Kentex ‘dummy’ ordered to pay P8.3M to 99 workers

MANILA, Philippines – The Department of Labor and Employment (DOLE) on Thursday, June 11, ordered the listed subcontractor of Kentex Manufacturing Corporation to pay P8.3 million to 99 underpaid workers it has deployed to the embattled footwear maker.

The DOLE Region 3 in San Fernando, Pampanga, issued a compliance order and served it to CJC Manpower Services, which Labor Secretary Rosalinda Baldoz had referred to as a “dummy” of Kentex.

Baldoz said the DOLE team “discovered other blatant labor violations” in addition to non-payment of the correct wages and law-mandated benefits.

She reiterated that Kentex and CJC are jointly and individually liable for these violations under Department Order (DO) 18-A.

The regional office headed by DOLE Director Ana Dione found that Kentex and CJC owed P8,389,655.70 to the 99 workers, higher than the initial estimate of P7.8 million.

The workers were paid as low as P202 a day, DOLE discovered. CJC claimed Kentex paid the additional P230 a day to the workers but no proof was presented to back this.

Kentex’s two-storey factory in Valenzuela City caught fire on May 13, killing least 72 people and injuring others.

The deadly blaze is seen as a setback for the Philippine manufacturing industry. Labor groups have aggressively pushed for pro-worker reforms in the aftermath of the tragic fire. (READ: Deaths in PH factory fire show need for decent jobs)

Findings 

The monetary deficiencies are based on “unlawful labor practices by CJC.” Based on findings unearthed on the 99 workers, the DOLE team said Kentex and CJC:

• Underpaid its workers
• Did not pay the required cost of living allowance (COLA) on top of workers’ salaries
• Did not provide workers’ 13th month pay for 2014
• Did not provide holiday pay and special holiday premium to its workers
• Illegally deducted a cash bond of P100 per week
• Did not remit workers’ premiums to the Social Security System, PhilHealth, and Pag-IBIG Fund, despite deductions in pay
• Is not registered under DO 18-A
• Did not have a written contract with Kentex, as required under DO 18-A
• Did not provide employment contracts to workers deployed at Kentex 
• Did not submit an annual work accident/illness exposure data report
• Did not submit annual medical report
• Did not have company policies and programs on anti-sexual harassment, drug-free workplace, tuberculosis, hepatitis B, and HIV-AIDS

The DOLE also found that Kentex entered a deal with CJC without the necessary contract. CJC was likewise an unregistered subcontractor. 

Besides liabilities over the use of CJC Manpower, Kentex would also be liable for a separate amount in relation to the violations to be outlined in a DOLE compliance order, based on a two-day mandatory conference held by the DOLE Metro Manila office. DOLE Metro Manila’s initial estimate for this is P2.45 million for 76 identified workers.

Use of subcontractor

Under DO 18-A, which regulates job contracting and subcontracting, unpaid wages and benefits are subject to double indemnity or payment double the unpaid amount.

For being a mere “dummy,” CJC was declared a labor-only contractor.

The use of a general contractor or subcontractor is allowed under Article 106 of the Labor Code, unless the subcontractor is not capitalized or is merely acting as a dummy to hire workers.

Unscrupulous employers often misclassify workers as contracted from a subcontractor or at times as independent contractors to relegate them to casual status as opposed to regular employees who enjoy a host of workers’ benefits.

This enables companies to reduce manufacturing costs, 40% often allocated to labor.

Baldoz issued DO 18-A series 201 after a stalemate in negotiations prevented legal reforms in job contracting to materialize.

A draft bill seeking to protect contractual workers’ rights and address perennial issues raised by labor groups was stuck at the National Tripartite Industrial Peace Council headed by Baldoz. The council has as members representatives of the labor and employers’ sectors. 

Some labor groups called for a complete end to all forms of contractual work, while employers argued that such hiring arrangements are permitted under the Labor Code and is well within their right to make management decisions.

OSH violations

On the heels of the Valenzuela fire which shed light on local sweatshops’ non-compliance with occupational safety and health standards, Baldoz and labor groups renewed their call to criminalize grave violations of OSH standards.

Family members of the fire victims interviewed by Rappler also attested to the pakyawan (package deal) system, where a handler is tapped by the owner to recruit factory workers without the necessary job contract and consequently without workers’ benefits required under law.

In the wake of the tragedy, labor coalition Nagkaisa called for the passage of a security of tenure bill that would limit job contracting and subcontracting to positions not necessary in the day-to-day operations of a company.

Baldoz has ordered a nationwide special assessment and surprise visits of all manufacturing establishments, urging a “full stop” of “sweatshop” practices.  – Rappler.com