THE president of the Cebu Business Club (CBC) has mixed feelings about contractualization.

Gordon Alan P. Joseph said that when contractualization is used to escape paying legal benefits to employees, then it is “obviously an injustice”.

“This is primarily true for the five-month type of contractualization, which, to my mind, is not only unjust but also poor for company efficiency and ultimately, profitability,” Joseph said.

He said that employees in a five- or six-month employment cycle are stuck in an unending cycle of uncertainty, and are usually very poorly trained.

“As we all know, poorly-trained and unmotivated employees are not efficient or not productive, and usually the cause of customer complaints. The employer loses in the long run, and probably requires more people than is actually necessary to profitably run the business. I personally believe this is false economy,” Joseph said.

On the other hand, Joseph said he knows many companies that resort to contractualization because of the difficulty in terminating incompetent and dishonest employees.

“It is a nightmare. At the end of the day, companies have to incur insignificant expense to legally dismiss an incompetent or dishonest employee. I know at least 15 cases like this – and it appears to be endemic here,” Joseph said.

He added that with the law ending contractualization should come a law (or a revision) that gives employers more leeway in terminating dishonest and erring employees.

“This is common practice in most, if not, all developed countries and in many developing countries. Employers, and not just dishonest or incompetent employees, should have rights as well: the right to demand high and honest performance from its employees, and the right to terminate non-deserving employees,” Joseph said.

“As you know, an efficient, successful and profitable company will ultimately have higher paid employees and will most likely consider reinvesting to expand operations and therefore, create more jobs,” Joseph added.

Meanwhile, the Partido ng Manggagawa (PM) has called on the Department of Labor and Employment (Dole) for an inspection of existing labor contractors to conduct an inspection of existing labor contractors in the wake of a directive released last week ordering the suspension of the registration of new subcontractors.

“We welcome the DOLE Department Order No. 162, series of 2016 and Labor Advisory 10, series of 2016 as the new administration’s cautious first step in ending endo. But we call on DOLE to make the next bold move of reviewing all prevailing subcontractors to ensure compliance with laws and regulation,” said PM spokesperson Dennis Derige.

Derige added that should existing service contracts and subcontracting schemes be found in breach of labor laws and regulations, especially the control test, contractual workers must be made regular employees.