Endo (derived from "end-of-contract") refers to a short-term de facto employment practice in the Philippines. It is a form of contractualization in which companies provide workers with temporary "employment" that lasts for less than six months (or strictly speaking, 180 calendar days) and then terminate their employment just before they can be regularized, to skirt the costs that come with the benefits of regularization. Some examples of such benefits are the de jure "employer-and-employee relationship"-mandated SSS, PhilHealth, and Pag-IBIG Fund contributions, paid time off (leaves), and a 13th month pay, among others.
Overview The term endo is derived from an abridged version of the phrase "end-of-contract." It is also sometimes referred to as "5-5-5," which alludes to the practice of terminating a non-regular employee's contract after five months.
Under the Labor Code of the Philippines (Presidential Decree No. 442), employers may employ individuals on a probationary status for a period not exceeding six months. The Supreme Court of the Philippines, in various rulings, has specified that this period is 180 calendar days from the first day of work. In the endo system, a worker's employment contract is terminated before they complete the six months (180 days), which would otherwise lead to them becoming a regular worker entitled to mandated benefits such as health, security, and insurance.
Contractualization is one of the most controversial labor practices in the Philippines. Since the Labor Code's adoption in 1974, it has been amended with several implementing texts. As of June 2016, there were an estimated 356,000 probationary workers in the Philippines.
Types of employment in the Philippines Regular employment A regular employee is defined by the 1974 Labor Code as one who is "engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer."
The Labor Code recognizes two types of regular employees:
Those who perform tasks that are necessary or desirable for the employer's business or trade. Casual, fixed-term, or project employees who have rendered at least one year of service, whether continuous or broken, in the same activity in which they were employed.
A regular employee (whether de jure, fixed-term, or project-based) is entitled to several mandated benefits, including but not limited to:
Social Security Social Security System (SSS): Private companies are required to register all regular employees with the SSS (RA 8282), which provides retirement and health insurance. Government Service Insurance System: For government employees, who can also be a member and contributors to the SSS but at their own cost. Philippine Health Insurance Corporation (PhilHealth): Both private and public sector workers must contribute to this service (RA 7875) for medical insurance. Home Development Mutual Fund (HDMF or Pag-IBIG): This agency provides low-interest housing loans, payable for up to 30 years. Private and public firms are also mandated to contribute to this fund on behalf of their regular employees (RA 7835). 13th month pay, five days of Service Incentive Leave (SIL) for every 12 months of service rendered,https://laborlaw.ph/service-incentive-leave/ and maternity benefits, among others.
The employee's portion of these benefits is deducted from the employee's gross monthly salary by the employer, as required by law.
Probationary employment In addition to regular employment, probationary employment is also recognized by the Labor Code. Under Article 296, probationary employment shall not exceed six months "unless it is covered by an apprenticeship agreement stipulating a longer period." Any employee who works beyond the probationary period automatically becomes a regular employee.
The security of tenure protects both regular and non-regular employees, a constitutional guarantee found in Section 3, Article XIII of the 1987 Philippine Constitution. It states that no employee, whether regular or non-regular, shall be terminated without a just or authorized cause. While probationary employees are not entitled to the same benefits as regular employees, they are still protected from illegal dismissal.
Labor-only contracting Department Order No. 3 (series of 2001) explicitly prohibits labor-only contracting, defined to be a type of employment wherein: "the contractor or subcontractor merely recruits, supplies or places workers to perform a job, work or service for a principal, and the following elements are present:(a) The contractor or subcontractor does not have substantial capital or investment to actually perform the job, work or service under its own account and responsibility; and (b) The employees recruited, supplied or placed by such contractor or subcontractor is performing activities, which are directly related to the main business of the principal".Contracts or subcontracts whose existence precede the effectivity of the Order are given non-impairment and non-diminution of benefits."
Government response Marcos administration Contractualization has its roots in 1974, under the rule of Ferdinand Marcos, when Ernesto "Boy" Herrera helped draft Presidential Decree 442. This decree, which Marcos eventually passed, would give the provisions and grounds for the contractualization of workers in the Philippines.
The Labor Code of 1974 introduced the concept of probationary employment to the Philippines. Under Article 281, it states that "employers are allowed to hire people under a probationary status for up to six months. These 6 months are used as a trial period for the employee. If the employee is allowed to work after the 6 month of the probationary period, they will be considered a regular employee." which upon further reading continues as follows "the services of an employee who has been engaged on a probationary basis may be terminated for a just cause or when he fails to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the time of his engagement." If an employee is unable to show that they possess the necessary skills to keep the job, they may be terminated from employment."
