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PHILIPPINES: Companies Obliged to Hire Workers Directly as Intermediaries Face Ban

Employers are to be obliged to hire workers directly and not through any intermediary agency under the terms of recently-adopted legislation. In more specific terms, it will be illegal for third-party organisations to recruit workers and then contract them out to a company as staff for its core business activities. In the case of any such existing arrangements, the workers concerned must become direct employees as soon as the legislation comes into force.

The move is aimed at abolishing what is known as “endo” (or “end of contract”), a widely practiced contractual arrangement which sees companies source workers through intermediary agencies for a period of not more than five months. This allows them access to a regular supply of workers while not obliging them to offer long-term employment. Under the terms of the country’s Labor Code, employers are obliged to offer permanent employment to any worker who has completed six months of continuous services.

The bill also officially divides workers into four distinct categories – probationary, seasonal, project-based and permanent, with employers now obliged to extend the benefits enjoyed by permanent employees to seasonal and project-based workers. Additionally, it specifies that the services of seasonal and project-based employees must not be terminated without a just or authorised cause. The bill is at present awaiting the formal endorsement of Rodrigo Duterte, the Philippine President, before being formally enacted.

Content provided by Picture: HKTDC Research
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