Philippines Contractualization Law

November 8, 2022

The Philippines Contractualization Law: What You Need to Know

In 2018, the Philippines government passed the “Security of Tenure Law” aimed at addressing the issue of contractualization in the country. The practice of contractualization refers to the hiring of workers on a temporary or fixed-term basis, without offering the benefits and protections that regular employees are entitled to.

Under the new law, companies are required to provide their workers with regular employment contracts, which must specify the employees` roles, responsibilities, and benefits. In addition, companies are required to extend the contracts of their workers for up to three years, after which they must be offered regular employment or retrenched with appropriate compensation.

The law also prohibits the practice of “endo,” where employees are repeatedly hired on short-term contracts to avoid paying benefits and providing job security. Employers found guilty of engaging in endo may face fines and imprisonment.

The passage of this law has been hailed as a significant step towards improving the rights and protections of Filipino workers. Contractualization has long been a contentious issue in the country, with labor groups campaigning for its abolition due to the working conditions and lack of job security it offers.

However, some employers have raised concerns about the impact of the law on their operations, particularly on the costs of providing benefits and maintaining regular employment contracts. The government has assured businesses that they will be given a transition period to comply with the law, and has pledged to provide support for SMEs and other small businesses.

The Philippines` Contractualization Law represents a crucial development in the country`s labor policies. By guaranteeing job security and benefits to workers, it offers a significant boost to their livelihoods and protections. However, it will require close cooperation between employers, employees, and the government to ensure its successful implementation and address any challenges that may arise.

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