Reporting ‘Endo’: Complicated, Confusing
AS PRESIDENTIAL candidate, Rodrigo Duterte vowed to end labor contractualization or “endo,” a practice that prevents workers from attaining the full benefits of regular employment. Duterte’s promise, together with his vow to end crime and drugs, projected his populist stance, helping him win the presidency in the May 9 elections.
The Senate Committee on Labor Employment and Human Resources held a hearing on Aug. 17 to discuss proposals to end endo and to plug loopholes in the implementation of the country’s labor laws.
The media reported this development but failed to provide background and important information crucial to the public understanding of an issue affecting millions of workers. The media should have gone beyond quoting officials and reducing the discussion to an exchange of statements.
Clarifying Unfair Labor Practices
The term “contractualization” itself is not found in the Labor Code of the Philippines, but what the law clearly prohibits is “labor-only contracting.” According to Article 106 of the law, labor-only contracting is an arrangement wherein the contractor or subcontractor merely recruits and places workers to perform jobs and services for a principal (the employer). Under this provision, “labor-only contracting” exists under the following conditions:
- The contractor or subcontractor does not have sufficient capital or investment (tools, equipment, machines, work premises, etc.);
- Employees recruited and placed are performing activities that are 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; and
- The contractor does not exercise the right to control over the performance of the employee’s work
Under such circumstances, the contractor is considered an agent of the employer, who then becomes liable to the workers to the same extent as if the employees were directly employed by the principal.
Department Order No. 18-A Series of 2011 (DO No. 18-A), which defines the regulations governing contracting and subcontracting agreements, reiterates this prohibition.
However, a contractor with sufficient capital or investment who has control over the performance of the employee deployed to fulfill contracted services, and is not delisted from the registry of legitimate contractors/subcontractors can legally engage in contracting.
And as far as legitimate contracting agreements by registered contractors are concerned, Department of Labor and Employment (DOLE) Secretary Silvestre Bello III said the arrangements made with them will still be recognized by the agency. These include project-based workers in the construction industry, provision of janitorial and security services and others that are recognized by the Labor Code.
Hiring and Terminating
The term endo is a colloquial term for “end of contract.” Related reports provided by the media on the labor contractualization issue in the month of August, in the days leading to and after the Senate hearing, defined endo as an employment scheme that prevents contractual employees from attaining the status of regular employees and the benefits that come with it as stipulated by the law.
One example is the so-called “5-5-5 scheme,” the hiring and terminating of workers’ contracts every five months (or less). Although not clearly specified, this kind of unfair labor practice is prohibited under Section 7.7 of DO No. 18-A. A policy brief by the DOLE Institute for Labor Studies published in June 2015, however, identified this as a grey area in the law which must be amended to specify the number of months that would be considered as an employment of short-duration.
According to the Issues and Concerns page of the DOLE Bureau of Labor Relations, under a subcontracting agreement, the scheme is done through:
- Repeated short-term agreements by one principal through the same contractor or under different contractors
- Repeated short-term arrangements through a Service Agreement of short duration under the same contractor or different contractors
Some examples of jobs where endo or the “5-5-5 scheme” can be observed include factory workers and salesclerks in malls and supermarkets.
Therefore, what are illegal and prohibited as provided by the law are labor-only contracting and the practice of endo or the “5-5-5 scheme.” These are what the Duterte administration aims to address, along with any other similar arrangements and illegal forms of contracting. Specifically, the government’s target is to “cut the incidence of endo or the ‘5-5-5 scheme’” by half this year through stricter enforcement of existing labor laws, according to labor secretary Bello in early July.
The confusion about what “contractualization” really refers to and what practices should be made illegal is rooted in the lack of an official definition of the term in the labor law. Some employers and trade groups reportedly asked Bello to “educate” them on the matter, and called on the government to be clear about policy.
Contracting work in itself is not illegal, as long as it covers legitimate forms of employment which may be appropriate to the nature of the business and the job. As lawyer Ces Alvero Azucena Jr. aptly pointed out in an article published in the Inquirer (“Contractualization: Which meaning do we mean?,” September 18, 2016), “hiring of employees on temporary basis is not altogether illegal where such kind of hiring is really needed by the business” as the law allows project-based employment with a pre-agreed termination date, seasonal employment and fixed-period employment (Article 280 of the Labor Code).
Such complications can be addressed by improving existing labor laws—a point that became evident in the Senate’s probe into the labor contractualization issue.
The Senate is yet to conduct more hearings into the contractualization issue. Until then, the press has time to go beyond what has already been said in its reports. The media have to provide more informative reports to help the public get a clearer picture of an issue as complicated as endo.
Ending endo and other unfair labor practices is a legitimate concern that deserves as much coverage as the Duterte administration’s campaign against crime and the illegal drug trade. That it isn’t getting this coverage doesn’t speak well of the press.