CONTRACTUALIZATION

IN THE PRIVATE
SECTOR
Advocacy for Promoting Awareness Towards
Contractual Workers’ Rights and Benefits

PolSci Sec 3
Cagas, Kathlene
Cunahap, Kennah
Dalida, Lenard
Dofitas, Gene
Juada, Shannon
Leal, Bea
Legayada, Irish
Pastolero, Ysabelle
Provido, Den Mar
Rojas, Danielle
Valle, Steffi

April 1, 2016
 I. Problem Statement

Issues that have risen concerning contractualization are oftenly involving

employees receiving insubstantial pay and privileges. There is also insufficient
monitoring on the implementation of the existing policies in order to protect the
employees. There are policies such as the Labor Code of the Philippines which was
designed to address the concerns regarding the employees’ welfare.
PSA Statistics shows that the minimum wage is insufficient to support their
daily lives for the average Filipino family annual expense comes around 193,000
Php, while they receive 180,00 Php instead. Contractual workers are exposed to this
insufficiency for they are subjected to minimum wage compared to regularized
employees.

Kinds of Contractualization:

According to the University of the Philippines system website, they have classified
the different kinds of contractual workers:

a) CONTRACTUAL WORKERS or FIXED TERM CONTRACT WORKERS

They are directly employed through written contracts, based on a particular period and type of work.
Renewal of contracts depends on management.

(b) PROBATIONARY WORKERS are placed under a probation period during which their skills are
tested. This is part of the process to eventually become a regular employee. The probationary period
shall not exceed six (6) months after which the management shall evaluate the workers’ capabilities
for regular employment.

(c) AGENCY WORKERS

They are not directly employed by the principal company as they are employed through agencies or
third parties to perform tasks in the enterprise of the principal company. They are not counted as
part of the work force of the principal. Their contract lasts for five months and is terminated after;
otherwise, they sign another five-month contract. Those who have been employed by the agency for
a number of years are called regular agency workers.
 Despite DOLE’s imposed standards, exploitation of contractual workers is still vastly
occurring along with said workers’ ignorance to their proper wage and benefits gives way
for these problems to arise:

Lack of Tenure for Employees

As stated in the Labor Code of the Philippines, an employee is deemed as “regular” if
he or she has been engaged to perform activities, which are usually necessary or desirable
in the usual business or trade of the employer and labeled as “casual” if he or she has
rendered work for the organization but not that necessary for the organization to function.

Regarding the fixed-term employment, ilustradongindio.wordpress.com has
mentioned that Article 280 of the Labor Code however, does not mention fixed-term
employment or the “contractuals”. Contractual workers are directly employed through
written contracts, based on a particular period and type of work and renewal of contracts
depends on management.

An article from the Panay News Philippines published on December 2015, explained
the lack of tenure to contractual employees.

“According to Sen. Aquilino Pimentel III, author of Senate Bill 3030, the practice of
contractualization deprives one of security of tenure. Under the said practice, workers are
hired for a specific number of months and then rehired after. Thus starting another cycle of
that job for the same duration. Instead of having the first months of the employees in the
company as a probationary period as to which they can prove to their employers their
competence in order for them to become regulars, this is not the case for some companies.
There are those that opt to rehire employees rather than renewing their contracts thus not
taking into account the previous performance of the employee.”

Deprivation Of Potential Benefits

A contractual worker is not only entitled to his/her proper wages but also to a
number of benefits that ensures his/her welfare, safety and protection during the course of
the worker’s employment.

