Do 174 requires a service contract between the customer and the contractor or subcontractor. It contains provisions relating to the precise description of the position or contracted work, its duration and the agreed amount of the work or contract work. In the Philippines in particular, IT-BP outsourcing facilities, which are considered essential services, were allowed to operate at the beginning of the pandemic, albeit through skeletal staff, while other companies were forced to implement work-from-home arrangements or temporarily suspend operations. As operational capacity was increased by the government in Q3 2020, IT-BP outsourcing companies were allowed to operate at 100%, with due regard to occupational health and safety measures. According to IBPAP, the Philippine IT-BP sector had regained strength in September 2020, recording a 1.8% increase in headcount and a 1.4% increase in revenue (compared to 2019). While the hospitality and travel sectors have been significantly impacted by the pandemic, with some companies resorting to temporary layoffs of workers and mass layoffs, sectors such as healthcare, e-commerce, retail, banking, finance and administration, and insurance have helped drive the growth of the IT-BP industry. In this context, the Labour Code and DO 174 are the relevant laws and regulations on contractual agreements. Thus, Article 109 of the Labour Code and ยง 9 do 174 are included in each service contract, which provide for joint and several liability of the Customer and the Supplier for the application of the provisions of the Labour Code and other social laws in the event of a violation of a provision of the Labour Code. including non-payment of wages. In the Philippines, captives and SSCs represent a significant part of the IT-BP outsourcing industry and have generated millions of jobs and revenues in recent years, as intra-group services include administration, human resources, finance, IT, management, marketing, research and development, among others. According to the Shared Services and Outsourcing Network (SSON), service growth is driven by technology, knowledge, and value creation skills, which according to a 2017 study include invoice queue management, treasury applications, general ledger, fixed assets, and more. In addition, SSON indicated in a 2020 survey that 75% of Philippine SSCs aim to expand their scope geographically or by adding new service offerings, or both, subject to the most important such as the availability of skills and expertise in potential locations and labor costs.
DO 174, which amended the implementing provisions of Articles 106 to 109 of the Labor Code, came into effect on April 3, 2017 and replaced the Department`s Executive Order No. 18-A, which previously governed contractual agreements in the Philippines. DO 174 applies to “an agreement by which a customer undertakes to perform or outsource with a contractor or subcontractor the execution or completion of a particular order, work or service within a specified or predetermined period of time, whether such work, work or service is to be performed or completed inside or outside the customer`s premises”. This is a trilateral relationship between: For the transfer of assets involved in outsourcing operations, the formalities are similar to those of regular commercial industries. Thus, if a transfer of assets from one company to another takes place by way of sale, the provisions relating to sales of the Civil Code apply. The underlined sentence nuances what is meant by substantial capital. == References ===== External links ===*Official website there was only the amount of 3 million pesos. The new D.O. now specifies that the significant capital must be that which allows the contractor to carry out the work carried out. This is a departure of Neri. With respect to remedies, the Customer may enforce the Service Contract against the Contractor by arbitration or civil action, depending on the agreement between the parties.
Conversely, if employees sue and enforce the employer, they can file a request for dismissal for lack of an employer-employee relationship. Under the new D.O., the above meaning has been modified, removing the underlined passages and installing this definition: Under D.O. 18-A, Entrepreneur means any natural person or entity, including a cooperative, that is involved in a legitimate contract or subcontract and that provides services, skilled workers, temporary workers or a combination of services to a principal under a service contract. Q: What should the service contract have between the client and the recruitment agency? A: The service contract must include the following description of the subcontracted orders, including the duration; o Workplace; o Conditions of employment; o Administration fee of at least ten per cent (10 per cent); o Issuance of a bond. (S11) In addition, the customer may include the following provisions in the service contract: (2) those whose functions do not depend on the performance or completion of a particular work, work or service (the “administrative staff” of the contractor) In addition to entering into contractual agreements with service providers, Philippine companies have also tried other approaches that meet their business needs, one of which is multi-supply. In that order, companies rely on a variety of service providers instead of letting a single service provider manage the entire business process. This allows companies to choose the best service provider for a particular function or service. It also helps to promote healthy competition between service providers. According to Article 6 of DO 174, other illegal forms of employment are declared prohibited because they violate law or public order. This article also prohibits other employment practices, systems or arrangements aimed at circumventing workers` right to security of property. In this context, if the transfer of workers was carried out in order to circumvent the workers` right to the security of the service or their right to self-organisation, this may constitute an illegal form of employment contract under DO 174. The Customer and the Supplier may stipulate in the Service Agreement that either party may terminate the Contract with or without giving reasons and after giving formal notice and compliance with an agreed notice period to the other party.
As a rule, the contractual protection of the customer in an outsourcing agreement refers to compliance with labor and social legislation, such as. B those concerning the salaries and benefits of the supplier`s employees, in order to avoid joint or several liability of the customer with the supplier. Even in the case of contractual contracts, the customer is always jointly and severally liable for unpaid salaries and benefits of employees. Thus, as a guarantee under Article 108 of the Labor Code, the Customer may require the Supplier to pay a deposit equal to the labor costs under the Contract, provided that the surety is responsible for the wages due to employees in the event that the Supplier does not pay it. If, due to the needs of a company, which require the customer to reduce the supplier`s workforce at his disposal, the relevant employees of the supplier are usually placed in a “floating status”, where they do not lose their jobs, but are usually subject to a no-work-not-pay policy. According to current case law, employees can be placed in floating status for a maximum of six months. Otherwise, they must be separated due to termination of employment, receive severance pay of at least one month`s salary or one month`s salary per year of service (whichever is greater) and notice of termination at least one month before their departure. Q: What are the application documentation requirements? A: The following documents must be filed: o Certified copy of sec/DTI/CDA; o CTC of the business permit; o Certified list of leases, facilities, tools and equipment; o Audited financial statements; o Disclosure of no ongoing case/transaction under another company name. (S15) In accordance with D.O.
18-A, the national TIPC reviews and monitors participation in authorized contracting activities; and compliance with administrative reporting obligations. This was done under the new D.O. Q: What is the effect if there is a termination due to the expiration of the service contract? A: In such a case, the employee can choose to wait and change within 3 months for reinstatement. If there is no new employment relationship, the Agency pays the employee`s severance pay (S13) The termination of the employment relationship of the contractor`s employees before the expiry of the service contract is governed by articles 297, 298 and 299 of the Labour Code (eligible grounds for dismissal). . . .