Labor dep't orders Kentex 'dummy' to stop operations
MANILA, Philippines – The listed subcontractor of embattled local slipper maker Kentex Manufacturing was ordered to stop its operations immediately after a joint assessment revealed multiple labor violations, Labor Secretary Rosalinda Baldoz said Saturday, May 23.
A cease-and-desist order was issued by the Department of Labor and Employment (DOLE) Region 3 in San Fernando, Pampanga against CJC Manpower Services, which Baldoz had referred to as a "dummy" of Kentex.
Baldoz had explained that the 99 factory workers CJC Manpower Services supposedly deployed to Kentex were not even hired by CJC but were merely assigned to CJC by Kentex.
The DOLE had found that Kentex entered a deal with CJC without the necessary contract. CJC was likewise an unregistered subcontractor both at the Securities and Exchange Commission and at DOLE.
Kentex and CJC were underpaying its workers and withholding law-mandated benefits, the DOLE found.
The use of a subcontractor is allowed under Article 106 of the Labor Code, unless the subcontractor is not capitalized or is merely acting as an agent 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% of which is often allocated for labor.
Lawyer Renato Paraiso, who represents two of the Kentex owners, denied that Kentex knew CJC was unregistered. He said he did not know of any standing relationship, besides business, between the owners of Kentex and CJC.
Kentex's two-story factory in Valenzuela caught fire on May 13, claiming at least 72 lives, and injuring others.
The deadly blaze is seen as a setback for the Philippine manufacturing industry and sheds light on the non-compliance by local sweatshops' with occupational safety and health (OSH) standards.
DOLE regional director Ana Dione already recommended the cancellation of CJC's business permit issued by the local city government of Meycauayan in Bulacan, where CJC is based.
In a May 15 joint assessment, senior labor laws compliance officer Dante M. Regala found that CJC:
- underpaid its workes
- 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 remitt workers' premiums to the Social Security System, PhilHealth, and Pag-Ibig Fund, despite deductions in pay
- is not registered under Department Order (DO) 18-A
- did not have a written contract with Kentex Manufacturing, as required under DO 18-A
- did not provide employment contracts to workers deployed at Kentex Manufacturing
- 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
Under DO 18-A, both the principal – in this case Kentex – and the subcontractor would be liable for any labor laws violations against the hired workers.
Baldoz warned against fly-by-night subcontractors, explaining that subcontractors are required to have a P3-million paid-up capital under DO 18-A.
The DOLE is still working on the compliance order it will issue against Kentex Manufacturing itself, after the culmination of a two-day mandatory conference held in DOLE's Metro Manila office.
Depending on results of ongoing probes, criminal charges can likewise be lodged against CJC and Kentex.
Need for reforms
Labor groups have seized the opportunity created by the tragic Valenzuela fire to push for pro-worker reforms, including 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, as well as labor groups, renewed their call for the criminalization of grave OSH violations, which would require amending the 1974 Labor Code.
Other factories and plants line the area in the village of Ugong in Valenzuela where the Kentex factory is located. Villagers in house clothes and slippers often congregate in front of tall gates to enter sweatshops where they work as low-wage earners.
Labor coalition Nagkaisa fears harsh working conditions persist in these factories, urging the labor department to conduct surprise inspections. (READ: Deaths in PH factory fire show need for decent jobs) – Rappler.com