House OKs on 2nd reading bill that would end labor-only contracting

RG Cruz, ABS-CBN News

Posted at Nov 26 2020 12:06 AM

MANILA - The House of Representatives has approved on second reading House Bill 7036, or the proposed security of tenure law that would end labor-only contracting.

The development, which came in an ayes and nayes vote during the plenary session Wednesday, paves the way for the House to give final approval next week.

Last-minute attempts by Gabriela Rep. Arlene Brosas and Anak Kalusugan Rep. Mike Defensor to amend the bill before approval were rejected by the plenary.

According to the congressional fact sheet, the bill expressly prohibits labor only contracting, providing for its definition. 

The bill defines its existence when any of the following conditions is present:

  • the contractor does not have substantial capital or investment in the form of tools, equipment, machineries, work premises among others;
  • the contractor has no control over the workers’ methods and means of accompanying their work; and
  • the contractor’s workers are performing activities which are directly related to the principal business of the employer. 

The bill also: 

  • introduces a new provision requiring all persons and entities doing business as job contractors to obtain a license from the Labor Department, including compliance with the listing requirements; 
  • declares that violation of substantive or procedural due process is equivalent to illegal dismissal and that the entitlements of an illegally dismissed employee are broadened by including the payment of social welfare contributions and benefits to the employee;
  • simplifies and clarifies the classification of employees by mandating regular employment as the general rule and prohibiting fixed term employment except in cases of Overseas Filipino Workers, workers on probation, relievers who are temporary replacements of absent regular employees whose engagements shall not exceed 6 months, project employees and seasonal employees;
  • provides that the rights and benefits of relievers, project and seasonal employees are at par with regular employees consistent with the principle that all workers must be treated alike both as to rights enjoyed and obligations assumed; and
  • provides administrative penalties of a fine and possible closure of business for those engaging in prohibited end of contract arrangements and labor only contracting.


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