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increases.
works for a company for a limited time only and most often are not
practice in many companies and some workforces who are usually employed
under the labor contractual agreements could end up on a path toward poverty.
service, job title or position, salary, department assigned and total numbers of
work per day. They also sought to get data if the employees were aware of
the new No Contractualization law, or if it was clearly disseminated or
employees were also answered. Aside from these, the respondents were also
2015 election, he said that “In 6 months, the employee cannot develop his or
her skills. If they are hired, enhance their skills, you make them more
productive. Because they have the skills and placed them in a regular position,
they enjoy benefits not just for themselves but also for their family.” Duterte
also pointed out: "How can they sustain the needs of their family, feed their
children if you employ them for 3 months only? They do not have security
which results to unrest and instability back home." He also added “I will not
run a country that way. If those who have money won't accept this, then you
campaign against me. Make sure you will beat me. I will not go for it, it is not
The time President Duterte won the 2016 elections, workers especially
who are under contract agreements throughout the Philippines waited for the
realization of his campaign promise to end "endo.” Prior his takeover, DOLE
or the Department of Labor and Employment had identified the number of
contractual workers at 1.3 million. The main agency in charge of this, the
Department of Labor and Employment (DOLE) was able to help around 36,
is one of the biggest businesses which hires and employs hundreds of workers
from Lucena City and from nearby provinces. It is owned and run by a multi-
national corporation- Metro Retail Stores Group, Inc. which was founded by
Mr. Victor and Sally Gaisano on 1982 in Cebu City. As of today, the
corporation is being run by their 4 children namely; Edward, Jack, Frank and
Margaret Gaisano together with the board of directors. Like other successful
businesses, it all started with their closest friends and families as workers.
Eastern Visayas as well as in Central Luzon, Metro Manila and South Luzon,
with three store formats comprising a department store, a supermarket and a
hypermarket.
Super Metro Lucena is the company’s 5th branch which opened last
July 2003. It is a department store and supermarket format. Since its opening,
it has given so many opportunities to lots of the natives of Lucena. After its
like to know also its impacts to the current employees, non-current employees
and to the company itself. To determine how many were benefitted after its
implementation and what are the levels of its effects in terms of turnovers,
of this study.
Statement of the Problem
The study aims to find out and helps understand more about No
1.1 age
1.2 gender
1.10 salary
Contractualization?
4.1 company
Lucena?
The result of this study would be helpful to the following for them to
now become his second home. From this home, possibly, he will acquire some
benefits and perhaps a higher compensation. Benefits for regular ones include
mandatory pension under Republic Act 7641 or based on the company’s terms
and sick leaves with pay, life insurance, de minimis benefits, allowances, sales
commissions, and other forms.. The regularized worker can even have
company resources and surely they may have to compete with one another in
the common goal, as a human capital, regular employees should have a good
must be always inculcated that multiple regular employees would make jobs
Contractulaization, this study would make them more educated and they
would be able to understand the very purpose of this Act. While businesses
can add up the increased cost to customers, they have to assess and weigh up
expect and understand possible higher prices for the consumption of goods
and services.
To the society, No Contractualization would help create more
independent workers with higher morale and integrity which could lead to a
stronger society. Workers with secured job would help the society thru their
Metro Lucena.
Metro Lucena at ML Tagarao Street Barangay 3, Lucena City, this year, 2017.
present the company has 679 employees working under its roof. Out of those,
we gather data from 87 selected and available respondents who are composed
of employees from supervisory and rank and file positions coming from
Independent Variables
Dependent Variable
in order to come up with the output of study; “What are the effects of
Definition of Terms
For better understanding of the topic, the following terms are defined:
typical casual employee is employed on a daily basis when the need arises.