 Department of Labor and Employment (DOLE) implied standard rights and benefits
for contractual workers as provided in the Articles 106 to 109 of the Labor Code
(Department Order No. 18 - 02 Series Of 2002). This includes:

(a) Safe and healthful working conditions;
(b) Labor standards such as service incentive leave, rest days, overtime pay,
holiday pay,
13th month pay and separation pay;
(c) Social security and welfare benefits;
(d) Self-organization, collective bargaining and peaceful concerted action;
and

But still many contractual employees are reported to have received unsatisfactory
benefits from their employers. Companies hiring contractual workers refuse to invest to
their workers’ benefits since the latter’s terms of employment are on a fixed time period
and spending company funds on such privileges are deemed to be wasted expense. What
with DOLE’s lack of manpower to monitor these certain discrepancies, contractual workers
risk their necks on immense workloads without employers subjecting them to benefits that
ensure their well-being

Salaries and Wages

The Department of Labor and Employment specifically the National Wages and
Productivity Commission is tasked to determine the appropriate fixed minimum wage. With
the help of its regional counterparts such as the regional boards, they are the ones studying
the feasible actions towards it. As of now, there are about a thousand mechanisms of
minimum wages issued by the body to protect the workers from being underpaid. There are
specific amounts for the different sectors such as the agriculture and non-agriculture.

There are variations of the minimum wage per region because there is an act which
is called the Wage Rationalization Act that is given the responsibility to determine the cost
of living applicable to each region. This causes the unrest among employees because having
different minimum wages per region makes them even more vulnerable to exploitation
because there is no uniformity. Instead giving employees the relief of having a safety net,
this regionalization of minimum wages permits not the price hike of wages but its space for
down charges.

A contractual employee could only expect a minimum wage of Php 295 in Western
Visayas and a monthly salary of Php 7,080. At this monthly salary rate, the social security
contribution of the employee is Php 521.8 or 7.37% to be paid by the employer, while the
employer pays a monthly social security contribution of Php 257.00 or 3.63 % of his salary.
This contribution rate falls on the second lowest of the monthly salary bracket contribution
at Php 3,500, with the highest being at Php 16,000.

However, these conditions still exist despite the existences of policies regarding
labor code, minimum wage and the living wage. Under Sen. Loren Legarda’s, living wage, it
was written that a family of six must have the eight points of standards of living. This
basically includes balanced diet, decent clothing, hygiene and sanitation, health and
medicare, basic education, basic durables such as radios, leisure and recreation, and
observance of personal and social events.

Susceptibility of the System to Abuse

During evaluation employers can use their own discretion as to how they deem the
employee to be “eligible” for regular employment. The evaluation process is currently under
the absolute control of the employer who therefore has the power to hire or fire employees
at will. This allows employers to exploit the system while saving money by repeatedly
hiring workers under a new contract and firing workers before they are able to become
regular employees. Using this loophole makes it possible for private establishments to
operate without having to expend resources on regular employees who are entitled to
benefits.
These social security benefits are basically available only for those employees who
have longer than six months of employment.


Lack of Avenue for Personal Growth

Contractual workers are growing exponentially. More individuals are harbored in
the industry, resulting to a staggering amount of employees. As it progresses, a cataleptic
phenomenon will most likely to happen. This will impair the efficacy of the employee in
terms of job they work at. Even discrimination is prevalent on the job, causing rifts between
employees that also impedes productivity levels of each worker.
Furthermore, the lack of expertise and experience of these workers will hinder them
to find a more stable job and even regularization in their contractual jobs. Most probably,
they will remain working as contractuals and operate the same kind of job without any
means to improve or develop their proficiency in it even if they become regular employees.
In the long run, this will cause an immobility of efficiency in the workplace. As such,
this will cause negative effects to the company and their employers also.

III. Proposed Solutions

Tenure
1. Fair employee evaluation by standardizing it through objective performance
standards
Benefits
1. Appeal to the government for the additional investment on the employee-welfare
monitoring sectors such as Department of Labor and Employment (DOLE) in order
for them to gain additional manpower to more effectively execute their measures
and regulations on private companies that hire contractual workers.
2. Disseminate information to contractual employees and educate them regarding
their rights and incentives and promote awareness among them through media
3. Gather feedback from the contractual labor force whether they indeed receive the
benefits they are entitled to through social media while protecting their personal
identity and information at the same time
4. Following the previous item, share gathered information to authorities such as
DOLE and appeal for more effective and immediate means of securing contractual
employees’ welfare


Salaries and Wages
 1. Employees must be aware that they are entitled to several privileges such as
overtime pay, right to weekly rest day, service incentive leave and those which are
stated under the Chapter III of Labor Code of the Department of Labor and
Employment.
2. Strictly implement and closely monitor the existing policies such as the Wage
Rationalization and Living Wage.
3. Regional Boards should conduct an evaluation from time to time in order to
recommend the wages which are appropriate for the cost of living of the employee
and the family.

