Question X, Labor Law, 2017 Bar Exam


The labor sector has been loudly agitating for the end of labor-only contracting, as distinguished from job contracting. Explain these two kinds of labor contracting, and give the effect of a finding that one is a labor-only contractor. Explain your answers. (4%)


What are the grounds for validly terminating the services of an employee based on a just cause? (5%)


Give the procedure to be observed for validly terminating the services of an employee based on a just cause? (4%)

Suggested Answer:

A. Permissible or legitimate job contracting or subcontracting refers to an arrangement whereby a principal agrees to put out or farm out with the contractor or subcontractor the performance or completion of a 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.

On the other hand, there is labor-only contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such person are performing activities which are directly related to the principal business of such employer.

If there is a finding of labor-only contracting, the labor-only contractor shall be considered merely as an agent of the principal who shall be considered as the employer and who ...

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