(Retrieved 10/14/17,
www.thepeopleindairy.org.au/LiteratureRetrieve.aspx?ID=118669)
would render their services for a finite amount of time, usually, for a few
months only. This is a system that has been practiced and used by many
companies, including large corporations. These enterprises often utilize this
http://asiapro.coop/contractualization-all-need-know/)
promote their health, good will, contentment, or efficiency. These benefits are
exempt from withholding tax on compensation (WTC) and fringe benefits tax
https://www.pwc.com/ph/en/taxwise-or-otherwise/)
5” practice. This is because some employers hire workers and then terminate
their contracts after five months, to avoid regularizing them – something that
is mandated by the law. According to the law, an employee who has been
working for a company for six months should be regularized unless the
http://asiapro.coop/contractualization-all-need-know/)
employee who is not doing well at their job or is otherwise deemed not
suitable for a particular position or any position. (Retrieved 10/14/2017,
https://en.wikipedia.org/wiki/Probation_(workplace)
specific project often work for a specific number of weeks or months until
the project is finished. ... You can set the hours, define the exact manner of
work, provide office space and facilities, and restrict employment activities to
receive benefits like subsidized health care, paid vacations, holidays, sick
https://en.wikipedia.org/wiki/Permanent_employment)
employee. It means that the employee qualifies for the permanent position in
Seasonal employees are the ones who works 120 days a year or less
for the employer. These days need not be consecutive. For example, if
an employee works only for the months of January, July, and October, then
the employee is seasonal, since that is less than 120 days. (Retrieved 10/14/17,
www.tnhealthcarereform.com/seasonal-employee)
and support personnel who are not client-facing. People who hold jobs in back
11/08/17, https://www.investopedia.com/terms/b/backoffice.asp)
its products or services, often an area for which a particular sales person or
A. Related Literature
Local Literature
that words like “Endo” and “5-5-5” have seeped into the vernacular. “Endo” is
the shortened version of “end of contract” and is used to refer to the definitive
Meanwhile, under “5-5-5,” workers can only work for five months at a
time, renewable for another two 5-month contracts, after which they can work
as open contract workers. The limit is at five months because under the Labor
six months shall be considered a regular employee and shall be entitled to the
rights and benefits accorded such workers. The term “5-5-5” also likens the
employment to 555, a popular brand of sardines, and connotes that the canned
food is the only thing a contractual worker can afford to eat. (De-Confusing
Contractualization: Defining Employees Engaged In Precarious Work in the
pp 346-348)
Freedom of Contracting
contracts have been advanced in the literature, all of which point to cost
contracts with their workers, even when product demand is expanding. In this
situation, labor standards and job security regulations that make terminations
increase hiring costs (Lazear [1990]). Firms avoid these expenses by resorting
result, employment has become more risky and workers’ incomes increasingly
employment. There are three major issues regarding Philippine labor policies.
One, they are based on the standards of highly developed markets, which is
not congruent with the country’s level of development. Two, labor policies are
highly regulatory and protective of workers’ rights, which is not suitable for a
country with a huge labor surplus. Thus, labor policies tend to be pro-
Foreign Literature
underlying most interventions is that free labor markets are imperfect, that as
employers abuse workers to extract these rents, leading to both unfairness and
fire workers who then need to be supported by the state, force employees to
work more than they wish under the threat of dismissal, fail to insure workers
against the risk of death, illness or disability, and so on. In response to the
workers.
Regulation of labor markets aiming to protect workers from employers
takes four forms. First, governments forbid discrimination in the labor market
and endow the workers with some “basic rights” in the on-going employment
the range of feasible contracts and raising the costs of both laying-off workers
unemployment, old age, disability, sickness and health, or death. The basic
November 2004)
majority of the people in the labor force are employees of organizations… and
the “means of production” is the legal sense. But it is a “right” in the means of
production as real property. Today the job is the employee’s means of access
Employment Law
cited work, Wood (1877) argued for replacing the law with the rule of at-will
employment, where both parties can break the relationship whenever they
wish and face no liability beyond the requirement that the employer pay her
the New York courts and remains the default rule today. In California, the
legislature adopted what is now Section 2922 of the California Labor code,
performance or number of hours worked, the firm will have to pay relatively
high wages or else the worker will leave. Similarly, if a worker demands a
higher wage or better working conditions, the firm is free to search for another
worker who will abide by the current arrangements. In equilibrium, all firms
and workers are satisfied with their lot relative to the alternatives.
