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[av_heading heading=’ ABOVE THE LAW ‘ tag=’h3′ style=’blockquote modern-quote’ size=’30’ subheading_active=’subheading_below’ subheading_size=’15’ padding=’10’ color=” custom_font=”]
BY AYIN DREAM D. APLASCA
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Thursday, October 19, 2017
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I HAVE a client whose concern has something to do with “contractualization.” It gave me an idea to write and share about this to you. I will discuss two kinds under this – job contracting and labor-only contracting.
Let us first define some of the terms under the latest issuance on the subject matter by the Department of Labor – Department Order 174, Series of 2017. It mentioned the term “sufficient capital” which means paid-up capital or net worth of at least P5 million; also, the term “investment” which refers to the equipment and tools needed to fulfill the contract.
Under the scheme of job contracting, the agreement between the contractor and the owner is solidary in nature. At first, the owner has to pay the contractor P5 million. However, it may be paid in parts. The owner is required to pay P1 million upon the signing of the contract. The balance of the payment may be paid upon accomplishment of certain construction markers.
As a reciprocal obligation, the contractor is required to supply all necessary construction materials. This may include cement, sand, stones, and the like. It also includes the labor force and other materials to finish the project. This means that the workers are the employee of the contractor. The owner is not liable for wages, overtime and other benefits imposed by law unless the contractor underpays his workers. In this situation, the owner has a solidary liability with the contractor.
However, under labor-only contracting, the contractor recruits the workers only and nothing more. It is the owner who pays for their wages and benefits or other things that the contractor should be the one providing. This is prohibited by our labor laws.
In a recent case, the Supreme Court defines job contracting as the following: carries on a distinct and independent business and undertakes to perform the job, work or service on its own account and under its own responsibility according to its own manner and method, and free from the control and direction of the principal in all matters connected with the performance of the work except as to the results thereof; has substantial capital or investment; and the agreement between the principal and contractor or subcontractor assures the contractual employees entitlement to all labor and occupational safety and health standards, free exercise of the right to self-organization, security of tenure, and social and welfare benefits.
On the other hand, labor-only contracting means “an arrangement where the contractor or subcontractor merely recruits, supplies or places workers to perform a job, work or service for a principal.”
Therefore, if you have a really big project to construct that involves skills and materials outside of your knowledge, turning to professionals is a good choice and idea.
(Atty. Ayin Dream D. Aplasca practices her profession in Iloilo City. She may be reached thru ayindream.aplasca@gmail.com/PN)
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