Labour Clauses (Public Contracts) Convention, 1949 (No. 94) - Philippines (Ratification: 1953)

Observation (CEACR) - adopted 2017, published 107th ILC session (2018)

Articles 1 and 2 of the Convention. Insertion of labour clauses in public contracts. Application of the Convention in practice. In its previous comments, the Committee, noting the Government’s reference to Department Order No. 18-A of 14 November 2011 of the Department of Labor and Employment (DOLE), observed that the fact that general labour legislation is applicable to workers engaged in the execution of public contracts does not in any way exempt the Government from providing for the inclusion in public contracts of the labour clauses required by the Convention. The Committee requested the Government to formulate either legislative provisions or administrative instructions and circulars which would fully incorporate the provisions of the Convention into the domestic public procurement regulatory framework. The Committee notes with interest that, on 20 March 2015, the Government Procurement Policy Board (GPPB) undertook to incorporate relevant provisions of the Convention into the Philippine Bidding Documents (PBDs) for the Procurement of Goods, Infrastructure Projects and Consulting Services. Subsequently, pursuant to section 75 of Republic Act No. 9184/2003, the Government promulgated Revised Implementing Rules and Regulations of the Republic Act (IRR), otherwise known as the “Government Procurement Reform Act”, for the stated purpose of prescribing the necessary rules and regulations for the modernization, standardization and regulation of the Government’s procurement activities. The revised IRR came into force on 28 October 2016. The Government adds that, pursuant to section 37.2.3(b) of the IRR, bidding documents shall form part of the contract. At the same time, through Resolution No. 24 of 27 October 2016, the Government approved the incorporation of provisions relevant to the Convention in the three volumes of the Fifth Edition of the PBDs for the Procurement of Goods, Infrastructure Projects and Consulting Services, respectively. The Government indicates that section 6.2(j) of the PBD for the Procurement of Goods and the PBD for the Procurement of Infrastructure Projects, and section 4.2(j) of the PBD for the Procurement of Consulting Services establish the responsibilities of the bidder or consultant, respectively. In this context, the Committee notes that section 6.2(j)(i)–(iii) of the PBDs for Procurement of Goods and Infrastructure Projects and 4.2(j)(i)–(iii) of the PBD for Procurement of Consulting Services, respectively, call for the bidder or consultant to ensure the entitlement of workers to wages, hours of work, safety and health and other prevailing conditions of work as established by national laws, rules and regulations, or by collective bargaining agreement or arbitration award, if and when applicable. In addition, in the event of underpayment or non-payment of workers’ wages and wage-related benefits, the bidder agrees that the performance security or portion of the contract amount shall be withheld in favour of the complaining workers without prejudice to the institution of appropriate actions under the Labour Code, as amended, and other social legislation. The parties also agree to comply with occupational safety and health standards and to correct deficiencies, if any, and to inform the workers of their conditions of work and labour clauses under the contract specifying wages, hours of work and other benefits, through posting this information in two conspicuous places in the establishment’s premises. The Committee notes that these provisions in the PBDs refer to “other prevailing conditions of work”, rather than to “conditions not less favourable” as envisaged under Article 2 of the Convention. In its 2008 General Survey on labour clauses in public contracts, paragraphs 103 and 104, the Committee indicates that “it may appear from the language of Article 2 of the Convention that conditions to be ensured by labour clauses in public contracts need not be the most favourable conditions among those fixed by collective agreements, arbitration awards, or national law. This is not the case in practice.” Given the requirement in the Convention that workers enjoy conditions “not less favourable” than those established by collective agreement, arbitration awards or national legislation, the automatic result would be to require the best conditions out of these three possibilities under Article 2(1)(a)–(c) of the Convention. The Committee therefore requests the Government to take all necessary measures to ensure that the workers concerned enjoy wages (including allowances), hours of work and other conditions of labour that are not less favourable than those established for work of the same character in the trade or industry in the district where the work is carried out. It also requests the Government to indicate the manner in which it is ensured that the Convention is applied to work carried out by subcontractors or assignees, as required under Article 1(3) of the Convention. In addition, the Committee requests that the Government provide updated information on the application in practice of the 2016 Revised Implementing Rules and Regulations, including sample copies of public contracts, statistics on the number and type of contracts awarded by a government authority, as well as inspection results showing the number of contraventions observed and sanctions imposed.

