DOLE’s D.O. 174: Rules on Contractualization

Written by Marilou Antonio

On April 6, 2017, we were privileged to have Atty. Benjo Santos Benavidez, bureau of labor relations director of the Department of Labor and Employment, as resource speaker for the labor update on the Department of Labor and Employment’s Department Order №174 (D.O. 174), which took effect last April 3, 2017.

In a nutshell, here’s what D.O. 174 covers:

1. Reiterates the prohibition against labor-only contracting (LOC) based on statutory definition and jurisprudence.

2. Expands illicit forms of employment arrangements:

a. Contracting out of work to an in-house cooperative

b. Requiring employees to become members of a cooperative

c. Other schemes, practices, or arrangements designed to circumvent the worker’s right to security of tenure

3. Removes the provision for an employment contract to be co-terminus with the service agreement.

4. In case of termination due to the expiration of a service agreement, the contractor is required to provide new employment to the employee within three months and pay the latter of separation benefits.

5. Adds the violation of any of the provisions of the Labor Code as grounds for cancellation of registration.

6. Reduces the time period within which regional directors shall resolve filed complaints from 10 to 7 days.

7. Blacklists a contractor, including any of its officers, whose registration has been cancelled, to operate or apply for new registration as a contractor under either the same or different name.

8. Increases the substantial capital requirement from 3M to 5M pesos.

9. Increases the registration fee from 25,000 to 100,000 pesos.

10. Shortens the validity of contractors’ certificate of registration from three to two years.

Compliance to the implementing rules of D.O. 174 will be the primary focus of the Department of Labor and Employment.

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About the author:

Marilou is the human resource manager of John Clements Consultants. She has more than 25 years of experience in the field of HR, working for several companies across various industries. Prior to her work as an HR professional, she worked as a psychology instructress and guidance counselor at the University of the East from 1981–1989. She earned her Bachelor of Science degree in Psychology, major in Clinical Psychology, from Far Eastern University.