THE LABOR CODE OF THE PHILIPPINES

PRESIDENTIAL DECREE NO. 442, AS AMENDED.

A DECREE INSTITUTING A LABOR CODE THEREBY REVISING AND

CONSOLIDATING LABOR AND SOCIAL LAWS TO AFFORD PROTECTION TO
LABOR, PROMOTE EMPLOYMENT AND HUMAN RESOURCES DEVELOPMENT
AND INSURE INDUSTRIAL PEACE BASED ON SOCIAL JUSTICE.

BOOK ONE

PRE-EMPLOYMENT

ART. 12. Statement of objectives. - It is the policy of the State:

a) To promote and maintain a state of full employment through improved manpower

training, allocation and utilization;

b) To protect every citizen desiring to work locally or overseas by securing for him the
best possible terms and conditions of employment;

c) To facilitate a free choice of available employment by persons seeking work in

conformity with the national interest;

d) To facilitate and regulate the movement of workers in conformity with the national
interest;

e) To regulate the employment of aliens, including the establishment of a registration

and/or work permit system;

f) To strengthen the network of public employment offices and rationalize the

participation of the private sector in the recruitment and placement of workers, locally
and overseas, to serve national development objectives;

g) To insure careful selection of Filipino workers for overseas employment in order to

protect the good name of the Philippines abroad.

Title I

RECRUITMENT AND PLACEMENT OF WORKERS

Chapter I

GENERAL PROVISIONS

ART. 13. Definitions. - (a) "Worker" means any member of the labor force, whether
employed or unemployed.
(b) "Recruitment and placement" refers to any act of canvassing, enlisting, contracting,
transporting, utilizing, hiring or procuring workers, and includes referrals, contract
services, promising or advertising for employment, locally or abroad, whether for profit or
not: Provided, That any person or entity which, in any manner, offers or promises for a
fee, employment to two or more persons shall be deemed engaged in recruitment and
placement.

(c) "Private fee-charging employment agency" means any person or entity engaged in
recruitment and placement of workers for a fee which is charged, directly or indirectly,
from the workers or employers or both.

(d) "License" means a document issued by the Department of Labor authorizing a

person or entity to operate a private employment agency.

(e) "Private recruitment entity" means any person or association engaged in the
recruitment and placement of workers, locally or overseas, without charging, directly or
indirectly, any fee from the workers or employers.

(f) "Authority" means a document issued by the Department of Labor authorizing a

person or association to engage in recruitment and placement activities as a private
recruitment entity.

(g) "Seaman" means any person employed in a vessel engaged in maritime navigation.

(h) "Overseas employment" means employment of a worker outside the Philippines.

(i) "Emigrant" means any person, worker or otherwise, who emigrates to a foreign
country by virtue of an immigrant visa or resident permit or its equivalent in the country
of destination.

ART. 14. Employment promotion. - The Secretary of Labor shall have the power and
authority:

(a) To organize and establish new employment offices in addition to the existing
employment offices under the Department of Labor as the need arises;

(b) To organize and establish a nationwide job clearance and information system to
inform applicants registering with a particular employment office of job opportunities in
other parts of the country as well as job opportunities abroad;

(c) To develop and organize a program that will facilitate occupational, industrial and
geographical mobility of labor and provide assistance in the relocation of workers from
one area to another; and

(d) To require any person, establishment, organization or institution to submit such

employment information as may be prescribed by the Secretary of Labor.

ART. 15. Bureau of Employment Services. - (a) The Bureau of Employment Services
shall be primarily responsible for developing and monitoring a comprehensive
employment program. It shall have the power and duty:
1. To formulate and develop plans and programs to implement the employment
promotion objectives of this Title;

2. To establish and maintain a registration and/or licensing system to regulate private

sector participation in the recruitment and placement of workers, locally and overseas,
and to secure the best possible terms and conditions of employment for Filipino contract
workers and compliance therewith under such rules and regulations as may be issued
by the Minister of Labor;

3. To formulate and develop employment programs designed to benefit disadvantaged

groups and communities;

4. To establish and maintain a registration and/or work permit system to regulate the
employment of aliens;

5. To develop a labor market information system in aid of proper manpower and

development planning;

6. To develop a responsive vocational guidance and testing system in aid of proper

human resources allocation; and

7. To maintain a central registry of skills, except seamen.

(b) The regional offices of the Ministry of Labor shall have the original and exclusive
jurisdiction over all matters or cases involving employer-employee relations including
money claims, arising out of or by virtue of any law or contracts involving Filipino
workers for overseas employment except seamen: Provided, That the Bureau of
Employment Services may, in the case of the National Capital Region, exercise such
power, whenever the Minister of Labor deems it appropriate. The decisions of the
regional offices of the Bureau of Employment Services, if so authorized by the Minister
of Labor as provided in this Article, shall be appealable to the National Labor Relations
Commission upon the same grounds provided in Article 223 hereof. The decisions of the
National Labor Relations Commission shall be final and inappealable. (Superseded by
Exec. Order 797, May 1, 1982).

