PLDT challenges Duterte’s executive order vs. contracting employees

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By Lara Climaco | FilAm Star Correspondent

Telco giant PLDT is challenging the government’s crackdown on labor-only contracting in what could be a test case for corporate social responsibility in the Philippines over a practice that is widely described as “pernicious” yet has persisted for years.

PLDT is not the only big fish being forced by the Department of Labor and Employment (DOLE) to regularize workers hired through third-party contractors. Fastfood chains Jollibee and Burger King have likewise been served with compliance orders this year but PLDT has taken it a step further by challenging DOLE in court after exhausting administrative remedies.

The compliance order on PLDT to regularize 7,306 workers became final and executory after Labor Sec. Silvestre Bello III dismissed on April 24 the motion for reconsideration of the company and its contractors, DOLE disclosed on its website last May 3.

According to local news reports, PLDT raised the case to the Court of Appeals on May 2, a day after President Rodrigo Duterte signed an executive order on “endo” also known as “555” in reference to employers’ practice of letting workers go after five months and then rehiring them for succeeding five-month periods in order to avoid their regularization, which is mandated by law after six months of employment.

DOLE’s order against PLDT initially involved 8,720 workers, 45 contractors used to hire these workers, and monetary claims amounting to PHP 77.5 million in back wages and unauthorized deductions, based on the agency’s announcement in July last year. PLDT has 91 contractors but those charged are 35 that “do not have a substantial capital as the employees use the principal’s equipment and tools in the performance of the outsourced services” while others violated occupational safety and health standards by, for instance, failing to provide adequate personal protective equipment such as harnesses, hard hats and safety shoes, DOLE documents show.

PLDT and its contractors appealed the ruling before Bello, who last January 10 reduced the number of workers ordered to be regularized to 7,416 and the monetary liability to PHP 66.3 million from PHP 78.2 million, according to the telco giant’s disclosure to the Philippine Stock Exchange.

“The resolution did not address the fundamental jurisdictional and due process issues raised by PLDT and 41 of its contractors in their appeals to the Office of the Secretary,” Ma. Lourdes Rausa-Chan, PLDT’s corporate secretary, said in a letter to the Philippine Dealing and Exchange Corp. last January 17. This was the basis for the subsequent motion for reconsideration filed.

While Bello dismissed the plea for lack of merit, the final and executory order now questioned in court covers only 35 contractors and their officers that have been banned from the contracting business. Unpaid benefits were also reduced to PHP 51.6 million because some of the contractors had already settled their dues.

Out of some 40 PLDT contractors audited by DOLE, only these were declared as legitimate: Customer Frontline Solutions, Pro Tek Telecoms Support, SL Temps; St. Clair Security and Investigation, and Trigold Security & Investigation Agency.

Executive Order (EO) 51 signed by Duterte on May 1 prohibits “contracting or subcontracting, when undertaken to circumvent the worker’s right to security of tenure, self-organization and collective bargaining, and peaceful concerted activities pursuant to the 1987 Philippine Constitution.” It authorizes the labor secretary to “declare activities which may be contracted out” and to affirm compliance orders which “shall be immediately executory unless restrained by an appropriate court.” Employees covered by a DOLE compliance order who are dismissed by the employer are automatically deemed regularized. This means they will be entitled to back wages whether they report for work or not, if the compliance order is upheld.

Organized labor groups have twitted the EO for failing to completely outlaw contractualization, which Malacañang says is not within the President’s powers as such requires legislation.

Senate President Koko Pimentel has promised to prioritize “the law on endo” once Congress resumes sessions on May 15. Employers have strongly opposed what they consider “the populist prejudice against contracting,” arguing that more flexibility on outsourcing would make the Philippines more competitive.

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