House Bill 6908 - ENDO, Labor Only Contract

HB 6908 was approved on the third reading.
It's not a law yet but i think it will be soon since the government is pushing it also.

It amends some provisions of PD 442 (Labor Code of the Philippines)
It focused mainly on securing Tenure of employees.

1. Labor Only Contracting
It is regarded as a labor only contracting when the following situation happens.

a) When the contractor doesn't have substantial capital or investment in the form of tools, equipment, machineries, work premises;

b) The contractor has no control over the workers’ methods and means of accomplishing their work;

c) the workers recruited and placed by such persons are performing activities which are directly related to the principal business of such employer.

In these cases, the contractor is a mere agent.  

Notes : Job contractors should secure license from DOLE. They should not fall any of the above mentioned conditions not to be a mere agent (labor only contractor).

Notes: If contractors fail to pay their employees...the employer (who give jobs) are jointly liable together with the contractor. Really? What if the employer already paid all to the contractor? hmmm.

2. No fixed-term contract will be allowed.

SSS rate increase proposal

Notes: Looks like many countries have Social Security Fund problems....They try hard to make it stable such as increasing contribution, reducing pension amount but doesn't looks like successful. Maybe they have to rely on Tax eventually.

In 2017, pension is increased P1,000 peso.

The proposal includes two provisions.

1. Increase rate from 11% to 14%. 
Notes: Personal income tax is reduced but it's neutral to companies since they still release the amount  to the employees. The company's share of SSS is more than double of each employee's share. It might be a extra burden to the company.

2. Increase Monthly Salary Credit from 1k~16k to 4k~20k. 
As of now, the highest salary SSS recognize was 16k. Means, even your salary is 20k...SSS contribution is based on 16k.  Those whose salary range is 16k~20k will feel the impact. I believe really a lot of employees are belong to this range...making the company burden bigger.

Ex) 20k salary man : total SSS would be increased from 1760 (1230 vs 530) to 2800.(1960 vs  840)
Company may should roughly 700 pesos more per person. yearly 8400...if they have 1,000 employees...it would be 840,000 yearly. Small or big? I don't know.

If it's implemented, the SSS fund life will be prolonged  from 2032 to 2044. What does this mean to those young people?

Due Process

Due process refers to the procedure in which an employee is terminated. It is a requirement by law to provide fairness to the employee by being notified of the reason for dismissal and in some cases, to give the employee ample opportunity to defend himself or herself.

In just causes of termination, the due process involves a 2-notice rule while in authorized causes of termination, the due process is deemed complied by serving a 30 days notice to the employee.

If due process is not accorded to the employee before the termination of the employment, the employee shall be entitled to payment of indemnity or nominal damages even if the termination is for a valid cause.

Penalty for failure to follow Due Process

In cases whereby the employer fails to comply with the due process requirements before terminating the employee for a just cause, the employer may have to indemnify the employee of not more than 30,000 pesos. In the case of an authorized cause, it’s 50,000 pesos.