(c) The Minister of Labor shall have the power to impose and collect fees based on rates
recommended by the Bureau of Employment Services. Such fees shall be deposited in
the National Treasury as a special account of the General Fund, for the promotion of the
objectives of the Bureau of Employment Services, subject to the provisions of Section 40
of Presidential Decree No. 1177.

ART. 16. Private recruitment. - Except as provided in Chapter II of this Title, no person or
entity other than the public employment offices, shall engage in the recruitment and
placement of workers.

ART. 17. Overseas Employment Development Board. - An Overseas Employment

Development Board is hereby created to undertake, in cooperation with relevant entities
and agencies, a systematic program for overseas employment of Filipino workers in
excess of domestic needs and to protect their rights to fair and equitable employment
practices. It shall have the power and duty:

1. To promote the overseas employment of Filipino workers through a comprehensive

market promotion and development program;

2. To secure the best possible terms and conditions of employment of Filipino contract
workers on a government-to-government basis and to ensure compliance therewith;

3. To recruit and place workers for overseas employment on a government-to-

government arrangement and in such other sectors as policy may dictate; and

4. To act as secretariat for the Board of Trustees of the Welfare and Training Fund for
Overseas Workers.

ART. 18. Ban on direct-hiring. - No employer may hire a Filipino worker for overseas
employment except through the Boards and entities authorized by the Secretary of
Labor. Direct-hiring by members of the diplomatic corps, international organizations and
such other employers as may be allowed by the Secretary of Labor is exempted from
this provision.

ART. 19. Office of Emigrant Affairs. - (a) Pursuant to the national policy to maintain close
ties with Filipino migrant communities and promote their welfare as well as establish a
data bank in aid of national manpower policy formulation, an Office of Emigrant Affairs is
hereby created in the Department of Labor. The Office shall be a unit at the Office of the
Secretary and shall initially be manned and operated by such personnel and through
such funding as are available within the Department and its attached agencies.
Thereafter, its appropriation shall be made part of the regular General Appropriations
Decree.

(b) The office shall, among others, promote the well-being of emigrants and maintain
their close link to the homeland by:

1) serving as a liaison with migrant communities;

2) provision of welfare and cultural services;

3) promote and facilitate re-integration of migrants into the national mainstream;

4) promote economic; political and cultural ties with the communities; and

5) generally to undertake such activities as may be appropriate to enhance such

cooperative links.

ART. 20. National Seamen Board. - (a) A National Seamen Board is hereby created
which shall develop and maintain a comprehensive program for Filipino seamen
employed overseas. It shall have the power and duty:

1. To provide free placement services for seamen;

2. To regulate and supervise the activities of agents or representatives of shipping
companies in the hiring of seamen for overseas employment and secure the best
possible terms of employment for contract seamen workers and secure compliance
therewith;
3. To maintain a complete registry of all Filipino seamen.

(b) The Board shall have original and exclusive jurisdiction over all matters or cases
including money claims, involving employer-employee relations, arising out of or by
virtue of any law or contracts involving Filipino seamen for overseas employment. The
decisions of the Board shall be appealable to the National Labor Relations Commission
upon the same grounds provided in Article 223 hereof. The decisions of the National
Labor Relations Commission shall be final and inappealable.

ART. 21. Foreign service role and participation. - To provide ample protection to Filipino
workers abroad, the labor attaches, the labor reporting officers duly designated by the
Secretary of Labor and the Philippine diplomatic or consular officials concerned shall,
even without prior instruction or advice from the home office, exercise the power and
duty:

(a) To provide all Filipino workers within their jurisdiction assistance on all matters arising
out of employment;

(b) To insure that Filipino workers are not exploited or discriminated against;

(c) To verify and certify as requisite to authentication that the terms and conditions of
employment in contracts involving Filipino workers are in accordance with the Labor
Code and rules and regulations of the Overseas Employment Development Board and
National Seamen Board;

(d) To make continuing studies or researches and recommendations on the various

aspects of the employment market within their jurisdiction;

(e) To gather and analyze information on the employment situation and its probable
trends, and to make such information available; and

(f) To perform such other duties as may be required of them from time to time.

ART. 22. Mandatory remittance of foreign exchange earnings. - It shall be mandatory for
all Filipino workers abroad to remit a portion of their foreign exchange earnings to their
families, dependents, and/or beneficiaries in the country in accordance with rules and
regulations prescribed by the Secretary of Labor.

