroyo gave way to President Benigno
Aquino III, DO 18 was replaced by DO 18-A (2011).

“Permissible Contracting” remained excluded but DOLE continued to insist on its failed
policy to merely restrict contracting out of labor. It still refused to exercise its authority
under the Labor Code to prohibit it.

In the more than 2 decades in which the DOLE has insisted on restricting and regulating
the practice of contracting out of labor, regular employment has now become the
exception.

In its stead, non-regular work including hiring through agencies, is now the norm. One
only has to ask the person delivering food to your homes and offices, the salesperson
showing you shoes at the department store, or the technician repairing your telephone
or internet or cable TV connection.

Less visible, workers in factories and manufacturing plants are also now a mix of regular
and agency hired workers with the latter outnumbering the former in many cases.

And so, presently, the cycle described above continues and workers remain unable to
enforce their rights or form and join organizations for their protection.

Ultimately, the continued proliferation of employment arrangements which render

workers vulnerable to abuse is directly related to the DOLE’s insistence on its failed
policy of merely restricting contracted labor instead of prohibiting it.

Through more than 20 years, the DOLE has implemented the same weak approach
while promising to finally protect workers from abuse.

To paraphrase an oft-heard quote, it is crazy to keep on doing the same thing over and
over, but expect a different result.

Cosmetic change

After the elections, workers demanded the fulfillment of President Duterte’s

commitment to end endo and employment through agencies.

With one voice, they told DOLE to change its policy of merely restricting the practice of
contracting out labor and, for once, exercise its authority under the Labor Code to
prohibit it.

Sadly, however, DOLE chose not to listen to the workers. Instead, DO 174, signed on
March 16, 2017, continues the same failed policy of regulating what is now an industry
of Brobdingnagian proportions.

Contrary to DOLE’s media posturings, the latest order only contains cosmetic changes
or amendments too inconsequential to benefit workers. According to the DOLE,
contractors must now have capital of at least P5 million instead of the previous P3
million. However, years of business success has seen the contracting industry grow into
a multi-billion peso industry. The increased in capitalization is therefore of any doubtful
efficacy.

On the other hand, consider the following troubling aspects of DO 174:

 D.O. 174 continues to allow principals to hire
workers through agencies. This, despite our long
history which proves that under such tripartite
arrangements, workers are extremely vulnerable
to abuse. The prohibitions it contains – such as
labor only contracting - have been prohibited for
the past 2 decades. And yet, the abuse of workers
have only worsened. So the question has to be
asked: what has changed with D.O. 174?

 Even worse, D.O. 174 inexplicably re-introduces a

provision on “permissible contracting.” This
provision has already been rejected many times
over since its first incarnation in D.O. 10 (1997)
because it only encouraged employers to contract
out labor and gave agencies a mask of legitimacy
to hide behind. And yet, the DOLE, defying logic
and good sense, revives it in D.O. 174. One will be
challenged to find something more idiotic!

 In the rounds of consultations it conducted, DOLE

received many testimonies from workers about
the abuse of the concept of “cooperatives.” And
yet, D.O. 174 completely ignored them and chose
instead to prohibit only those which it considers
to be “in-house” cooperatives. By doing this,
DOLE allows all other cooperatives to engage in
contracting and subcontracting – a practice which
have demonstrably misled many workers
regarding their true status of employment and
blunted their ability to exercise their rights as
employees.

 D.O. 174 removed the ability of workers’

representatives (bargaining agents) to demand a
copy of the service contract between the principal
and the contractor/subcontractor. This was
previously granted by D.O. 18-A but was
inexplicably removed in D.O. 174, leaving workers
and their unions even weaker than before.
  D.O. 18-A previously required contractors to set
at least 10% of the total contract cost as the
standard administrative fee. Competition among
contractors should then operate above this rate.
This is not anymore required by D.O 174. Thus,
one can only wonder how the DOLE expects
contractors, without a set minimum for such a
fee, to avoid cutthroat pricing and racing to the
bottom with regard rates charged to principals.
These practices have invariably lead to the denial
of workers’ benefits.

Statements made by the DOLE following the issuance of D.O. 174 seem to indicate a
pledge to enforce labor laws in order to protect workers.

However, given the DOLE’s betrayal of the President’s promise to end "endo" and
employment through agencies, the DOLE has clearly shown its choice to cling to its
failed policy of regulating contracting out of labor in face of workers’ unanimous
demand to prohibit it.

This indicates a readiness to accommodate employers’ interests at the cost of workers’

rights and welfare. What kind of enforcement then can we then expect from such a
Department?

As workers and workers’ organizations such as NAGKAISA and SENTRO continue to

demand for the total prohibition of all forms of contracting, they also remain vigilant in
guarding the rights of workers: the person delivering your food, the salesperson
offering you shoes, the factory worker producing goods. Will they finally enjoy the
security of tenure, the living wage, the right to form and join unions, and all other rights
guaranteed by the Constitution?

Under a DOLE which continues to insist on a weak and failed approach to contracting
out of labor, it is highly unlikely. And the workers’ demand to prohibit all forms of
contractualization will only grow louder. – Rappler.com

SENTRO is a national labor center composed of 16 industry federations and sectoral

organizations. It has been at the forefront of the fight for security tenure for many years. It
is an affiliate of the NAGKAISA Labor Coalition.