The Department of Labor and Employment (Dole) yesterday acknowledged the absence of penalties for illegal contracting and of mechanisms to detect it, vowing to work with Congress to plug loopholes in laws and guidelines that allow the practice of “endo,” or end-of-contract hiring.

At an organizational meeting of the Senate committee on labor, employment and human resources development, Dole officials outlined initiatives to deal with the problem.

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“The mechanism to detect red flags is not present,” Labor Undersecretary Joji Aragon said at the meeting chaired by Sen. Joel Villanueva, a former vocational training chief.

Sen. Franklin Drilon, a former labor secretary, chimed in, pointing out weaknesses in rules governing contractualization.

“They do not consider certain forms of labor-only contracting illegal or prohibited. That is why there is no mechanism to find red flags,” Drilon said.

Benjo Benavidez, director at the Bureau of Labor Relations, cited the need to bolster penal provisions to deter endo, saying those caught practicing it get away without criminal penalties.

“At most, the penalty for the principal is to be ordered to regularize workers, pay their wages. But now, [there are] no penalties in the form of fines, or criminal penalties,” Benavidez said in an interview after the meeting.

On orders of President Duterte, Labor Secretary Silvestre Bello III has directed Dole to eradicate by next year the widespread practice of endo, or the periodic rehiring of workers for the same jobs without affording them opportunities for regularization.

No job security

The practice of endo, which denies workers security of tenure, benefits, and social security and health coverage, is prevalent in “hotels, food chains, manufacturing, malls, plantations and corporate farms,” Aragon said.

Labor officials said endo was widespread despite a ban on the practice by a presidential decree issued in 1974 and regulations on contractual employment set forth under the Labor Code of the Philippines and Department Order 18-A.

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Dole data show 5,150 registered contractors were allowed to undertake legal forms of job contracting, all of whom passed government requirements, including a P3-million capitalization. The companies had by far deployed 416,343 workers under 26,194 principals, according to Aragon.

Villanueva said his committee sought to put related bills to end endo—five so far in the Senate— on the floor for deliberations before the end of the year.

These efforts were targeting endo, not other forms of legal contracting such as project-based hiring or the temporary employment of workers for specific roles, he said.

“What we’re after here is the evils of contractualization, where after six months, you will be fired, and then you are rehired, the same job description, the same person,” he said in an interview.

“We want to be very careful. It is not our intention to shut down companies or discourage investors. Contractual hiring is a global practice, but it is also global practice not to put workers in a precarious condition.”

Three-pronged campaign

Pending the enforcement of new measures or stronger laws, Benavidez said Dole was pursuing a three-pronged campaign to clamp down on endo, including the enforcement of existing rules, a review of Department Order 18-A governing contracting and subcontracting arrangements, and the drafting of bills that would amend weak provisions of the labor code.

The department was also undertaking “targeted inspections” to check for violations of contracting rules, Aragon said.

Villanueva’s committee will set at least three more hearings and invite labor unions and employers to get their insights.

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