Legal Fact

Department Order No. 18-2 (February 2002)

There is job contracting or subcontracting when an EMPLOYER (PRINCIPAL) farms out the performance of a PART of its business to another, referred to as the CONTRACTOR.

For the purpose of undertaking the principal's business that is farmed out, the contractor then employs its own employees referred to as CONTRACTUAL WORKERS.

LEGITIMATE CONTRACTOR OR SUBCONTRACTOR

Contractor is duly licensed in the business as an independent contractor that can undertake varied projects, jobs and other related management oriented services in conformity with the specific requirements of the Client.

Substantial capital or investment in the form of tools, equipment, machinery, work premises and other materials which are necessary in the conduct of his business.

Undertakes the contract or performance of the job, work or services on his own account, under his own responsibility, according to his own manner and method, FREE from the CONTROL and DIRECTION of the principal in all matters connected with the performance of the work except as to the results thereof.

Assures contractual employees of all labor, occupational safety and health standards, free exercise of the right to self organization, security of tenure, and social and welfare benefits.

LABOR ONLY CONTRACTING

Probited by law when it merely recruits, supplies or places workers to perform a job, work or services for a principal if:

it does not have substantial capital or investment in tools, equipment, machinery, work premises and other materials.
Contractual workers recruited and placed are performing activities directly related to the main business of the Principal.
the agency is owned by the principal.
in which workers are habitually employed by the same principal.