At a glance: hiring employees in Philippines

Background information on applicants

Are there any restrictions or prohibitions against background checks on applicants? Does it make a difference if an employer conducts its own checks or hires a third party?

There is no law prohibiting background checks on applicants, whether conducted by the employer or a third party. There are, however, specific laws that apply concerning applications and background checks for the protection of applicants’ personal information. For example, Republic Act No. 10911, or the Anti-Age Discrimination in Employment Act, specifically prohibits requiring the declaration of age or birth date during the application process.

The Implementing Rules and Regulations of Republic Act No. 10173 (the Data Privacy Act of 2012) also provide that an applicant or a data subject has the right to be informed if their personal data is being collected for the purposes of profiling or other forms of data processing. Within the meaning of the Data Privacy Act of 2012, ‘profiling’ includes the automated processing of personal data (defined as information from which the identity of an individual is apparent or can be ascertained), consisting of the use of such personal data to evaluate certain personal aspects relating to a natural person.

Republic Act No. 11166, or the Philippine HIV and AIDS Policy Act, likewise prohibits the rejection of a job application based (solely or partially) on the applicant’s actual, perceived or suspected HIV status.

Are there any restrictions or prohibitions against requiring a medical examination as a condition of employment?

Republic Act No. 11166, or the Philippine HIV and AIDS Policy Act, prohibits the rejection of a job application based (solely or partially) on the applicant’s actual, perceived or suspected HIV status. Access to personal data relating to an employee’s hepatitis B status is bound by the rules of confidentiality and is strictly limited to medical personnel or if legally required, as provided by Department of Labor and Employment (DOLE) Department Advisory No. 05-10. DOLE Department Circular No. 73-05 prohibits discrimination against workers who have or have had tuberculosis.

Further, medical examination results should not be used to deny employment when the denial of employment would constitute discrimination under the applicable laws. For example, Republic Act No. 7277, as amended by Republic Acts No. 9442, No. 10070 and No. 10754, or the Magna Carta for Persons with Disability, states that using qualification standards, employment tests or other selection criteria that screen out or tend to screen out a person with a disability (unless such standards, tests or other selection criteria are shown to be job-related for the position in question and are consistent with business necessity) are discriminatory acts.

Are there any restrictions or prohibitions against drug and alcohol testing of applicants?

There are no restrictions against drug and alcohol testing, and there is no law prohibiting an employer from refusing to hire an applicant who refuses to submit to such a test. However, in 2003, the DOLE issued DOLE Department Order No. 053-03 containing its Guidelines for the Implementation of a Drug-Free Workplace Policies and Programs for the Private Sector, which state that only drug-testing centres accredited by the Department of Health shall be utilised for drug testing.

Hiring of employees

Are there any legal requirements to give preference in hiring to, or not to discriminate against, particular people or groups of people?

Philippine law provides various prohibitions against discrimination, including discrimination based on gender, age and disability status.

Also, a JobStart graduate is legally given preference in the hiring of workers by employers participating in the JobStart Philippines programme. The programme was established under Republic Act No. 10869, or the JobStart Philippines Act, and aims to shorten a young person’s school-to-work transition period by enhancing the knowledge and skills that jobseekers acquire in formal education or technical training so that they can become more responsive to the demands of the labour market.

Must there be a written employment contract? If yes, what essential terms are required to be evidenced in writing?

Generally, Philippine law does not require an employment contract to be put into writing, but specific laws may require it. For example, Republic Act No. 10361, or the Domestic Workers Act, requires an employment contract to be executed between the domestic worker and the employer in a language or dialect understood by both parties. The contract must include the duties and responsibilities of the domestic worker, the period of employment, and the agreed compensation and authorised deductions, among others.

Department of Labor and Employment (DOLE) Department Order No. 65-04, or the Rules and Regulations Implementing the Act Providing for the Elimination of the Worst Forms of Child Labour, also provides that, when the employer works in public entertainment or information, it shall submit a written employment contract concluded between the employer and the child’s parents or guardian, which must be approved by the DOLE.

Under DOLE Department Order No. 174-17, the employment contracts of employees of a contractor or subcontractor involved in job contracting are required to include the following stipulations:

• the specific description of the job or work to be performed by the employee; and
• the place of work, and terms and conditions of employment, including a statement of the wage rate applicable to the individual employee.

To what extent are fixed-term employment contracts permissible?

Fixed-term contracts are permitted provided that either of these two criteria are met:

• the fixed period of employment was knowingly and voluntarily agreed upon by the parties without any force, duress or improper pressure being brought to bear on the employee and without any circumstances vitiating consent; or
• it satisfactorily appears that the employer and employee dealt with each other on more or less equal terms with no moral dominance whatsoever being exercised by the former on the latter.

Although labour laws and jurisprudence do not provide for a maximum duration for fixed-term employment contracts, the Philippine Supreme Court has previously recognised the validity of fixed-term employment contracts with durations of five years.

What is the maximum probationary period permitted by law?

Presidential Decree No. 442, as amended (the Labor Code), provides that probationary employment shall not exceed six months from the date on which the employee started working unless it is covered by an apprenticeship agreement stipulating a longer period. However, the Philippine Supreme Court has upheld a longer probationary period in the following instances:

• during the probation period, the employee may voluntarily agree to an extension if it would afford the employee another opportunity to pass the standards for regularisation after having initially failed the probationary period; and
• the employer and employee expressly agree to a longer period at the start of employment, where such an extended probationary period is established by company policy or is required by the nature of the work.

What are the primary factors that distinguish an independent contractor from an employee?

An independent contractor carries on a distinct and independent business, and undertakes to perform jobs, work or services on their own account and under their own responsibility according to their own manner and method, free from the control and direction of the principal in all matters connected with the performance of the work, except as to the results thereof.

A job contractor is any person or entity engaged in a permissible contracting or subcontracting arrangement providing services for a specific job or undertaking farmed out by the principal under a service agreement. Job contracting is permissible when all the following concur:

• the contractor or subcontractor is engaged in a distinct and independent business, and undertakes to perform the job or work on their own responsibility according to their own manners and methods;
• the contractor or subcontractor has sufficient capital to carry out the job farmed out by the principal on their account, manner and method, and investment in the form of tools, equipment, machinery and supervision;
• in performing the work farmed out, the contractor or subcontractor is free from the control or direction of the principal in all matters connected with the performance of the work except as to the result thereof; and
• the service agreement ensures compliance with all rights and benefits for all employees of the contractor or subcontractor under Philippine labour laws.

Jurisprudence has also recognised another kind of independent contractor in the form of individuals with unique skills and talents that set them apart from ordinary employees. The result of the control test is the primary factor in determining the presence or absence of an employer–employee relationship. Under the control test, an employer–employee relationship exists where the person for whom the services are performed reserves the right to control not only the end achieved but also the manner and means to be used in reaching that end.

Is there any legislation governing temporary staffing through recruitment agencies?

Recruitment and placement are any acts of canvassing, enlisting, contracting, transporting, utilising, hiring or procuring workers, including referrals, contract services, promising or advertising for employment, locally in the Philippines or abroad and whether for profit or not. Recruitment in the Philippines is governed by the Labor Code, while recruitment for work abroad is governed by Republic Act No. 8042, as amended by Republic Act No. 10022, or the Migrant Workers and Overseas Filipinos Act.

The rules on legitimate job contracting also provide for the temporary assignment of a contract worker for the duration of the service agreement, or only for a phase of the job or work to be undertaken. However, under DOLE Department Order No. 174-17, a job contractor is prohibited from engaging in recruitment and placement activities.