B. Related Studies
Local Studies
Fille Saint Merced Cainglet, Thea Elyssa Vega, and Jerome Albert T.
worker as well as the firm. Rather than being locked into keeping the hours
designated by the employer, some contractors are able to vary their hours of
avoiding the law through implementing a less than 6 months contract period.
employee benefits costs, this has been the easy lure for investors. While the
constitution recognizes the role of the private sector, the incentives for
interpretations.
retail establishments, particularly by, but not limited to, department stores, it
engagement period of less than six months. This certainly elicited cynicism
from among the labor advocates since six months is the maximum prescribed
contract with a principal with the knowledge of the employment period of less
Beware of the “End Contractualization!” Battle Cry, that there is little doubt
that the “endo” practice is illegal. Therefore, to uphold the majesty of the law,
the government is obligated to end the practice. This fact, however, should not
regularization law and from examining the need for its amendment. More
crucially, the outrage against illegal “endo” practices should not blind
further TEC curtailment and outsourcing are likely to result in worsening the
labor markets. First, it would disproportionately reduce good formal sector job
is expected to be more pronounced over the long run. This is especially true
with the imminent Fourth Industrial Revolution which is foreseen to bring
about widespread jumps in the use of robots and automation of other devices
other sciences.
and difficult for temps to become permanent employees and for small
not have SSS, Pagibig, PhilHealth and other benefits currently enjoyed by
formal sector workers. As mentioned, the policy would also likely push many
small enterprises with serious financing and survival issues to stagnate or fail.
Foreign Studies
Forest Service.” From her research, it was concluded that short term
staff in the organization since a lot of time and effort was used in training new
employees as their turnover was high. The research also noted that the very
the part of temporary workers. This reduces their level of commitment and
hence their productivity. To cope with the effects of short term employment,
the study found that Kenya Forest Service was implementing the following
short-term employees to equip them with skills so that they could be more
productive and frequently reviewed the compensation and benefits terms for
staff under short term contracts. The study found that in Kenya Forest Service
and Kenya in general, the use of temporary workers was on the increase due
globally.
Real Options Theory: A Case Study in the Irish Third Level Academic Sector
pay and pension bill, its aim is to restrict the filling of posts across the public
service including the higher education sector in which an employment control
framework was put in place to provide for the application of the cessation to
de Vrande et al. (2006) advice flexibility and reversibility are more important
outsourcing).
at risk of marginalization. Up to the present day, little research has been done
outcomes of the unemployed is not clear. On the one hand, temporary work
may improve workers’ human capital and also provide them with labor market
contacts that can later lead to stable employment In this case, temporary
agencies may reduce the time job-seekers spend looking for a new job and
may facilitate rapid entry into regular employment. If the labor market
tightens, client firms use temp agencies not only to screen potential candidates
to fill vacancies but also to buffer core workers in case demand declines in an
economic downturn Consequently, agency workers are the first to be laid off
in a recession.
an accurate way. The three main methods to collect this information are:
Research Locale
Lucena, located at M.L. Tagarao Street, Barangay 3, Lucena City for it is very
convenient for the researchers to conduct survey to some employees since one
Research Respondents
At present, Super Metro Lucena has a total of 679 workforces; 108 are
regulars, 125 are under probationary period, 39 are under labor contracts from
Easy Link Agency, 10 are seasonal employees, 357 are consignors (promos
From 679 employees, the researchers were able to get the sample size
of 87 respondents through the use of Slovin’s formula with the maximum 10%
tells how reliable a measure is. Common standards used by researchers are
90%, 95% and 99%. Margin of error tells you how much error surrounds a
measure. It’s a percentage that describes how much the opinion and behaviors
of the sample you survey are likely to deviate from the total population.
(help.surveymonkey.com/articles/en_US/kb/How-many-respondents-do-i-
need)
size was taken using the Slovin's formula which allowed the researchers to
Research Instruments
length of service, job title or position, salary, department assigned and number
of hours of work. The next part is composed of questions about company and
were benefited. Definitely, this part also would make the researchers
understand the level of effects of its implementation to company in terms of;
Rona T. Lobos last October 17, 2017. Thereafter, the researchers explained to
the respondents the very purpose of the study before letting them answer the
guide questions.
