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Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
AT A GLANCE:
“Endo” and “5-5-5” is a prohibited hiring practice whereby the end of an employment contract is intentionally set by employers at five (5) months in order to avoid the regularization of workers. The practice of repeatedly hiring of employees under an employment contract of short duration or under a service agreement of short duration with the same or different contractors, circumventing the Labor Code, is declared prohibited for being contrary to law or public policy. (Section 7 A(7), Department Order No. 18-A, series of 2011: Rules Implementing Articles 106 to 109 of the Labor Code, as amended)
“Endo” and “5-5-5” is a form of illegal contractualization where the end of an employment contract is intentionally set by employers at five (5) months in order to avoid the regularization of workers.
Under the Labor Code, a worker is deemed regular after six months of employment.
The law says –
ART. 296. [281] Probationary Employment. – Probationary employment shall not exceed six (6) months from the date the employee started working, unless it is covered by an apprenticeship agreement stipulating a longer period.
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An employee who is allowed to work after a probationary period shall be considered a regular employee.
ART. 106. Contractor or Subcontractor. – Whenever an employer enters into a contract with another person for the performance of the former’s work, the employees of the contractor and of the latter’s subcontractor, if any, shall be paid in accordance with the provisions of this Code.
In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract, in the same manner and extent that he is liable to employees directly employed by him.
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. In so prohibiting or restricting, he may make appropriate distinctions between labor-only contracting and job contracting as well as differentiations within these types of contracting and determine who among the parties involved shall be considered the employer for purposes of this Code, to prevent any violation or circumvention of any provision of this Code.
There is “labor-only” contracting where 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. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him.
Section 7 A(7), Department Order No. 18-A, series of 2011: Rules Implementing Articles 106 to 109 of the Labor Code, as amended, provides that:
The practice of repeatedly hiring of employees under an employment contract of short duration or under a service agreement of short duration with the same or different contractors, circumventing the Labor Code, is declared prohibited for being contrary to law or public policy.
Read also: WHAT ARE THE PROHIBITED PRACTICES IN CONDUCTING RECRUITMENT FOR LOCAL EMPLOYMENT?
Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries regarding taxation and taxpayer’s remedies, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.
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