Are new rules on labour contracting worth the wait?

Finally, the long wait is over. After almost nine months of numerous dialogues and consultations, the Department of Labour and Employment (DOLE) secretary Silvestre Bello III issued Department Order (DO) No. 174, series of 2017. It sets out the new rules implementing articles 106 to 109 of the Labour Code, replacing DO 18-A, series of 2011. The new order became effective on 2 April, 2017.

At first reading, it appears that DO 174 did not deviate to a great extent from DO 18-A. It would seem that it simply borrowed the provisions of the old order and tweaked it a little to adjust to current conditions. For instance, DO 174 no longer provides for a Net Financial Contracting Capacity (NFCC), nor does it require that the same be included in service agreements.

The required substantial capitalization of contractors was increased from at least P3 million (about US$60,000) to at least P5 million. The registration and renewal fee was also increased, to P100,000 from P25,000, and in addition the certificate of registration must now be effective for only two years.

Ma Clarissa Excelsis S Villanueva is a junior associate at ACCRA Law Offices