After the approval of the research topic and problems, the researchers
which will help them to get the results resolving the statement of the
problems. Then, letters to conduct survey in Super Metro Lucena were duly
Aside from getting data through survey, the researchers also gathered
information from library and internet to make this research more informative
and effective. Finally, all the data were carefully collected and interpreted.
Statistical treatment
After gathering all the answered questionnaires, the researchers
interpreted the results with the use of statistical tools. Surveyed answers were
Formula:
i. Percentage (%)
P = f x 100
N
Where:
P = Percentage distribution
f = frequency
To compare the proportion and distribution of the first and second part
statistical tool.
Chapter IV
ANALYSIS, PRESENTATION AND INTERPRETATION OF DATA
and analyzed for the purpose of presenting data in clearer form, for finding the
50.57%. Age bracket of 22 to 25 years old got the second most numbers of
The data shows that most of the employees of Super Metro Lucena are
adults. This means that most of the respondents are matured enough to handle
the jobs assigned to them since they are grown-ups and have extensive
accepting applicants 35 years old and below unlike in the previous practice
The table shows that there’s a difference in numbers between male and
discrimination in the labor market and endows the workers with some “basic
discrimination now when it comes to civil status. Both single and married
RESIDENCY OF RESPONDENTS
R (77.01%)
80
e 70 67
60
s 50
40 (8.05%) (9.20%)
p 30 (1.15%) (1.15%) (3.45%)
o 20 7 3 8
10 1 1
n 0
d
e
n
t
s
Residency
Majority of the workers are from Lucena City since Super Metro is
situated in the same area and is giving more opportunities to the city’s natives
or locals.
Figure 5. The profile of respondents in terms of employment status
The majority were regulars because of loyalty and long tenancy. Some
of the regular employees started since the opening of Super Metro in 2003.
They helped the business sustained and expand. While some new employees
Contractualization.
Figure 6. The profile of respondents in terms of business relation to Super
Metro Lucena
Lucena. The data gathered shows that the 43 respondents or 49.43% were
employees who have vital role in the business’ growth. This indicates that
Super Metro still keeps more activities in-house especially for tasks which
workers.
Figure 7. The profile of respondents in terms of date of employment
2015 and 2003, 10 or 11.49% each year were employed. In 2012, there were 8
or 9.20% of the total distribution. In 2013 6 or 6.90% were employed while in
employment while from 2009 to 2011, there were 3 or 3.45% hired each year.
Two respondents or 2.30% were deployed in 2004 and 2005. Both 2006 and
This illustration merely states that most of the employees are new in
wherein workers were being replaced every 5 months. With this kind of
From the data, it is noticeable that 11 or 12.64% of the total sample has 1 year
service has 8 or 9.20% distribution. Then both 4 and 5 years length of service
have 7 and 8.05%, followed by 3 years with 6 or 6.90%. Both 7 years and 10
also.
shows that there are more new employees this year. This is contributed also by
workers to work for 5 months only. According to the old practice, five months
is enough time for a worker to do well in his job. Another common belief
among employers is that within five months, a worker should be able to do well
respondents were from rank and file, promo/ merchandisers ranked second
The salaries of respondents are reflected in Figure 10. From the data,
because the company is comprised mainly of rank and file workers with
minimum salaries.
An employee will be considered to be paid on a “salary basis” if the
leveling the pay rates and salary ranges established by an individual employer
were form department store and 5 or 5.75% were from security department.
The data shows that Supermarket has the most numbers of employees.
data, almost half of total employees or 357 out of 679 are deployed in
Supermarket.
Figure 12. The profile of respondents in terms of number of hours work
respondents rendered 8 hours of duty per day while 3 or 3.44 % only rendered
12 hours of duty. Those 3 who worked for 12 hours were security guards.
