Contractor’s employees

Summary

⦁ The employees of a contractor or a subcontractor may be deployed personnel or administrative personnel.

⦁ The contractor’s or subcontractor’s employees enjoy the same rights and benefits as any other employee under labor laws.

⦁ The Contractor’s employees are required to be provided a written employment contract.

⦁ In case of expiration of the Service Agreement, the contractor’s employees have several options, one of which will entitle them to separation benefits.

1. Employees of a Contractor or Subcontractor

The contractor’s or subcontractor’s employees may be deployed personnel or administrative personnel.

a. Deployed or assigned personnel

Under DO-174, a contractor’s employee refers to “employee of the contractor hired to perform or complete a job or work performed by the principal pursuant to a Service Agreement with the latter.” (Section 3(e), DO-174)

If a contractor’s employee is deployed or assigned at premises of the principal to perform the work therein, he/she is often referred to as a deployed or assigned personnel.

b. Administrative personnel

A contractor may hire employees as administrative personnel, who may work in the principal place of business of the contractor. Accordingly, they are not deployed or assigned to an account or principal.

2. Rights of the employees of the contractor or subcontractor

The employees of the contractor and subcontractor are entitled to all the rights and benefits under labor laws, including:

1) Security of tenure;

2) Safe and healthful working conditions;

3) Labor standards such as but not limited to service incentive leave, rest days, overtime pay, holiday pay, 13th month pay, and separation pay;

3) Retirement benefits under the SSS or retirement plans of the contractor/subcontractor;

4) Social security and welfare benefits; and

5) Self-organization, collective bargaining and peaceful concerted activities including the right to strike. (Section 10, DO-174)

a. Written employment contract

The employees of a contractor or a subcontractor are required to be provided with a written employment contract, which shall include the following stipulations:

1) The specific description of the job or work to be performed by the employee; and

2) The place of work and terms and conditions of employment, including a statement of the wage rate applicable to the individual employee. (Section 11, DO-174)

The contractor or subcontractor are required to inform the employees of the foregoing stipulations on/before the first day of his/her employment. (Ibid.)

3. Expiration of Service Agreement

If the Service Agreement expires, or phase/s for which an employee was hired have been completed, the contractor’s employee have the following options:

1) Resign from employment;

2) Wait for re-employment within three (3) months;

3) If no re-deployment within three months, resign from employment and receive separation benefits in addition and on top of his/her final pay as may be provided for by law or the Service Agreement, whichever is higher. (Section 13, DO-174)

References

Book III, Presidential Decree No. 442, a.k.a. Labor Code of the Philippines

DOLE Department Order No. 174, Series of 2017

/Updated: January 4, 2023

Disclaimer: All information is for educational and general information only. These should not be taken as professional legal advice or opinion. Please consult a competent lawyer to address your specific concerns. Any statements or opinions of the author are solely his own and do not reflect that of any organization he may be connected.

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