Friday, April 24, 2015
LABOR, WORKERS CO-OPS: 2015 REVISED RA 9520 IRR
LABOR SERVICE COOPERATIVE,
AND WORKERS COOPERATIVE
Section 1. Legal Basis. The legal basis for this Rule are as follows:
"ART. 23. Type and Categories of Cooperatives. - (1) Types of Cooperatives - Cooperatives may fall under any of the following types:
(e) Service Cooperatives is one which engages in medical and dental care, hospitalization, transportation, insurance, housing, labor, electric light and power, communication, professional and other services;
"(t) Workers Cooperative is one organized by workers, including the self-employed, who are at same time the members and owners of the enterprise, its principal purpose is to provide employment and business opportunities to its members and manage it in accordance with cooperative principles."
Section 2. Guiding Principles. It is the declared policy of the State to foster the creation and growth of cooperatives as a practical vehicle for promoting self-reliance and harnessing people power towards the attainment of economic development and social justice. The State shall encourage the private sector to undertake the actual formation and organization of cooperatives and shall create an atmosphere that is conducive to the growth and development of these cooperatives.
These Rules shall serve as a guide to service cooperatives which are engaged in labor contracting and sub-contracting arrangements as defined under existing laws, and workers cooperative that provides labor to, and produces products in, an enterprise owned by the worker-members. The purpose is to harmonize policies and practices of cooperatives in the light of existing treaties, laws, rules, and regulations on the matter.
Section 3. Applicability. This Rule shall cover the following:
a. Labor service cooperative - a cooperative that is engaged in providing a specific labor, job, or service to a principal under a contracting or sub-contracting arrangements as may be defined under existing laws and in accordance with the cooperative principles set forth under the Philippine Cooperative Code of 2008 (R.A. 9520); and
b. Workers cooperative - a cooperative organized by workers, including the self-employed who are at the same time members and owners of the enterprise. The principal purpose is to provide employment and business opportunities to its worker-members and manage it in accordance with the cooperative principles.
Section 4. Distinction and Authorized Activities. The following shall be the distinction between labor service cooperative and workers cooperative:
a. Labor Service Cooperative:
As to nature of activities - Engaged in contracting and sub-contracting arrangements as defined by law;
As to existence of employer-employee relationship - Existence of employer-employee relationship is at all times observed in contracting and sub-contracting arrangements during the deployment of the member. Trilateral relationship exists between and among the principal, contractor, and the member-employees.
b. Workers Cooperative:
As to nature of activities - May engage in labor and production, including contracting and subcontracting arrangements in support of the main activity as defined by law.
As to existence of employer-employee relationship - Self-employed individual is allowed by the cooperative in regard to its enterprise.
Section 5. Definition of terms. The meaning of each term as used in this Rule shall be as follows:
I. For those falling under workers cooperative.
a. "Self-employed" refers to one who has his/her own personal occupational capacity put to productive use by applying his/her own capital raised by himself of together with other self-employed persons pursuing related occupational interest.
b. "Skilled Worker" refers to to a worker possessing technical knowledge and expertise to accomplish a work.
c. "Worker Cooperative" refers to a cooperative organized by workers, including self-employed individuals who are owners and members of the enterprise.
d. "Worker-member" is also referred to as member-owner. He/she also works in the cooperative or is deployed as a worker with a principal availing of services offered by the cooperative.
Worker-member ownership means work and management are carried out jointly, without the typical limitations of individual work, nor exclusively under the rules of conventional wage-based labor.
II. For those falling under labor service cooperatives:
a. "Cabo" is prohibited activity referring to a person or group of persons or to a labor group which, in the guise of cooperative, supplies individual members or workers to an employers, with or without any monetary or other consideration, whether in the capacity of an agent of the employer or as an ostensible independent contractor.
b. "Contracting" or "Subcontracting " or "Labor Contracting" refers to an arrangement whereby a principal agrees to put out or farm out with a contractor the performance or completion of an specific job, work or service within a definite or predetermined period, regardless of whether such job, work or service is to be performed or completed within or outside the premises of the principal.
c. "Contractor" refers to a labor service cooperative engaged in a legitimate contracting or subcontracting arrangement providing either labor services, skilled or temporary workers, including individual member-employees, or a combination of services to a principal under a Service Agreement.
d. "Contractor's member-employee" includes an individuual member of a cooperative who has been deployed by the cooperative to perform or complete a job, work or service pursuant to a Service Agreement. It also refers to members who are regular employees of the contractor whose functions are not dependent on the performance or completion of a specific job, work, or service within a definite period of time, such as administrative staff.
e. "Principal" refers to a person or entity, including government agencies and government-owned and controlled-corporations, who puts out or farms out a specific job, service or work to a contractor.
f. "Service Agreement" refers to the contract between the principal and contractor containing the terms and conditions governing the performance or completion of a specific job, work or service being farmed out for a definite or predetermined period.
g. "Solidary liability" refers to the liability of the principal pursuant to the provisions of Article 109 of the Labor Code, as direct employer together with the contractor for any violation of any provision of the Labor Code, as amended, and these Rules.
It also refers to the liability of the principal, in the same manner and extent that he/she is liable to his/her direct employees, to the extent of the work performed under the contract when the contractor fails to pay the wages of his/her employees, as provided in Article 106 of the Labor Code, as amended, and these Rules.
h. "Substantial capital" refers to the capital required by DOLE for labor service cooperatives to engage in labor contracting and sub-contracting arrangement. However, for purposes of registration with the Authority, the minimum capital requirement is Fifteen Thousand (Php15,000.00) pesos.
i. "Trilateral Relationship" refers to the relationship in a contracting or subcontracting arrangement where there is a contract for a specific job, work or service between the principal and the contractor, and a contract of employment between the contractor and its worker-member.
There are three (3) parties involved in these arrangements: the principal who decides to farm out a job, work or service to a contractor; the contractor who has the capacity to independently undertake the performance of the job, work or service; and the contractual employee who may or may not be cooperative members, engaged by the contractor to accomplish the job, work or service.
Section 6. Legitimate contracting or subcontracting. Contracting or subcontracting undertaken by a cooperative shall be legitimate if all the following circumstances concur:
(a) The contractor must be registered as a labor service cooperative with the Authority in accordance with these Rules, and carries a distinct and independent business and undertakes to perform the job, work, or service on its own responsibility, according to its own manner and method and free from control or direction of the principal in all matters connected with the performance of the work except as to the results thereof;
(b) The contractor has substantial capital and/or investment; and