Labor Only Contracting

The Labor Code, as early as in 1974, has already nullified this notorious practice by some fly-by-night middlemen, who make a fast buck at the expense of the sweats and tears of workers. These middlemen are harshly referred to as “cabo” and their practices have long been considered as illegal, immoral and callous, being vestiges of the long outlawed slave trade and involuntary servitude. There is nothing new to this law. But the High Court and the DOLE have recently given it more impetus.

The Supreme Court defined labor-only contracting as that prohibited act, by which a labor supplier, merely recruits and supplies workers only, without any tool or equipment, or sufficient capital to perform services for a principal employer. The workers recruited would then perform activities that are directly related to the main business of the principal. This scheme has been designed to shield the principal from employer-employee relationship, and the save it from the higher costs of having to maintain a bigger manpower and a higher labor cost. At the end of the day, the workers are left with a ‘’cabo’’ or a labor-only contractor that has no adequate funds to shoulder the financial cost of wages and benefits.

Vis-a-vis this highly vulnerable position of the workers, the sovereign people have issued a constitutional mandate upon the state, to afford full protection to labor. The Labor Code, particularly, its Articles 106 to 109, DO 18-A and labor jurisprudence are among the body of protective mechanisms to help the working class. Lately, the Supreme Court, in at least two landmark decisions, has further strengthened the mantle of state protection against the evils of labor-only contracting. In the Lorenzo Shipping Corporation case (GR 186091), promulgated on 15 December 2011, the High Court reiterated the law’s very   strict abhorrence of labor-only contracting.

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