PRESIDENT Rodrigo Duterte on Friday, July 26, rejected the proposed measure aimed at strengthening workers' right to security of tenure, a day before it was supposed to lapse into law.
Duterte, in a letter sent to Congress, said he was constrained to veto the measure because of the "sweeping expansion of the definition of labor-only contracting."
Such definition "destroys the delicate balance and will place capital and management at an impossibly difficult predicament with adverse consequences to the Filipino workers in the long term," Duterte stated.
The proposed measure prohibits labor-only contracting, which is defined as a scheme wherein "the job contractor, whether licensed or not, who merely recruits and supplies or places workers to a contractee has no substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, or the workers recruited and supplied or placed by such person are performing activities which are directly related to the principal business of such contractee or are under the direct control and supervision of the contractee."
The President stated in his letter that such definition forbids contractual arrangements that are
"not particularly unfavorable" to the workers.
"I stand by my firm commitment to protect the workers' right to security of tenure by eradicating all forms of abusive employment practices. Our goal, however, has always been to target the abuse, while leaving businesses free to engage in those practices beneficial to both management and the workforce," the President said in his veto message.
"While the bill mostly codifies into law existing rules, regulations, orders, and jurisprudence on matters of labor-only contracting and security of tenure, it likewise unduly broadens the scope and definition of probited labor-only contracting, effectively proscribing forms of contractulization that are not particularly unfavorable to the employees involved," he added.
On May 1, 2018, Duterte signed Executive Order (EO) 50, which prohibits "illegal" contracting and subcontracting arrangements schemes "of all parties, including cooperatives."
But during his 2018 State of the Nation Address (Sona), the President acknowledged that his EO was not enough to ensure job protection, prompting him to renew his call to Congress to pass a measure amending the Labor Code and effectively ending any kind of contractualization.
In September last year, Duterte certified as urgent the proposed Security of Tenure Act.
Articles 106 to 109 of Presidential Decree 442 or the Labor Code of the Philippines allows employers to enter into contractual arrangements with their employees.
While reiterating that he is against labor-only contracting, Duterte in his latest statement said "legitimate job-contracting should be allowed, provided that the contractor is well capitalized, has sufficient investments, and affords its employeees all the benefits provided for under the labor laws."
"Businesses should be allowed to determine whether they should outsource certain activities or not, especially when job-contracting will result in economy and efficiency in their operations, with no detriment to the workers, regardless of whether this is directly related to their business," the President said.
"This is especially critical since empirical data shows that the Philippines is currently at a disadvantage already in terms of cost and flexibility of labor use compared to its peers in the region," he added.
The President also cited the Supreme Court's ruling on several occasions that while the 1987 Constitution mandates the state to protect the rights of workers and promote their welfare, "such constitutional policy is not intended to oppress or destroy capital and management."
He also stressed the need to observe a "healthy balance between the conflicting interests of labor and management." (SunStar Philippines)