President Rodrigo Duterte has vetoed the security of tenure bill that prohibits all forms of contractualization, the Palace said Friday, drawing cheers from the business community and condemnation from organized labor.
In a letter addressed to Congress dated July 26, the President said the bill “unduly broadens the scope and definition of prohibited labor-only contracting” and said legitimate forms of job contracting must be allowed.
“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 letter said.
President Duterte also said that while he commits to the protection of workers against abusive employment practices, the conflicting interests between labor and management must be balanced.
“I believe the sweeping expansion of the definition of labor-only contracting destroys the delicate balance and will place capital and management at an impossibly difficult predicament with adverse consequences to the Filipino workers in the long term,” Duterte said.
“Our goal has always been the target of abuse, leaving businesses free to engage in those practices beneficial to both management and the workforce,” the letter said.
The security of tenure bill enrolled in Malacañang for approval was the consolidated versions of Senate Bill No. 1826 and House Bill No. 6908.
The measure was certified by the President as urgent in September 2018, but he made no mention of the bill, which was ready for his signature, in his State of the Nation Address this year.
Presidential Spokesman Salvador Panelo told reporters late Thursday night that the enrolled bill was vetoed by the President, but he took it back, saying it was still being studied.
On Friday, Panelo said the authors of the bill and the labor sector should not feel “disappointed” and “betrayed” by the decision of the President to veto the proposed measure.
“As a thinking and pragmatic President, PRRD realized that an over-reaching prohibition and without identifying exemptions on farming out services, deemed legitimate contracting, will adversely affect businesses, and trigger their closure thereby cause the termination of employment of our workers,” Panelo said in a statement.
“The passage of the bill could also discourage investment and remove the great potential of providing employment to our unemployed,” he added.
The spokesman also said the government is confident that the Congress will legislate a law that will be “both protective of the rights of the workers and the business sector.”
Panelo, who also serves as Duterte’s chief legal counsel, said the President’s promise to end unfair practices of contractualization will still be pursued.
A few days before the bill was to lapse into law on July 27, Socioeconomic Planning Secretary Ernesto Pernia said the bill needed “tweaking” so it would not be detrimental to investments and enterprises.
Major business groups also made a last-minute plea to President Duterte, asking him to veto the bill. These included the American Chamber of Commerce of the Philippines, the Makati Business Club, the European Chamber of Commerce of the Philippines, and the Philippine Chamber of Commerce and Industry.
They claimed the measure would impinge on freedoms of companies to make managerial decisions and would ramp up the cost of doing business, which could lead to job losses.
If the bill had been signed into law, it would have been illegal for a job contractor to merely supply and recruit workers to a contractee. It would have also been illegal for workers supplied to a contractee to perform tasks or activities that are listed by the industry as directly related to the core business of the contractee.
In May 2018, Duterte had signed an executive order on contractualization that labor groups slammed as “useless” as the President admitted the only way to end labor-only contracting is to amend the Labor Code, which only Congress can do.
Labor groups already had problems with the bill submitted to Duterte for his signature.
The Partido Manggagawa; Alliance of General Unions, Institutions, and Labor Associations; and the Philippine Airlines Employees Association had rejected the bill, claiming it was a watered-down version of the bill the House of Representatives had adopted. The groups had wanted the following features in the bill: Prohibition of fixed-term employment and multi-layered contracting; and stiffer fines and penalties, including closure of agencies found guilty of labor-only contracting.
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