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Liability of Independent Contractor in case its employees did not work for principal during holiday

Requested from DOLE by Joriel Villaruel at 10:04 AM on Sep 17, 2020.
Purpose: Dispute resolution among contracting parties.
Date of Coverage: 09/17/2020 - 09/17/2020
Tracking no: #DOLE-380078740201

Joriel 10:04 AM, Sep 17, 2020

Good day! I would to seek enlightenment on the following:

Our company has entered into a Service Agreement with an Independent Contractor (IC) for manpower services. Both parties recognize the rights of the IC’s employees under the DOLE Department Order 174 and these rights are reflected in the Service Agreement and in the employment contracts.
However, the contracting parties are having issues as to payment of holiday pay to IC's employees who did not report for the principal during a regular holiday.

Joriel 10:04 AM, Sep 17, 2020

Parties are aware that employees who did not work during regular holiday are still entitled to 100% of their salaries. However, we believe that it is the independent contractor's liability to pay holiday pay since they are the direct employer of these employees. The principal (our company) is interested only in the results provided by the IC and is willing to pay the required 200% wage only if these employees are physically present during regular holiday. 

We are humbly asking that you shed light on the foregoing. 

Thank you and God bless.

Joriel 10:12 AM, Sep 17, 2020

P.S 

The above is not a subject of any pending litigation or dispute before any courts or quasi judicial body.

Jann 10:21 AM, Sep 20, 2020

September 20, 2020

Dear Joriel,

Thank you for your request dated Sep 17, 2020 under Executive Order No. 2 (s. 2016) on Freedom of Information in the Executive Branch, for Liability of Independent Contractor in case its employees did not work for principal during holiday.

We received your request on Sep 17, 2020 and will respond on or before Oct 08, 2020 10:04:08 AM, in accordance with the Executive Order's implementing rules and regulations.

Should you have any questions regarding your request, kindly contact me using the reply function on the eFOI portal at https://foi.gov.ph/requests/aglzfmVmb2ktcGhyHgsSB0NvbnRlbnQiEURPTEUtMzgwMDc4NzQwMjAxDA, for request with ticket number #DOLE-380078740201.

Thank you.

Respectfully,

Jann Barboza
FOI Officer

Mark 11:18 AM, Sep 20, 2020

September 20, 2020

Dear Joriel Villaruel,

Greetings!

Thank you for your request dated Sep 17, 2020 10:04:08 AM under Executive Order No. 2 (s. 2016) on Freedom of Information in the Executive Branch.
You asked for Liability of Independent Contractor in case its employees did not work for principal during holiday.

Anent your concern; May we refer you to the DOLE DO 174 s. 2017, Section 9 SOLIDARY LIABILITY—In the event of violation of any provision of the labor code, including the failure to pay wages, there exist a solidary liability on the part of the principal and contractor xxxxx.

The issue that you have raised should have been a part of the service agreement that was executed between you and your contractor. In its absence, you may opt to cost share the payment for holiday pay pending the result of your renegotiation for its inclusion in the existing service agreement contract. Bottom line is, workers must not be denied of their rightful benefit. 

Based on the foregoing, the Principal and the Contractor are solidarily liable in case there is a violation of the labor code. The service agreement between Principals and Contractors, is governed by the Civil Code. However, its paramount concern is how the contracting parties may comply with the provision of the labor code. 

We hope that we have addressed your concerns. For any further queries, you may reach us thru DOLE Hotline 1349.

Thank you.

Respectfully

Mark Valeros
FOI Decision Maker

Attachments:
 DO-174-17-Rules-Implementing-Articles-106-to-109-of-the-Labor-Code-As-Amended1.pdf

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