HomeBlogLabor-Only Contracting and Its Ramifications in the Business Industry

Labor-Only Contracting and Its Ramifications in the Business Industry


One of the things that businesses must avoid is getting entangled with a labor-only contractor, who is obviously engaged with labor-only contracting. While this term has “contracting” appended to it, the law actually abhors such practice, as opposed to legitimate independent contracting like the one Dynamic Builders and Construction Co. (Phils.) Inc. History is replete with businesses that have fallen prey to this type of contracting, which rendered them facing liabilities that are more than they can truly handle.


For the abovementioned reason, it is truly prudent for businesses to only seek the services of an independent contractor such as Dynamic Builders and Construction in Bacolod City, Philippines, and not trust a labor-only contractor. Here are some of the telltale signs that will help you identify the labor-only contractor.

It has the appearance of a legitimate business, only that it does not have substantial tools, equipment and capital to carry an independent business.

Basically, businesses that undertake labor-only contracting do not have the capacity to undertake the job or service required by the principal (business, investor, and the like that seeks the services of the contractor). Oftentimes, it utilizes the facilities and equipment of the principal and it does not bring in any additional equipment that might be of use to said company. Basically, all that it provides for the principal company that hired its services is “labor” in the form of manpower. Without supplying labor to the principal, it simply could not stand on its own and carry business.

It does not control the manner and method by which work is carried out by the employees, but it is the principal that supervises such things. In effect, the moment that employees enter the premises of the principal, the contractor no longer exercises any form of supervision thereof.

This exercise of control is deemed by numerous court decisions as the most important test in determining whether there exists independent contracting or labor-only contracting. Once you have ascertained that a business will not be exercising control over its employees but that it is the principal that will, then be cautioned as you might find yourself engaging the services of a labor-only contractor.

Here is one word of advice. If you are unsure of the identity of the business entity that you are dealing with, better proceed with caution. Ascertain if it is a legitimate independent contractor like Dynamic Builders, or one that merely engages in labor-only contracting. If it is the latter, then steer clear of it, or else you will find yourself in a whole lot of trouble.


Last modified on Wednesday, 09 August 2017 09:52
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