President Rodrigo Duterte has vetoed the Security of Tenure Bill that would have banned practically all forms of contractual employment, a move that critics said was a turnaround on a major promise made during the 2016 campaign trail.
Duterte, in a letter to the Senate, said that while he remained committed to workers’ rights, employers were entitled to legitimate forms of contractualization, whether or not related to their businesses.
Duterte said Senate Bill 1826 and its House counterpart, House Bill 6908, would have unnecessarily broadened the scope of the already prohibited labor-only contracting, in which an employer outsources its manpower services that are integral to its business to another entity that does not have adequate capital or investments for the scope of work.
“Indeed, while labor-only contracting must be prohibited, legitimate job contracting should be allowed, provided that the contractor is well capitalized, has sufficient investments, and affords its employees all the benefits provided for under labor laws,” the president said in his veto message dated July 26, 2019.
Siding with employers that had lobbied for the bill’s veto as well as the National Economic and Development Authority (NEDA), Duterte said: “Businesses should be allowed to determine whether they should outsource certain activities or not, especially when job-contracting will result in economy and efficiency in their operations, with no detriment to the workers, regardless of whether this is related to their business,” he added.
The bill would have immediately regularized all employees in the country except under those under probationary, seasonal and project employment. The maximum administrative fine for violators was set at P5 million on labor-only contractors.
Reacting to the veto, Senate Minority Leader Franklin Drilon said: “We regret it. The bill was certified as urgent by the President and thus, in the 17th Congress, the Senate worked hard to pass a balanced bill that would protect the welfare of the workers while maintaining the stability of businesses.”
“Our workers have waited for two decades to finally have legislation that would prohibit illegal company practices of contractualization and provide them with security of tenure. They came into 2016 with very high hopes that the practice would be prohibited. Now, we are back to square one,” said Drilon, who had been secretary of the labor and justice departments.
He pointed out that the Department of Labor and Employment (DOLE) and NEDA had opposing views, and the president sided with the latter. “With the veto message, it seems like the policy direction has been set. Any attempt to refile the bill could be an exercise in futility without the administration’s support,” Drilon said.
“Having said that, I’ve mentioned in the past that the DOLE can prohibit contractualization even without amending the Labor Code, if indeed, the administration wants to end ‘endo.'”
Sen. Joel Villanueva, author of the bill, said “Unfortunately, profit wins again with the veto of the Security of Tenure bill.”