Falsos augurios, crisis y cambios. A la búsqueda de nuevos horizontes

Q: What is “job contracting” (independent

contracting/ subcontracting)?

A: "Contracting" or "subcontracting" is an arrangement whereby a principal agrees to put out or farm out with a contractor the performance or completion of a specific job, work or service within a definite or predetermined period, regardless of whether such job, work or service is to be performed or completed within or outside the premises of the principal. (DO 18-A)

Q: What are the conditions that must be met in order to be considered as legitimate job contracting or subcontracting?

A: The following conditions must be met:

1. The contractor must be registered in accordance with these Rules and carries a distinct and independent business and undertakes to perform the job, work or service on its own responsibility, according to its own manner and method, and free from control and direction of the principal in all matters connected with the performance of the work except as to the results thereof; 2. The contractor has substantial capital and/or

investment; and

3. The Service Agreement ensures compliance with all the rights and benefits under Labor Laws. (Sec. 4, DO 18-A)

Q: When is there “labor-only contracting”? A: There is labor-only contracting when:

1. The contractor does not have substantial capital or investments in the form of tools, equipment, machineries, work premises, among others, and the Ees recruited and placed are performing activities which are usually necessary or desirable to the operation of the company, or directly related to the main business of the principal within a definite or predetermined period, regardless of whether such job, work or service is to be performed or completed within or outside the premises of the principal; or

2. The contractor does not exercise the right to control over the performance of the work of the Ee. (Sec. 6, DO 18-A)

Q: What are the factors to consider in determining whether contractor is carrying on an independent business?

A:

1. Nature and extent of work 2. Skill required

3. Term and duration of the relationship

4. Right to assign the performance of specified pieces of work

5. Control and supervision of worker 6. Power of Er to hire, fire and pay wages 7. Control of the premises

8. Duty to supply premises, tools, appliances, materials and labor

9. Mode, manner and terms of payment [Vinoya vs. NLRC, G.R. No. 126286, (2000)].

Note: Individuals with special skills, expertise or talent

enjoy the freedom to offer their services as independent contractors. An individual like an artist or talent has a right to render his services without any one controlling the means and methods by which he performs his art or craft

[Sonza vs. ABS-CBN, G.R. No. 138051, (2004)].

Q: SMC and Sunflower Cooperative entered into a 1- yr Contract of Services, to be renewed on a month to month basis until terminated by either party. Pursuant to the contract, Sunflower engaged private respondents to render services at SMC’s Bacolod Shrimp Processing Plant. The contract was deemed renewed by the parties every month after its expiration on Jan. 1, ‘94 and respondents continued to perform their tasks until Sep. 11, ‘95. In July ‘95, private respondents filed a complaint before the NLRC, praying to be declared as regular employees of SMC, with claims for recovery of all benefits and privileges enjoyed by SMC rank and file employees. Respondents subsequently filed an Amended Complaint to include illegal dismissal as additional cause of action following SMC’s closure of its Bacolod Shrimp Processing Plant on which resulted in the termination of their services. SMC filed a Motion for Leave to File Attached Third Party Complaint to implead Sunflower as 3rd-Party Defendant. Are private respondents employees of the independent cooperative contractor (Sunflower) or of the SMC?

A: The contention of SMC holds no basis. Using the “substantial capital” doctrine and the “right of control test,” the Court found that the Sunflower had no substantial capital in the form of tools, equipment, machineries, work premises and other materials to qualify itself as an independent contractor. The lot, building, machineries and all other working tools utilized by private respondents in carrying out their tasks were owned and provided by SMC. In addition, the shrimp processing company was found to have control of the manner and method on how the work was done. Thus, the complainants were deemed Ees not of the cooperative but of the shrimp processing company. Since respondents who were engaged in shrimp processing performed tasks usually necessary or desirable in the aquaculture business of SMC, they should be deemed regular Ees of the latter and as such are entitled to all the benefits and rights appurtenant to regular employment [SMC vs. Prospero Aballa, et al., G.R. No. 149011, (2005)]. Q: What are the conditions of permissible job contracting?

U S T A:

1. The labor contractor must be duly licensed by the appropriate Regional Office of the DOLE 2. There should be a written contract between the

labor contractor and his client-Er that will assure the Ees at least the minimum labor standards and benefits provided by existing laws.

Note: The Ees of the contractor or subcontractor shall be

paid in accordance with the provisions of the LC. (Art. 106,

LC)

Q: Who are the parties in contracting and subcontracting?

A:

1. Contractor/subcontractor –any person or entity, including a cooperative, engaged in a legitimate contracting or subcontracting arrangement. 2. Contractual Ee– One who is employed by a

contractor or subcontractor to perform or complete a job, work, or service pursuant to a service agreement with a principal. (D.O. 18-A) 3. Principal– Any Er who puts out or farms out a job,

service, or work to a contractor or subcontractor. Q: Describe the relationship arising from contractual arrangements.

A: There is a trilateral relationship between the principal, contractor and Ee. There exists a contractual relationship between the principal and the contractor or subcontractor to its Ees.