ART. 23. Composition of the Boards. - (a) The OEDB shall be composed of the
Secretary of Labor and Employment as Chairman, the Undersecretary of Labor as Vice-
Chairman, and a representative each of the Department of Foreign Affairs, the
Department of National Defense, the Central Bank, the Department of Education,
Culture and Sports, the National Manpower and Youth Council, the Bureau of
Employment Services, a workers organization and an employers organization and the
Executive Director of the OEDB as members.
(b) The National Seamen Board shall be composed of the Secretary of Labor and
Employment as Chairman, the Undersecretary of Labor as Vice-Chairman, the
Commandant of the Philippine Coast Guard, and a representative each of the
Department of Foreign Affairs, the Department of Education, Culture and Sports, the
Central Bank, the Maritime Industry Authority, the Bureau of Employment Services, a
national shipping association and the Executive Director of the NSB as members.

The members of the Boards shall receive allowances to be determined by the Board
which shall not be more than P2,000.00 per month.

(c) The Boards shall be attached to the Department of Labor for policy and program
coordination. They shall each be assisted by a Secretariat headed by an Executive
Director who shall be a Filipino citizen with sufficient experience in manpower
administration, including overseas employment activities. The Executive Director shall
be appointed by the President of the Philippines upon the recommendation of the
Secretary of Labor and shall receive an annual salary as fixed by law. The Secretary of
Labor shall appoint the other members of the Secretariat.

(d) The Auditor General shall appoint his representative to the Boards to audit their
respective accounts in accordance with auditing laws and pertinent rules and
regulations.

ART. 24. Boards to issue rules and collect fees. - The Boards shall issue appropriate
rules and regulations to carry out their functions. They shall have the power to impose
and collect fees from employers concerned, which shall be deposited in the respective
accounts of said Boards and be used by them exclusively to promote their objectives.

Chapter II

REGULATION OF RECRUITMENT AND PLACEMENT ACTIVITIES

ART. 25. Private sector participation in the recruitment and placement of workers. -
Pursuant to national development objectives and in order to harness and maximize the
use of private sector resources and initiative in the development and implementation of a
comprehensive employment program, the private employment sector shall participate in
the recruitment and placement of workers, locally and overseas, under such guidelines,
rules and regulations as may be issued by the Secretary of Labor.

ART. 26. Travel agencies prohibited to recruit. - Travel agencies and sales agencies of
airline companies are prohibited from engaging in the business of recruitment and
placement of workers for overseas employment whether for profit or not.

ART. 27. Citizenship requirement. - Only Filipino citizens or corporations, partnerships or

entities at least seventy-five percent (75%) of the authorized and voting capital stock of
which is owned and controlled by Filipino citizens shall be permitted to participate in the
recruitment and placement of workers, locally or overseas.
ART. 28. Capitalization. - All applicants for authority to hire or renewal of license to
recruit are required to have such substantial capitalization as determined by the
Secretary of Labor.

ART. 29. Non-transferability of license or authority. - No license or authority shall be used

directly or indirectly by any person other than the one in whose favor it was issued or at
any place other than that stated in the license or authority be transferred, conveyed or
assigned to any other person or entity. Any transfer of business address, appointment or
designation of any agent or representative including the establishment of additional
offices anywhere shall be subject to the prior approval of the Department of Labor.

ART. 30. Registration fees. - The Secretary of Labor shall promulgate a schedule of fees
for the registration of all applicants for license or authority.

ART. 31. Bonds. - All applicants for license or authority shall post such cash and surety
bonds as determined by the Secretary of Labor to guarantee compliance with prescribed
recruitment procedures, rules and regulations, and terms and conditions of employment
as may be appropriate.

ART. 32. Fees to be paid by workers. - Any person applying with a private fee-charging
employment agency for employment assistance shall not be charged any fee until he
has obtained employment through its efforts or has actually commenced employment.
Such fee shall be always covered with the appropriate receipt clearly showing the
amount paid. The Secretary of Labor shall promulgate a schedule of allowable fees.

ART. 33. Reports on employment status. - Whenever the public interest requires, the
Secretary of Labor may direct all persons or entities within the coverage of this Title to
submit a report on the status of employment, including job vacancies, details of job
requisitions, separation from jobs, wages, other terms and conditions and other
employment data.

ART. 34. Prohibited practices. - It shall be unlawful for any individual, entity, licensee, or
holder of authority:

(a) To charge or accept, directly or indirectly, any amount greater than that specified in
the schedule of allowable fees prescribed by the Secretary of Labor, or to make a worker
pay any amount greater than that actually received by him as a loan or advance;

(b) To furnish or publish any false notice or information or document in relation to

recruitment or employment;

(c) To give any false notice, testimony, information or document or commit any act of
misrepresentation for the purpose of securing a license or authority under this Code.

