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    State The Different Kinds of Sub-Contracting

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    Anathema Device
    This document discusses the requirements for legal subcontracting arrangements under Philippine law. It states that job contracting, where a principal outsources a specific job or work to a contractor, is allowed. However, labor-only contracting is prohibited. To be valid, a subcontracting arrangement must meet four requirements: 1) The contractor operates an independent business; 2) The contractor has substantial capital investment; 3) The contractor has freedom to perform the work as it chooses; and 4) The arrangement ensures worker rights. DOLE Order 174 also outlines mandatory registration requirements for contractors, including providing business and workforce details as well as paying a registration fee.

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    State The Different Kinds of Sub-Contracting

    Uploaded by

    Anathema Device
    138 views2 pages
    This document discusses the requirements for legal subcontracting arrangements under Philippine law. It states that job contracting, where a principal outsources a specific job or work to a contractor, is allowed. However, labor-only contracting is prohibited. To be valid, a subcontracting arrangement must meet four requirements: 1) The contractor operates an independent business; 2) The contractor has substantial capital investment; 3) The contractor has freedom to perform the work as it chooses; and 4) The arrangement ensures worker rights. DOLE Order 174 also outlines mandatory registration requirements for contractors, including providing business and workforce details as well as paying a registration fee.

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    LABOR 20

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    This document discusses the requirements for legal subcontracting arrangements under Philippine law. It states that job contracting, where a principal outsources a specific job or work to a contractor, is allowed. However, labor-only contracting is prohibited. To be valid, a subcontracting arrangement must meet four requirements: 1) The contractor operates an independent business; 2) The contractor has substantial capital investment; 3) The contractor has freedom to perform the work as it chooses; and 4) The arrangement ensures worker rights. DOLE Order 174 also outlines mandatory registration requirements for contractors, including providing business and workforce details as well as paying a registration fee.

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    © All Rights Reserved
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    Download as docx, pdf, or txt
    138 views2 pages

    State The Different Kinds of Sub-Contracting

    Uploaded by

    Anathema Device
    This document discusses the requirements for legal subcontracting arrangements under Philippine law. It states that job contracting, where a principal outsources a specific job or work to a contractor, is allowed. However, labor-only contracting is prohibited. To be valid, a subcontracting arrangement must meet four requirements: 1) The contractor operates an independent business; 2) The contractor has substantial capital investment; 3) The contractor has freedom to perform the work as it chooses; and 4) The arrangement ensures worker rights. DOLE Order 174 also outlines mandatory registration requirements for contractors, including providing business and workforce details as well as paying a registration fee.

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    24. State the different kinds of sub-contracting.

    Job contractor is an arrangement whereby a principal agrees to put


    out or farmout with a contractor or series of contractors for the performance
    or completion of a specific job, work or service within a definite or
    predetermined period, regardless of whether such job, work or service is to
    be performed or completed within or outside the premises of the principal.
    A labor-only contractor is a person supplying workers to an employer
    does not have substantial capital or investment in the form of tools,
    equipment, machineries, work premises, among others, and the workers
    recruited and placed by such person are performing activities which are
    directly related to the principal business of such employer. This kind of
    contracting is prohibited by law.
    25. What are the recognized requirements of a valid
    subcontracting?
    The elements are:
    (a) The contractor is engaged in a distinct and independent business
    and undertakes to perform the job or work on its own responsibility,
    according to its own manner and method;
    (b) The contractor has substantial capital to carry out the job farmed
    out by the principal on his own account, manner and method, investment in
    the form of tools, equipment, machinery and supervision;
    (c) In performing the work farmed out, the contractor is free from the
    control and/or direction of the principal in all matters connected with the
    performance of the work EXCEPT as to the result thereto; and
    (d) The Service Agreement ensures compliance with all the rights
    and benefits for all the employees of the contractor under labor laws.
    Absence of any of the foregoing requisites makes it a labor-only
    contracting arrangement.

    26. Explain the legal consequences of an illegal subcontracting?


    The effects are:
    1. The labor-only contractor will be treated as the agent or intermediary of
    the principal. Since the act of an agent is the act of the principal, representations
    made by the labor-only contractor to the employees will bind the principal;
    2. The principal will become the direct employer as if it directly employed
    the workers supplied by the labor- only contractor to undertake the contracted job
    or service. The principal will be responsible to them for all their entitlements and
    benefits under labor laws; and
    3. The principal and the labor-only contractor will be solidarily treated as
    the direct employer.
    27. Explain the wisdom of DOLE DO 174.
    Under the Labor Code, the Secretary of Labor and Employment shall
    regulate contracting and subcontracting arrangements by absolutely prohibiting
    labor-only contracting and restricting job contracting (Arts. 5, 106-109).
    28. Provide all the requirements of DO 174.
    Under the Order, Section 14 that it shall be mandatory for all persons or
    entities acting as contractors to register with the DOLE Regional Office where it
    principally operates.
    For registration, Section 15 provides that the applicant shall provide in
    the verified application form the following information:
    a. The name and business address of the applicant and the
    areas where it seeks to operate;
    b. The names and addresses of officers, if the applicant is a
    corporation, partnership, cooperate or a labor
    organization;
    c. The nature of the applicant’s business and the industry/swhere the applicant seeks to
    operate;
    d. The number of regular workers and the total workforce;
    e. The list of clients, if any, the number of personnel assigned
    to each client, if any, and the services provided to the client;
    f. The description of the phases of the contract, including the
    number of employees covered in each phase, where appropriate; and
    g. Proof of compliance with substantial capital requirements.
    A payment is also required by Section 19. The payment of registration
    fee of One (P100,000) shall be required upon approval of the application.

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