The normal hours of work of any employee shall not exceed eight
hours a day. Hours worked shall include all time during which an employee is
(http://kittelsoncarpo.com/labor-employment/working-hours/)
Part II
Figure 1
that they were aware of the law and only 3 or 3.44% admitted that they were
not aware of it. Because of television, social media, and newsprints, many
by the government.
Figure 2
the total respondents agreed that they discussed this new policy inside their
and taught. Being aware of the law will make workers be knowledgeable
about their rights, allowing them not to be abused and to be treated equally as
through outsourcing. The company outsources staffs from Easy Link agency
expenses perhaps more than double than what a contractual employee will get
without benefits.
Figure 4
33.33% from the total surveyed employees who answered yes; it is beneficial
performance is not usually disclosed to them. But based from reliable source,
Metro Retail Stores Group Inc. (MRSGI) continues to achieve solid bottom
over last year, and sales of Php24.4 billion or 2.9% growth for the first nine
months of 2017. This means that, that the company is continuously growing
figure shows that most of the respondents answered yes. There were about 40
or 45.98% who believed that this new implemented law is beneficial to the
employees were given opportunities and became regulars. But some were not
lucky enough and ended their contracts due to performance and attitude
reasons.
Figure 6
50
44
R 45
E 40 37
S 35
P 30
O
25
N
20
D
15
E
10 6
N
T 5
S 0
YES NOT CERTAIN NO
IS THE LAW BENEFICIAL TO NON-CURRENT
EMPLOYEES?
in new jobs and get regularized. Since No Contractualization took effect just
recently, there are still more opportunities and vacancies. Furthermore, there
were current employees who did not passed the probationary period which
were 51 employees and above who were being benefitted with the
there were only 25 employees and below who were regularized and 17 or
19.54% assumed that there were 26 – 50 employees who were benefitted with
No Contractualization.
According to HR, there were 125 employees who were put under
probations early this year. At present, almost all of them are already regulars
50 (50.57%)
44
R
40
(36.78%)
E 32
S 30
P
O 20 (12.64%)
11
N 10
D
E 0
N INCREASED NO EFFECT DECREASED
T
S THE LEVEL OF EFFECTS OF THE LAW IN TERMS OF
TURNOVERS
lot of time and effort was used in training new employees as their turnover
respondents or 8.05% of the total percentage said that tardiness had decreased
feel no one in organization minds that that one person is late. The employees
may then conclude it won't matter if others are late, too. Once more personnel start
to come to work late simply because they can, an apathetic attitude toward the
workplace can emerge. Finding the reason for one worker's tardiness, and preventing
through transportation help, different hours or other adjustments will keep this
there was an increased effect while 5 or 5.57% answered that there was no
is in the nature of the employees to make some excuses if they don’t feel like
working.
Figure 11
the data gathered, 52 or 59.77% of the total respondents said that the
employees turn lazy and only deliver the bare minimum once they are
regularized. With this the company will suffer. But when employees know that
the company cares about them and their welfare and that the employer
genuinely wants them to do well, they give the best of themselves and go over
and beyond the call of duty in order to help the company succeed. In addition to
chance that the employees will be more productive and motivated to work for
the company.
Figure 12
Figure 12 shows the answers for the question; what are the levels of
were none who answered decreased but there were 80 respondents or 91.95%
of the total surveyed employees who said that since the implementation of No
However, there were 7 or 8.05% of the total respondents who said that there
him/her is not enough that is the time that he/she will change his amount of
the company had decreased its manpower since the implementation of the new
Workers are not mere employees of companies but they are active and
equal partners. Employees are business partners as well. Their own respective
interests and welfare are critical not only to themselves, but to the company as
well.
Figure 14
benefits while 18 or 20.69% believed that there was an increased effect since
the implementation. And there were 2 or 2.30% who believed that the benefits
the company provides vacation leave, sick leave, health care, SSS, Pag-ibig
enhance corporate loyalty towards the company and better development and
improvement of job performance. By offering different benefits, these help
of the data gathered from the previous chapter. This also shows the
appendices and bibliographies which were used as reference during the study.
Findings
Based from the data gathered, the following were the findings:
11.49%.
