Lessons from PLDT’s Recent Labor Controversy: Employee Regularization and Contracting in PH
As HR practitioners, we shouldn’t just be familiar with labor laws; we also need to make sure that our companies abide by them. Taking care of employees involves sticking up for their rights, after all. Besides, no company wants to be identified with unfair labor practices.
Last July 21, the Department of Labor and Employment (DOLE) ordered Philippine Long Distance Telephone Incorporation (PLDT) to regularize 8,720 employees. The said employees had been working under contracting and subcontracting arrangements, even though their jobs are directly related or indispensable to PLDT’s business.
DOLE also directed PLDT and its 47 contractors to pay monetary claims amounting to ₱ 77.5 million, which includes overtime, holiday, service incentive leave, and 13th month pay, as well as unauthorized deductions to 2,500 employees.
PLDT’s case makes two matters worthy of discussion: employee regularization and labor-only contracting. Let’s talk about these two in detail.
The law on regularization
Article 280 of the Labor Code of the Philippines defines regular employment as a type of employment where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season.
An employee whose role is needed by the company is entitled to be regularized, unless, for instance, if that employee was hired to complete a time-bound project. Regular employees enjoy paid vacations and health benefits. They’re also protected against abrupt termination brought about by layoffs or unjust causes.
Probationary employees who meet their company’s reasonable performance standards should be regularized within 6 months or 180 days from their start date. That is if their jobs do not require an apprenticeship period longer than 6 months. According to the law, employees who are allowed to work after their probationary period shall be considered regular.
Another angle of PLDT’s case that’s worth exploring is labor-only contracting. Labor-only contracting happens when companies hire contractors only to recruit workers, meaning the companies are still the ones in charge of the supervising, paying, and providing the work tools of the contracted workers. According to Article 106 of the Labor Code, labor-only contracting is illegal.
Labor-only contracting is different from job contracting, a scheme where contracted workers are considered as their contractors’ employees. In job contracting, contractors pay workers at least the minimum wage and provide them with benefits. The law does not prohibit this arrangement.
PLDT’s story teaches us that companies need to have their workers’ employment statuses completely straightened out. This means keeping regularization and contracting agreements in check.
In HR, it’s our job to confirm that everything that we do follows the law. Inc.’s article, Human Resources Management and the Law, couldn’t have put it better: “Regulations and laws govern all aspects of human resource management—recruitment, placement, development, and compensation.”
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