Article 106

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Group or joint liability Wage manipulation, non-payment or withholding of wages

Article 106 establishes the joint and several liability of employers in the event that a contractor or subcontractor fails to pay the wages of his employees. Article 107 provides that any person, partnership, association or corporation which, not being an employer, contracts with an independent contractor for the performance of any work, shall similarly be jointly and severally liable.

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Article 106. Contractor or subcontractor.

Whenever an employer enters into a contract with another person for the performance of the former’s work, the employees of the contractor and of the latter’s subcontractor, if any, shall be paid in accordance with the provisions of this Code. In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract, in the same manner and extent that he is liable to employees directly employed by him.

The Secretary of Labor and Employment may, by appropriate regulations, restrict or prohibit the contracting-out of labor to protect the rights of workers established under this Code. In so prohibiting or restricting, he may make appropriate distinctions between labor-only contracting and job contracting as well as differentiations within these types of contracting and determine who among the parties involved shall be considered the employer for purposes of this Code, to prevent any violation or circumvention of any provision of this Code.

There is “labor-only” contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such person are performing activities which are directly related to the principal business of such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him.

Article 107. Indirect employer.

The provisions of the immediately preceding article shall likewise apply to any person, partnership, association or corporation which, not being an employer, contracts with an independent contractor for the performance of any work, task, job or project.

Law /Philippines / Labour Code (Presidential Decree No. 442 of 1974, as amended)

The Labour Code regulates the employment of all workers, except certain excluded categories, and may be used to hold both individual and corporate employers to account for violations of labour rights. Under the Code, breaches declared to be unlawful or penal in nature, are penalised with 3 months to 3 years of imprisonment, a fine ranging from 1,000 to 10,000 pesos, or both. The Labour Code provides some rights and protections for workers, such as provisions regarding working hours, weekly rest, health and safety, minimum wages, and against wage manipulation and the witholding of wages. The Labour Code excludes domestic workers from its scope of application, and thus from the protections afforded to other workers. This major loophole was addressed through the enactment of the Domestic Workers Bill in 2013, which instituted a number of protections for domestic workers, including minimum wages, social security, leave entitlements, and protection against abuse, violence or harassment.