Article 5. Adequate sanctions. The Committee notes that section 6.2(j)(ii) of the PBDs for the Procurement of Goods and Infrastructure Projects and section 4.2(j)(ii) of the PBD for the Procurement of Consulting Services, respectively, provide that in the event of underpayment or non-payment of workers’ wages and wage-related benefits, the bidder agrees that the performance security or portion of the contract amount shall be withheld in favour of the complaining workers without prejudice to the institution of appropriate actions under the Labour Code, as amended, and other social legislation. While the PBDs provide for the recovery of unpaid wages owed to the workers concerned, as required under Article 5(2) of the Convention, it does not specify sanctions, such as the withholding of contracts, for failure to observe and apply labour clauses, as called for under Article 5(1). The Committee requests the Government to indicate the manner in which effect is given in practice to Article 5(1) of the Convention.

Observation (CEACR) - adopted 2012, published 102nd ILC session (2013)

Article 2 of the Convention. Insertion of labour clauses in public contracts. Further to its previous comment, the Committee notes the Government’s reference to Order No. 18-A of 14 November 2011 of the Department of Labour and Employment concerning Rules implementing sections 106–109 of the Labour Code. The Government indicates that a service agreement concluded under this Order between a principal employer (who may be any person or entity, including government agencies and government-owned and controlled corporations), and a contractor (defined as any person or entity engaged in a legitimate contracting or subcontracting arrangement providing either services, skilled workers, temporary workers, or a combination of services to a principal employer), must include a clause ensuring compliance with all the rights and benefits of the employees under the Labour Code, such as provision of safe and healthful working conditions, leave, rest days, overtime pay, 13th month pay, separation pay and retirement benefits.

The Committee observes, however, that Department Order No. 18-A does not pertain specifically to public procurement operations but rather to contracting and subcontracting arrangements in general and also that section 8 of the Order merely reaffirms that workers engaged under a service agreement enjoy the full coverage of the Labour Code in terms of wages, working time and social security benefits. As the Committee has indicated on numerous occasions, the fact that the general labour legislation is applicable to workers engaged in the execution of public contracts does not in any way exempt the Government from providing for the inclusion in public contracts of the labour clauses envisaged by the Convention. Such inclusion ensures the protection of workers in cases in which the legislation only establishes minimum conditions of work (e.g. minimum pay rates) which may be exceeded by general or sectoral collective agreements. Moreover, even if collective agreements were applicable to workers engaged in the execution of public contracts, the implementation of the Convention remains of full value because its provisions are designed precisely to ensure the specific protection needed by those workers. For example, the Convention requires the adoption by the competent authorities of measures, such as the advertisement of specifications, to ensure that tenderers have advance knowledge of the terms of the labour clauses. It also requires notices to be posted in conspicuous places at the workplace to inform workers of the conditions of work applicable to them. Finally, it provides for sanctions in the event of non-compliance with the terms of labour clauses, such as the withholding of contracts or the withholding of payments due to contractors, which may be more directly effective than those applicable for violations of the general labour legislation.

The Committee understands that the Government is currently considering the possibility of receiving technical assistance from the Office in the framework of a time-bound programme aimed at capacity building on international labour standards and reporting obligations. The Committee hopes that the Government will seize this opportunity in order to formulate either legislative provisions or administrative instructions and circulars which would fully incorporate the provisions of the Convention into the domestic public procurement regulatory framework. The Committee requests the Government to keep the Office informed of any progress made in this regard.