Open to Abuse
1. Mandate Employers to evaluate potential employees after six months of contractual
work at the establishment.
2. Make sure the evaluation is fair by (1) Standardizing evaluation with objective
performance standards (2) Having the Dept of Labor participate and evaluate in the
employee evaluation as a form of assurance that standard protocol is being followed
3. Educate the workers about the rights and benefits they are entitled to by (1) having
the Dept of Labor conduct monthly employer and employee forums in order to
directly inform both parties of their rights and obligations and (2) actively
campaigning about these rights and obligations in traditional media and social
media.

Lack of Avenue for Personal Growth

1. Substantial offers of training and seminars shall be offered to them to enhance their
skills and working capacity in preparation for their regularization. This in turn will
make them capable in working efficiently. This will yield competence and
guaranteed boost of working capacity to the employees.
2. There is a pressing need to educate the employees and potential employees about
the rights they are entitled to, as well as, inform employers of their obligations and
responsibilities towards their respective employees in which it should establish an
environment fit for work.
 3. As much as possible, employers should subsidize the enrichment activities as such
that it follows the arrangement agreed by both parties. (i.e. Return Service
Agreements)
4. Assessment of each employee shall be done to keep track of their status and their
overall wellbeing. This is very helpful in facilitating in determining the individuals
who needs the improvement and peer programs in order to establish an employee-
friendly workplace.

IV. TARGET AUDIENCE
• Contractual Employees
Contractual employees are the stakeholders directly affected by (wait
hahaha) For employees to be aware of their rights and the benefits that they are
entitled to. They can use this to protect themselves from employers who abuse their
power over them.
• Employers
Employers carry the obligation of ensuring their workers’ welfare and well-
being by giving them proper pay and benefits. To assure that employers follow these rules
and regulations, this advocacy project provide information that imposes the seriousness of
providing contractual employees’ rightful wage and benefits.
• Government Officials
We aim for the government officials to see this advocacy video because they
are the ones making laws that affect the contractual workers. Through this video, we hope
that they would fully understand the needs of the said workers resulting to them making
better laws for the betterment of the fixed-term workers.
• The President
The next Philippine President should acknowledge this issue as a violation of
the right of the state’s working class citizens and be willing to compromise economic gain in
exchange for the welfare of its people.



 V. PRODUCTION PLAN
PEOPLE
INVOLVED EQUIPMENT
DATE ACTIVITY OBJECTIVE/S COST
(BESIDE THE NEEDED
GROUP)

Pass advocacy To pass the advocacy Prof. Juhn Chris Laptop, printer,
April 1, 2016 NA
proposal proposal Espia paper

To gather subjects'
opinions towards
Contractual P 150 for
April 2-5 Survey contractualization Survey forms
employees printing
and how they feel
about it

(a) To gather
backrounds of first-
hand experiences
from contractual
employees, ask about
their workload, their
salaries, and (if there Contractual
April 5-11 are any) benefits employees, P 200 for
Interview/Film Camera, paper
2016 employers, transportation
(b) To Ask lawyers lawyers
about the legality of
contractualization,
its scope and
limitation, and its
acceptability to our
society

To edit and organize
the multimedia
April 12 – 18,
Editing of video campaign and to NA Laptop, camera NA
2016
improve supporting
files

Submission of To submit advocacy Prof. Juhn Chris
April 21, 2016 USB NA
advocacy video video Espia

Cost Estimation

-Food, travel, etc. required for the execution of the project are subjected to
individual expense

Risk Analysis
Personal information and identity of contractual workers will be treated as highly
confidential and all information relayed will strictly be based only upon the project and
purpose of the advocacy.