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January 15, 2021

By Rafael E. Khan

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New Security of Tenure Bill

A new Security of Tenure bill has passed the lower house of the Philippine Congress, and may be deliberated in the Senate sometime in 2021.

  • A previous version of this bill was vetoed by President Rodrigo Duterte in 2019, because it imposed too‑stringent restrictions on outsourcing.
  • The new bill attempts to remedy those objections, but still contains provisions intended to (a) impose additional legal requirements for employee terminations; and (b) create limits to the use of contracted labour.
  • We expect both organised labour and employer confederations to lobby for and against this measure as it makes its way through the Senate and the bicameral deliberation process.


Employer restructurings

Employer restructurings due to the economic crisis created by COVID‑19 will likely increase this year. The Philippines has suffered one of the steepest drops in economic activity in Asia, and by all indications it will continue to be a hard climb into 2021 given the likely slow deployment of a COVID vaccine in the country, the fact that many industries continue to operate below capacity, and significantly reduced consumer spending persists.

Six month legal limits on employment suspensions are already expiring and were due to mostly expire in January 2021, forcing many employers to either negotiate extensions or effect separations.


Public sector and public sector investment

The public sector, and public sector investment, may be significant drivers of employment this year.

With most private sector employers taking a wait‑and‑see attitude, it was the public sector which hired:

  • to a significant degree, for jobs which have been created as a result of the COVID‑19 pandemic, such as contact tracers and health‑care workers; or
  • for infrastructure jobs tied to government projects and other public sector investment.




Employment status

There is a continuing debate between employers, employees, labor unions and regulatory authorities (primarily the Department of Labor and Employment ("DOLE")) regarding the status of workers and employees.

According to the Labour Code of the Philippines, regular employees are those who perform work which is directly related to an employer's core business and enjoy security of tenure that can only be interrupted for cause, whereas contractual employees are those who are engaged on limited and temporary fixed-term contracts. Although an employer is not permitted to hire a contractual employee to perform the functions of a regular employee, many employers find grey areas to avoid having to 'regularise' workers, in order to keep headcounts and tenure-based benefit costs low.

Regularisation efforts take the form of lawsuits for employment recognition, canvassing by labor unions, or enforcement actions by the DOLE for employers to convert contractual employees to regular employees. The latter initiative peaked in 2017, but there was talk of resurrecting this campaign in 2020 prior to the COVID-19 lockdown.


Occupational Safety and Health (OSH) compliance

Following the amendments to the OSH law in 2018, an expanding institutional awareness of this issue and a renewed focus on OSH compliance by the DOLE were supposed to continue in 2020. However, with the onset of COVID-19, the OSH conversation has now shifted towards (a) the definition of 'essential worker'; (b) the sufficiency of COVID-19 protection measures, including physical distancing and the provisioning of personal protective equipment; and (c) adequacy of work-from-home processes by employers.


'Safe spaces' in the workplace

The 'Safe Spaces' Act recently came into effect and provides protection against sexual harassment in public and private spaces, including the workplace. Employers have new obligations to create specific mechanisms to prevent, investigate and punish gender-based sexual harassment, including those committed online or with the use of digital technology.




Implementation of the Telecommuting Act

In recognition of technological developments and employees looking for more flexible working patterns, the Telecommuting Act was approved and came into force on 20 December 2018.

The Act gives statutory recognition to this type of working arrangement and allows an employer to put in place a telecommuting arrangement by mutual agreement with the employee. This will enable an employee to work more flexibly from home or another location where they have a computer and internet connection. The terms and conditions of such arrangement must meet the minimum legal labour standards and ensure that telecommuting employees are treated the same as their comparable office based employees including in terms of pay and benefits.

It is hoped that this Act will help employers attract and retain talent.




Contracting-Out and Outsourcing, Anti-Age Discrimination and Labour Law Enforcement Measures

The Philippines’ Department of Labor and Employment (DOLE) issued the following new administrative rules:

  • Department Order No. 174 regarding contracting-out and outsourcing practices, which imposes new registration and capitalization requirements on entities seeking to provide third party services;
  • Implementing rules for the Republic Act No. 10911 which prohibits age discrimination in hiring, compensation or promotion; and
  • Department Order No. 183 which expands the processes under which DOLE representatives conduct a compliance audit in private employer establishments. These audits have resulted in findings whereby the DOLE has ordered private employers to hire, as their own employees, hundreds – and in some cases, thousands – of third party workers.


Higher Minimum Wage Rates in the National Capital Region

The statutory minimum wage rate for Metro Manila, where many businesses are located, was raised to Php512.00 (approximately USD10.00) as of the end of-2017.

With thanks to Rafael E. Khan of Siguion Reyna, Montecillo & Ongsiako for his invaluable collaboration on this update.


Image: Suzanne Horne
Suzanne Horne
Partner, Employment Law Department

Image: Kirsty Devine
Kirsty Devine
Associate, Employment Law Department

Image: Aashna Parekh
Aashna Parekh
Associate, Employment Law Department

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