Philippines Fixed-Term Contracts/Independent Contractors Rules Look to Get Stricter

A new legislation in the Philippines that would make it more difficult to hire contract workers may soon be signed by the country’s President, Rodrigo Duterte, a long-time supporter of expanded worker rights.  

The concern which gave rise to the legislation is the expanding practice of employing workers in six-month terms to avoid making them full-time employees, which would trigger entitlement of benefits, including paid leave. In 2018, temporary employment represented 21% of the total labor market in the Philippines.

International Businesses Adjusting to the Changes

Several prominent domestic and international business organizations representing employers have asked President Duterte to veto the bill, describing it as not in sync with the rest of the world’s move toward more flexible working arrangements. Some local legal experts agree with those concerns. However, the bill is supported by the country’s labor unions, despite the growing popularity of flexible labor practices among the Philippines’ workers.  

Some businesses have already begun to react to the trend toward protection of labor rights in the Philippines, including reducing subcontractor headcount and adding more full-time employees, or leveraging third party employer PEO options. Others have left the country altogether as a result of this and previous labor law reforms under President Duterte’s rule.

Penalties for non-compliance are expected to be severe.

GoGlobal Philippines Can Help

By utilizing GoGlobal’s International PEO services in the Philippines, you can mitigate the risks of non-compliance mentioned above and ensure you’re structured properly as you expand into the Philippines. Our on-the-ground team is ready to assist!