Observation (CEACR) - adopted 2010, published 100th ILC session (2011)

Article 2 of the Convention. Insertion of labour clauses in public contracts. The Committee has been commenting for numerous years on the Government’s persistent failure to adopt implementing legislation which would give effect to the basic requirement of the Convention, that is, the insertion of labour clauses in public contracts to ensure that the workers engaged in the execution of public procurement contracts (whether for works, goods or services) enjoy wages and other working conditions not less favourable than those fixed by collective agreements, arbitration awards or national laws or regulations for work of the same character in the same area. The Committee notes with regret that in its last report the Government does not provide any new information nor does it appear prepared to take any measures in order to bring its public procurement legislation into line with the letter and the spirit of the Convention. Under the circumstances, the Committee is bound to reiterate that the mere fact that the Labour Code and its Omnibus Rules Implementing the Code apply to workers employed in the public contracts is not sufficient to meet the level of protection required by Article 2 of the Convention. As regards other legal instruments to which the Government has been referring in its reports, these mostly seek to regulate the bidding and selection process in public procurement, but have no direct bearing on the matters dealt with by the Convention. Finally, Republic Act No. 6685, which seeks to promote the employment of local manpower, does not satisfy the requirements of the Convention either. The Committee recalls, in this respect, that, although the Convention requires the insertion of labour clauses covering wages, hours of work and other working conditions in all public contracts to which it applies, it does not preclude the application of other social criteria at either the pre-selection or the post-award stage of the tendering process, for instance, affirmative action measures with a view to promoting the employment of women or vulnerable groups or pursuing broader social policy objectives such as the promotion of employment for long-term unemployed, young persons, disabled or migrant workers, etc. The requirement in public contracts that such additional criteria be satisfied does not relieve the Government of its duty to include clauses ensuring to the workers the conditions prescribed by the Convention. The Committee therefore once again urges the Government to adopt all necessary measures without further delay in order to give full effect to the Convention. To this effect, the Government may draw upon the technical assistance of the Office and may also make use of the Committee’s General Survey of 2008 on labour clauses in public contracts and of the Office’s Practical Guide, copies of which have previously been transmitted to the Government.

[The Government is asked to reply in detail to the present comments in 2012.]

Observation (CEACR) - adopted 2008, published 98th ILC session (2009)

Article 2 of the Convention. Insertion of labour clauses in public contracts. The Committee regrets that the Government in its last report does not provide any new information in reply to the persistent calls of the Committee for action in order to ensure the implementation of the core requirement of the Convention. The Government admits that there are no provisions in the national legislation specifically requiring the inclusion of labour clauses in public contracts and makes renewed reference to the Labour Code, the Government Procurement Reform Act of 2003 and its implementing rules and regulations as sufficiently safeguarding the rights of workers engaged in the execution of public contracts. In this connection, the Committee refers to paragraphs 41–45, 98–104 and 110–113 of its General Survey of 2008 on labour clauses in public contracts in which it analysed the meaning and purpose of Article 2 of the Convention and explained why the general applicability of the national labour legislation to work done in the execution of public contracts is not sufficient to meet the requirements of the Convention. Under the circumstances, the Committee again urges the Government to take without delay all necessary action to give full effect to the Convention. It also recalls that the Office remains prepared to extend any technical assistance that the Government might wish to receive to this end.

For all useful purposes, the Committee attaches herewith a copy of a Practical Guide, prepared by the Office principally on the basis of the abovementioned General Survey, to help better understand the requirements of the Convention and ultimately improve its application in law.

[The Government is asked to reply in detail to the present comments in 2009.]

