On 13 June 2017, the Department of Labor and Employment (DOLE) issued Department Circular (DC) No. 01 to clarify the applicability of Department Order (DO) No. 174, series of 2017 which regulates contracting and subcontracting agreements.
The DOLE clarified that DO No. 174 only applies to trilateral relationships between the principal, subcontractor, and the employee which characterize contracting or subcontracting arrangements. DO No. 174 does not cover information technology-enabled services involving an entire or specific business process such as Business Process Outsourcing (BPO), Legal Process Outsourcing (LPO), and other similar services. This is a reiteration of the previously issued DC No. 01, series of 2012 which excluded such services from the coverage of DO No. 18-A, the predecessor of DO No. 174.
DO No. 174 is also not applicable to contracting or subcontracting arrangements in the construction industry which fall under the licensing coverage of the Philippine Contractors Accreditation Board (PCAB). The said construction industry arrangements shall be governed by DO No. 19, series of 1993 (Guidelines Governing the Employment of Workers in the Construction Industry), DO No. 13, series of 1998 (Guidelines Governing the Occupational Safety and Health in the Construction Order), and the DOLE-DPWH-DILG-DTI and PCAB Memorandum of Agreement-Joint Administrative Order No. 1, series of 2011.
Private Security Agencies are covered by DO No. 150, series of 2016 (Revised Guidelines Governing the Employment and Working Conditions of Security Guards and other Private Security Personnel in the Private Security Industry). However, the registration requirements under DO No. 174 should still be followed by Private Security Agencies.
Finally, it was clarified that DO No. 174 does not cover contractual relationships such as contracts of sale, contracts of lease, contracts of carriage, contracts of growing, toll manufacturing contracts, contracts of management, operation and maintenance, contracts, and other similar contracts governed by the Civil Code and other laws. In the same vein, DO No. 174 does not cover the contracting out of a job or work to a professional or individual with unique skills and talents who performs the work for the principal.
The full text of Department Circular No. 01-2017 can be viewed at: