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

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

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.