Effectively, Article 281 and its legal loophole were identified by companies and, since then, have been used as a primary basis for laying off workers to avoid extra costs associated with regular employment.
Cory Aquino administration During the Cory Aquino administration from 1986 to 1992, Republic Act 6715 of 1989, also known as the Herrera Law, was passed. It was this law that gave the first major revisions to the original Philippine Labor Code drafted earlier during the Marcos Presidency. This revised Philippine Labor Code was amended to combat workplace discrimination against women and to extend workers' rights in employment. However, this revision under the administration of Corazon Aquino did not tackle contractualization directly and effectively. For example, Article 279 of the labor code was amended to provide better security of tenure for workers. This article states that:
"In cases of regular employment, the employer shall not terminate the services of an employee except for just cause or when authorized by this Title. An Employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full back wages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement."
This failed to recognize the situation of those employed on probation. Regular employees could not have their services terminated without cause, but for a probationary employee to attain this regular status, they would need to work more than six months.
Ramos administration President Fidel V. Ramos vowed to end contractualization to address the plight of suffering Filipino people and had the Philippine Labor Code amended to extend the powers of the Secretary of Labor, along with the powers of the regional directors, to more efficiently handle violations of the Labor Code and hopefully tame and curb the growing problem of exploitative contractualization. The amendment is quoted as follows, Article 106 of the Revised Labor Code, "The Secretary of Labor and Employment may, by appropriate regulations, restrict or prohibit the contracting-out of labor to protect the rights of workers established under this Code." This amendment to the Philippine Labor Code effectively gives the power of ending or continuing contracting-out of labor into the hands of the then-DOLE Secretary.
Then-DOLE Secretary Leonardo Quisumbing issued Department Order 10 in May 1997, strengthening the practice of contracting out labor by granting employers additional allowances while safeguarding employee rights. Department Order 10 propagated the concept of agencies through "Permissible contracting or subcontracting." It was here when employees started coining the word Endo in response to the 5 months - 5 months - 5 months work schedule of most contractual employees.
It was also this change in provision on the Philippine Labor Code and the DOLE Department Order 10, compounded together, which made the problems of Endo worse off in the administration of Fidel V. Ramos.
Estrada administration With the growing Endo Contractualization practices in the Philippines also came a myriad of worker abuse complaints, which gave rise to multiple worker protests and led to the then-DOLE Labor Secretary Patricia Sto. Tomas passed DOLE Department Order 3 in 2001, which revoked the previously passed DOLE Department Order 10. This, however, also removed the changes to the rights of a contractual employee as outlined in Department Order 10. These rights included giving contractual employees the same benefits as regular employees, a promise of proper working conditions, service incentive leave, rest days, and overtime pay, among others. Department Order 3 also included a section that protected existing contracts. Existing contracts between companies and workers had to be fulfilled. Both parties still had rights to the stipulations mentioned in their current contracts.
Arroyo administration The DOLE Department Order 3, though it did revoke the previous DOLE Department Order 10, was only a temporary solution.
Benigno Aquino administration Upon the transition of power from the 9-year Gloria Macapagal Arroyo administration, the Benigno Aquino III administration started. DOLE Department Order 18 underwent review and was replaced by a new, improved version, DOLE Department Order 18-A. By this point, DOLE has aggressively restricted and regulated the agency contractualization practice, so that it seemed that the norm is not contractualization, whilst regularization is the exception.
Duterte administration During his campaign for the 2016 Presidential Election, one of Rodrigo Duterte's promises was the phasing out of contractualization and improvement to labor in the Philippines.
Upon his election, he appointed Silvestre Bello III as Secretary of the Department of Labor and Employment, who was tasked with requiring all companies to place at least 80% of their employees under contract, as per the president's orders. By the end of 2016, around 36000 workers had been regularized. Going into 2017, Duterte and Bello aimed to enact a new permanent policy to end labor-only contractualization by the end of February, but Bello ultimately did not sign it. Instead, he decided to start with dialogue between the president and labor groups to get feedback. Eventually, President Duterte met with the labor groups as Bello drafted a new Department Order that would stop labor contractualization.