Observation (CEACR) - adopted 2007, published 97th ILC session (2008)

The Committee has been requesting the Government for the last 25 years to take measures to ensure the full implementation of the basic requirement of the Convention, i.e. the insertion of labour clauses in public contracts, as set out in Article 2 of the Convention. The Committee recalls that, by Ministerial Order of February 1983, effect was given to the requirements of the Convention but the labour clauses which were subsequently included in public contracts only required contractors to comply with labour laws regarding minimum wages, hours of work and other conditions of labour. The Government later reported that, due to a shift in priorities of the legislature, no action could be taken to follow up on the Committee’s comments while, in more recent reports, the Government limited itself to stating that workers involved in the execution of public contracts were sufficiently covered by the Labour Code and its implementing rules and regulations. In addition, the Government makes reference to the public procurement legislation in force, including the Government Procurement Reform Act (Republic Act No. 9184) of 2003 and its Implementing Rules and Regulations, which however contains no provisions on the social aspects of public contracting.

The Committee is bound to recall, in this respect, that the mere fact that the general labour legislation is applicable to workers engaged in the context of public contracts does not in any way exempt the Government from providing for the inclusion in public contracts of the labour clauses envisaged in the Convention. Such inclusion ensures the protection of workers in cases in which the legislation only establishes minimum conditions of work (e.g. minimum pay rates) which may be exceeded by general or sectoral collective agreements. Moreover, even if collective agreements were applicable to workers engaged in the execution of public contracts, the implementation of the Convention retains its full value in so far as its provisions are designed precisely to ensure the specific protection needed by those workers. For example, the Convention requires the adoption by the competent authorities of measures, such as the advertisement of specifications, to ensure that tenderers have advance knowledge of the terms of the labour clauses. It also requires notices to be posted in conspicuous places at the workplace to inform workers of the conditions of work applicable to them. Finally, it provides for sanctions in the event of non-compliance with the terms of labour clauses, such as the withholding of contracts or the withholding of payments due to contractors, which may be more directly effective than those available for violations of the general labour legislation. The Committee therefore asks the Government to take without further delay all necessary measures in order to bring the national legislation into conformity with the Convention. It also requests the Government to specify whether the Ministerial Order of 16 February 1983 providing for the inclusion of labour clauses in government contracts, which previously gave effect to the provisions of the Convention, is still in force.

Finally, the Committee seizes this opportunity to refer to this year’s General Survey which contains an overview of public procurement practices and procedures in so far as labour conditions are concerned and makes a global assessment of the impact and present-day relevance of Convention No. 94.

[The Government is asked to reply in detail to the present comments in 2008.]

Observation (CEACR) - adopted 2001, published 90th ILC session (2002)

With reference to its previous observations, the Committee notes with regret that the Government has as yet been unable to take the measures necessary to give effect to the provisions of the Convention. The Committee has been pointing out for many years that, in order to give effect to the Convention, the Government has to enact legislation providing for the insertion of labour clauses in public contracts with a view to ensuring to the workers concerned wages, hours of work and other labour conditions not less favourable than those established for similar work, in the trade or industry concerned, in the same district, whether by collective agreements or by arbitration awards or by national legislation.

The Committee notes that the Government in its last report refers to Republic Act No. 6685 which seeks to promote the use of indigenous manpower in the execution of public works projects and to Presidential Decree No. 1594 of 11 June 1978 prescribing policies, guidelines, rules and regulations for government infrastructure contracts. However, the Committee is bound to observe that both enactments contain no provisions related to the wage levels, hours of work and other conditions of labour of the workers engaged in the execution of public contracts and thus are strictly irrelevant in the application of this Convention. The Committee therefore strongly suggests that the Government should take the necessary steps without delay to bring its legislation into conformity with the requirements of the Convention, which might possibly take the form of rules and regulations to be promulgated jointly by the Minister of Public Works, Transportation and Communications, the Minister of Public Highways, the Minister of Energy, and the Director-General of the National Economic and Development Authority under section 12 of the above-referenced Presidential Decree. While recalling that the technical assistance of the Office is at the Government’s disposal to assist it in giving effect to the Convention, the Committee requests the Government to communicate in its next report any positive developments in this respect.

