Chapter 7 - Understanding the Legal Codes

Employment of Foreigners | Employing Filipino Workers | Recorking the Genie
Labor Disputes | Labor-Only Contracting

The Labor Code of the Philippines, or Presidential Decree No. 442 as amended, is the prime law that protects the welfare of Filipino workers, promotes full employment and maintains industrial peace by regulating relations between employers and employees. It is one of the most important codes in the Philippines for anyone seeking to hire Filipino workers.

Under this law, Filipino workers are granted the rights to self-organization, collective bargaining, security of tenure, and just and humane conditions of work. Many employers however, and especially foreign employers believe the law is slanted so far towards the protection of workers that it acts as a disincentive to expanding local operations by its encouragement of frivolous complaints by employees who are stood down.

This law also regulates the employment of foreigners including the establishment of a registration and/or work permit system and at the same time governs careful selection of Filipino workers for overseas employment in order to protect the good name of the Philippines abroad.

Employment of Foreigners

Foreigners who seek employment with a local or foreign company in the Philippines are required by law to obtain an alien employment permit (AEP), which is issued by the Department of Labor and Employment (DOLE). Normally this will be arranged before you arrive in the Philippines.

The Philippine government requires all foreign nationals - residents, non-residents or refugees - to obtain an AEP, or the equivalent document issued by the regional director of the Department of Labor and Employment (DOLE).

For example, foreigners who wish to work in Subic Freeport will have to secure an AEP from the regional office of DOLE in Central Luzon while those who seek employment at an industrial park in Laguna province will have to apply for AEP with the regional office of DOLE in the Southern Tagalog region.

The AEP may be issued to a non-resident foreigner or to the applicant employer after a determination of the non-availability of a person in the Philippines who is competent, able and willing at the time of application to perform the required services.

In applying for an AEP, foreigners have to identify the particular function that they are expected to perform in a particular company or project. The AEP does not allow a foreigner to transfer to another job or change their employer without the prior approval of the Philippine labor department.

Under the Omnibus Guidelines for the Issuance of Employment Permits to Foreign Nationals, as contained in Department Order No. 12, series of 2001, all foreign nationals are required to obtain an AEP, including those who are allowed to practice their profession in the Philippines by virtue of reciprocity and other international agreements as well as holders of the Special Investors Resident Visa (SIRV), Special Retirees Resident Visa (SRRV), Treaty Traders Visa (9d) or Special Non-Immigrant Visa.

Exempted from the requirement are members of the diplomatic community, foreign government officials accredited by the Philippine government, officers and other staff of international organizations of which the Philippine government is a cooperating member, and their legitimate spouses interested to work in the Philippines.

Also exempted are foreign nationals elected as members of the Governing Board of a corporation in the Philippines as long as they do not occupy any other position and their functions are limited to voting in the affairs of the corporation. Congress reserves the right to promulgate laws or special laws granting exemption to foreign nationals from applying for an AEP.

Foreign nationals are required to file personally their application for an AEP with the regional office of DOLE, which has jurisdiction over the company or place where they intend to work. A checklist of documents that have to be presented is included at the end of this chapter.

The government charges a filing fee of P1,000 (US$19.60) and an annual permit fee of P3,000 (US$59 approx.) for every applicant. Applicants covered by publication are required to pay a publication fee of P4,000 (US$78.5). Publication is required for the application of a foreign national who will occupy a technical, advisory or supervisory position.

Resident foreign nationals are exempted from publication, along with non-resident foreign nationals applying for renewal of AEP. To those covered by publication, the AEP will be granted five days after publication, as long as no one objected to the application within that period.

An AEP issued to a resident foreign national will not be subject for renewal and is valid for one or more positions in different companies, provided they have been identified in the application. However, an applicant is required to report to the issuing regional office of DOLE any subsequent employment or changes in employment status, duration of employment or the identity of the employers.

For a non-resident foreign national, the AEP is valid for only one year, subject for renewal. An application for renewal of the AEP must be filed at least 15 days before its expiration.

Foreigners will be fined P5,000 for working without an AEP for one year or less and P10,000 for working without a permit for more than one year. Those who fail to renew their AEP six months or less after the prescribed period will be fined P5,000 while those who fail to apply for renewal after six months following the permit's expiration will have to pay P10,000.



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