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The Institute for Labor Studies, as the policy and research arm of the Department of Labor and Employment, is mandated to review the rationale of existing legislation and regulations, including the costs involved in implementation and the benefits derived. The inevitable changes in the labor and employment sector through the years have given rise to the need to address emerging issues and consequences arising from policies and practices. Consequently, this study on Department Order No. 174, series of 2017, assessed the regulatory impact of the said contracting and subcontracting regulation by analyzing the experiences and insights of stakeholders, particularly on the DO’s legal, administrative, and operational aspects. These insights were analyzed and formulated into policy options, and ways forward that the Department may follow in its review. The research adopted a mixed-method approach as an initial step for regulatory impact assessment. Primary and secondary data were collected and analyzed through desk review, key informant interviews, focus group discussions, and a survey. Throughout the study, it was found that the majority of the stakeholders find DO 174-17 sufficient in achieving its purpose of regulating contracting and subcontracting arrangements but needs refinement to improve the efficiency of the processes and procedures involved. Strengthening the implementation of the DO can be achieved by harmonizing or clarifying vague provisions of the regulation. Consequently, the researchers recommend two (2) policy options to either: 1) adopt DO 174-17 but develop a uniform streamlined process flow; or 2) revise the current regulation entirely.

Specifically, in its possible revision, DOLE’s Technical Working Group may consider to 1) review and/or harmonize provisions with existing jurisprudence and other regulations considering the concerns raised by stakeholders for specific provisions of the regulation; 2) develop a centralized system, process manual, and checklist for the registration, renewal, verification inspection and execution of orders/judgments under DO 174-17 to modernize and provide structure to these procedures; and 3) review the Labor Code provisions on contracting and subcontracting (Articles 106-109) in relation to other provisions (e.g. Article 31 on bond for PEAs, Article 301 on the period of termination of employment, among others).

Keywords: contracting, subcontracting, labor-only contracting, regulatory impact assessment, labor protection clause
RESEARCHERS: Principal Authors: Jan Danielle R. Bondad | Mary Rosarie B. Sto. Tomas || Contributor: Joyce Anne S. Lumactud

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