In addition, the Committee asks the Government to continue to provide in accordance with Article 6 of the Convention and Part V of the report form up to date and detailed information on the practical application of the Convention, including for instance copies of public contracts containing labour clauses, official reports or statistics bearing on the enforcement of relevant legislation (e.g. number and nature of infringements observed and penalties imposed) and any other particulars regarding the practical fulfilment of the conditions prescribed by the Convention.

Observation (CEACR) - adopted 1995, published 82nd ILC session (1995)

The Committee notes the Government's indication in its report that the Labour Code covers the workers employed by public contractors. It also notes the attached Department Order No. 19, s. 1993 (Guidelines governing the employment of workers in the construction industry) and Department Order No. 13, s. 1988 (Minimum wage of workers of service contractors), which relate to the general regulation of conditions of employment in the construction industry and the service sector.

The Committee points out that, in order to give effect to the Convention, it is necessary to take measures that provide for the inclusion, in the contracts to which this Convention refers in Article 1, of clauses which ensure for the workers concerned terms and conditions of labour which are not less favourable than those established for work of the same character in the trade or industry concerned in the same district in accordance with Article 2(1) and (2). The Committee hopes that the Government will take the necessary measures to this end in the near future and that it will consult with the organizations of employers and workers concerned, as set out in Article 2(3), in determining the terms of the clauses to be included. The Committee requests the Government to indicate any progress made in this respect.

The Committee also asks the Government to provide information requested under point V of the report form, including the number of contracts of the type covered by the Convention, the number of workers covered by such contracts and the number and nature of violations noted.

Observation (CEACR) - adopted 1991, published 78th ILC session (1991)

The Committee takes note of the Government's reply to its previous comments. The Committee notes the Government's indication that there has been a shift in the priorities of the legislature owing to national and international developments, with the result that there have been no positive developments with regard to the points raised by the Committee concerning the application of this Convention and particularly the provisions of Articles 1 and 2 of the Convention. The Committee hopes therefore that the Government will be able to take the necessary measures in the not too distant future to give effect to the Convention and that it will consult the workers' and employers' organisations concerned, as set out in Article 2, paragraph 3, of the Convention, when adopting these measures.

With regard to the Committee's request for the information requested under Point V of the report form, the Committee notes that, according to the Government, violations by contracting enterprises are acted upon by the Department of Labour and Employment. It also notes that the mechanism to monitor contracts referred to in the Convention, has not yet been established, although the Government indicates that, in 1981, a memorandum of agreement between the Department of Labour and Employment and the Department of Public Works and Highways was adopted to ensure strict implementation of the Convention in all contracts for public works projects or services. The Committee hopes that, in any event, the Government will be able to provide information on the number of contracts of the type covered by the Convention, the number of workers covered by such contracts and the number and nature of violations noted.

Observation (CEACR) - adopted 1990, published 77th ILC session (1990)

1. The Committee notes the Government's reply to its previous comments in which it indicates that the legislation that should have been adopted to give effect to the Convention has still not been enacted, although work is continuing for its adoption. The Government adds that under the country's existing legislation, and in particular the Civil Code and the Labour Code, workers covered by public contracts are protected. The Committee points out that in order to give effect to this Convention it is necessary to take measures that provide for the inclusion in the contracts to which this Convention refers in Article 1, of clauses which ensure to the workers concerned terms and conditions of labour which are not less favourable than those established for work of the same character in the trade or industry concerned in the same district, in accordance with Article 2, paragraphs 1 and 2. The Committee therefore hopes that the Government will take the necessary measures to adopt the above legislation in the near future and that it will indicate the progress achieved in this respect. The Committee also once again hopes that the Government will consult with the organisations of employers and workers concerned, as set out in Article 2, paragraph 3 of the Convention, when adopting the above measures.

2. The Committee also points out that in its previous observation it requested the Government to supply general information on the way in which the Convention is applied in practice and to supply information on the number of public contracts and workers covered, as required by Point V of the report form on this Convention. The Committee hopes that the Government will also supply this information.