Dear Atty. Kathy,
We have been working in a beverage manufacturing, distribution, and marketing company, X, for at least five years as delivery drivers, helpers and forklift operators. During the five years, we were employed by three different service contractors, A, B and C, one after another, but always assigned to X for the same positions. We use the delivery trucks of X and our work is performed in X’s compound. It is the supervisors-employees of X who directly assign us to their different client accounts. We talked to A, B and C about this, and they said the same things
— X was not involved in their hiring, they regularly paid our salaries and benefits, X only reports complaints to them but does not conduct any disciplinary action proceedings which they do as our employers, and they are legitimate job contractors since they have substantial capitalization. Then, we were told the service contracts with X were expiring in 1 month so we should start reporting to A, B and C’s head offices by then. When we asked where we were going to be working next, there was no clear answer. We are worried of being jobless. Aren’t we regular employees of X?
Zoey
***
Dear Zoey,
Under Section 7 of Department of Labor and Employment Department Order 174, series of 2017 (DoLE DO 174, s. 2017), a principal is deemed as the employer of the contractor’s or subcontractor’s employees upon a finding that the latter is a labor-only contractor.
Labor-only contracting refers to the arrangement where the contractor or subcontractor merely recruits, supplies or places workers to perform a job or work for a principal. Under Section 5 of the DoLE DO 174, s. 2017, there is labor-only contracting when: (a) the contractor or subcontractor does not have substantial capital or does not have investment in tools, equipment, machineries, supervision and work premises and the employees are performing activities which are directly related to the main business of the principal; or (b) the contractor or subcontractor does not exercise the right of control over the work of the employees except as to the result thereto.
Based solely on what you shared, it appears that A, B and C are engaged in labor-only contracting, due to the following: you have been working as delivery drivers, helpers, and forklift operators in X, for at least five years during which you were employed by A, B and C, one after another; you use the delivery trucks of X; your work is performed in X’s compound; and the
supervisors-employees of X directly assign you to different client accounts.
On your work as delivery drivers, helpers and forklift operators, the Supreme Court has ruled that such are activities directly related and indispensable to the main business of a beverage manufacturing, distributing and marketing company. Your repeated rehiring attests to the necessity or desirability of your services in the regular conduct of the business or trade of X.
Further, aside from the general claim that A, B and C have substantial capitalization, there is no showing that they possess tools and equipment necessary in the performance of the contracted services, such as the delivery trucks or forklifts. A finding that a company has substantial capitalization does not automatically result to a finding that it is an independent job contractor, in the absence of substantial investment in tools and equipment used in the services rendered.
It also appears that A, B and C do not have investment in supervision and work premises since you have been working in the compound of X; and you are being assigned your work directly by X’s employees-supervisors.
Thus, subject to other evidence, it appears that A, B and C are labor-only contractors, and X is your direct employer.
(Ernesto C. Luces, et al. versus Coca-Cola Bottlers Phils. Inc., et al., G.R. 213816, 2 December 2020)