(d) To induce or attempt to induce a worker already employed to quit his employment in
order to offer him to another unless the transfer is designed to liberate the worker from
oppressive terms and conditions of employment;

(e) To influence or to attempt to influence any person or entity not to employ any worker
who has not applied for employment through his agency;
(f) To engage in the recruitment or placement of workers in jobs harmful to public health
or morality or to the dignity of the Republic of the Philippines;

(g) To obstruct or attempt to obstruct inspection by the Secretary of Labor or by his duly
authorized representatives;

(h) To fail to file reports on the status of employment, placement vacancies, remittance of
foreign exchange earnings, separation from jobs, departures and such other matters or
information as may be required by the Secretary of Labor.

(i) To substitute or alter employment contracts approved and verified by the Department
of Labor from the time of actual signing thereof by the parties up to and including the
periods of expiration of the same without the approval of the Secretary of Labor;

(j) To become an officer or member of the Board of any corporation engaged in travel
agency or to be engaged directly or indirectly in the management of a travel agency; and

(k) To withhold or deny travel documents from applicant workers before departure for
monetary or financial considerations other than those authorized under this Code and its
implementing rules and regulations.

ART. 35. Suspension and/or cancellation of license or authority. - The Minister of Labor
shall have the power to suspend or cancel any license or authority to recruit employees
for overseas employment for violation of rules and regulations issued by the Ministry of
Labor, the Overseas Employment Development Board, or for violation of the provisions
of this and other applicable laws, General Orders and Letters of Instructions.

Chapter III

MISCELLANEOUS PROVISIONS

ART. 36. Regulatory power. - The Secretary of Labor shall have the power to restrict and
regulate the recruitment and placement activities of all agencies within the coverage of
this Title and is hereby authorized to issue orders and promulgate rules and regulations
to carry out the objectives and implement the provisions of this Title.

ART. 37. Visitorial Power. - The Secretary of Labor or his duly authorized representatives
may, at any time, inspect the premises, books of accounts and records of any person or
entity covered by this Title, require it to submit reports regularly on prescribed forms, and
act on violation of any provisions of this Title.
ART. 38. Illegal recruitment. - (a) Any recruitment activities, including the prohibited
practices enumerated under Article 34 of this Code, to be undertaken by non-licensees
or non-holders of authority, shall be deemed illegal and punishable under Article 39 of
this Code. The Department of Labor and Employment or any law enforcement officer
may initiate complaints under this Article.
(b) Illegal recruitment when committed by a syndicate or in large scale shall be
considered an offense involving economic sabotage and shall be penalized in
accordance with Article 39 hereof. Illegal recruitment is deemed committed by a
syndicate if carried out by a group of three (3) or more persons conspiring and/or
confederating with one another in carrying out any unlawful or illegal transaction,
enterprise or scheme defined under the first paragraph hereof. Illegal recruitment is
deemed committed in large scale if committed against three (3) or more persons
individually or as a group.

(c) The Secretary of Labor and Employment or his duly authorized representatives shall
have the power to cause the arrest and detention of such non-licensee or non-holder of
authority if after investigation it is determined that his activities constitute a danger to
national security and public order or will lead to further exploitation of job-seekers. The
Secretary shall order the search of the office or premises and seizure of documents,
paraphernalia, properties and other implements used in illegal recruitment activities and
the closure of companies, establishments and entities found to be engaged in the
recruitment of workers for overseas employment, without having been licensed or
authorized to do so.

ART. 39. Penalties. - (a) The penalty of life imprisonment and a fine of One Hundred
Thousand Pesos (P1000,000.00) shall be imposed if illegal recruitment constitutes
economic sabotage as defined herein;

(b) Any licensee or holder of authority found violating or causing another to violate any
provision of this Title or its implementing rules and regulations shall, upon conviction
thereof, suffer the penalty of imprisonment of not less than two years nor more than five
years or a fine of not less than P10,000 nor more than P50,000, or both such
imprisonment and fine, at the discretion of the court;

(c) Any person who is neither a licensee nor a holder of authority under this Title found
violating any provision thereof or its implementing rules and regulations shall, upon
conviction thereof, suffer the penalty of imprisonment of not less than four years nor
more than eight years or a fine of not less than P20,000 nor more than P100,000 or both
such imprisonment and fine, at the discretion of the court;

(d) If the offender is a corporation, partnership, association or entity, the penalty shall be
imposed upon the officer or officers of the corporation, partnership, association or entity
responsible for violation; and if such officer is an alien, he shall, in addition to the
penalties herein prescribed, be deported without further proceedings;

(e) In every case, conviction shall cause and carry the automatic revocation of the
license or authority and all the permits and privileges granted to such person or entity
under this Title, and the forfeiture of the cash and surety bonds in favor of the Overseas
Employment Development Board or the National Seamen Board, as the case may be,
both of which are authorized to use the same exclusively to promote their objectives.