1.2 When it comes to gender, male got the higher number which was
42.53%.
1.3 As to civil status, married and single status almost got even.
2 or 2.30%.
1.4 It is noticeable in this study that almost all of the employees of the
project-based employees.
in 2004 and 2005 and lastly 1 or 1.15% both in 20016 and 2008.
were working for 1 year already, there were 10 or 11.49% both for
2 years and 14 years. 9 or 10.34% were just new because they
years.
answered yes while only 3 or 3.44% answered no, they were not
stated that it was fully executed and there were still 5 or 5.75%
current employees.
said that there were 51 employees and above who were benefited
respondents were asked what are the levels of effects after its
50.57% of them said that it did not affect the number of turnovers
increased and there were still 7 or 8.05% who said that tardiness
2.10As for absenteeism there were 48 or 55.17% who said that there
effect.
1. From the demographic profile; Most of the respondents are regular male
and company outright employees, married adults and residing in Lucena City.
Majorities of the respondents are newly hired and belong to rank and file
company used manpower agency as its leeway. For the employees whether No
company did not give merit increases and additional bonuses. Another
drawn;
1. Super Metro Lucena should provide jobs not just within Lucena City but
or better yet do not rely on outsourcing by the use of Easy Link Agency in
3. The business should invest more for the trainings and seminars to increase
the potentials of new employees in order to make them more skillful and
competitive.
5. As for the awareness of law, the company should conduct orientations and
Contractualization.
7. The employees must be educated about the company’s mission and vision
plus the core value in order for them to become more positive and productive.
done for the employees who are consistently punctual and present to work.
Philippines
contracting arrangements emerged with the decline of the cabo system. Cabos
independent contractor, engages its members, who are paid through union
present, the cabo system is prohibited under the Implementing Rules of the
Labor Code.
started in the export processing zones in the 1970s. The first export processing
enacted Presidential Decree (“P.D.”) No. 66, which created the Export
all personnel, including temporary workers. It also provided that the Civil
Service Law and regulations of the Wage and Position Classification Office
would not be applicable to the workers, effectively exempting them from the
amending the Implementing Rules of Books III and VI of the Labor Code. It
and had substantial capital, and the agreement between them and the principal
Four years later, in 2001, the said department order was modified by
D.O. No. 3-01, which added the element of a direct business relation, such
the main business of the principal; otherwise, the scheme would be deemed
Article 10624 of the Labor Code by issuing D.O. No. 18-0225 which
interpreted Articles 106 to 109 of the Labor Code. It provided for a trilateral
as long as it did not fall within the category of “labor-only contracting,” which
also equated security of tenure with having a definite contract, instead of the
regular and permanent status previously enjoyed by workers who have worked
for more than six months. D.O. No. 18-A-11, the latest interpretation to Art.
106, superseded D.O. No. 18-02 but did not propose substantial changes. It
Under the new order, DOLE Secretary Silvestre Bello III said that
agreement with his employer is no longer allowed. With the new policy,
expects the regularization of more workers and the end to illegal contractual
provider will also attain the status of a regular employee,” Bello pointed out.
contracting arrangements, DOLE has set higher capital requirements for such
waiting for new assignment, for a maximum of three months. If the three-
month period lapses without the worker getting new employment, the
contractor should give him or her separation pay. Violators of the new DO
P50,000.
arrangement can enjoy their right to security of tenure as well as just and
growth over last year, and sales of Php24.4 billion or 2.9% growth for the first
and chief executive officer Frank S. Gaisano. “This shows the effectiveness of
our business strategy which continues to improve our profitability. Our
floor area by 2020 since the company’s public listing two years ago.
Figure 1
Above data from Human Resource Department shows that after the
Contractualization took effect. The data also shows that Super Metro Lucena
started to hire some of its employees thru Easy Link agency. And right after
the implementation, it can also be observed that the manpower has decreased.
From a total of 692 last year, the workforce was reduced to 679.
Figure 2
employee tardiness and absenteeism. The data from HRD shows that the
employees their leeway not to perform well in their jobs and report to their
posts whenever they want. They became lax knowing that they can still find