Library of PH Labor Law

SSC/PSA Service Agreements

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1. Concept

Service Agreement – refers to the contract between the principal and the Security Service Contractor / Private Security Agency (SSC/PSA) containing the terms and conditions governing the performance or completion of security service, job, or work being farmed out for a definite or predetermined period. (Section 2[j], D.O. No. 150, Series of 2016)

2. Required stipulations on the Service Agreement

The Service Agreement must conform to the DOLE Standard Computation and Standard Service Agreement as provided under this Guidelines. (Section 4, Ibid.)

The Service Agreement shall stipulate, among others:

1) The specific description of the kind or nature of security job, work, or service being subcontracted;

2) The place of work and terms and conditions governing the contracting arrangement which shall include the agreed amount of the security services to be rendered and the standard administrative fee of not less than twenty percent (20%) of the total contract cost;

3) The basic equipment to be provided by the SSC/PSA which shall be as follows: (a) For every two (2) security guards and other private security personnel, one (1) handgun as prescribed by R.A. 5487; but in no case shall a security guard be posted without a firearm, unless required otherwise by the client; and (b) one (1) handheld radio; Provided that, if the principal requires more than these basic equipment, it shall be shouldered by the principal;

4) An “automatic crediting provision” which shall immediately give effect to the common provision in wage orders that prescribed increases in wage rates and other wage-related benefits of security guards and other private security personnel shall be borne by the principals or clients of the SSC/PSAs and the Service Agreements shall be deemed amended accordingly;

5) Provisions which shall ensure that the principal and the SSC/PSA shall uphold the rights and provide all the benefits of security guards and other private security personnel under the Labor Code, as amended, and other existing laws, and that violation of which will render the service contractor ineligible to participate in any bidding and the principal ineligible to engage the services of such SSC/PSA;

6) A provision on the NFCC of the SSC/PSA, which must be equal to the total contract cost per month, provided that posting of the corresponding bond shall be required only when the NFCC is less than the total contract cost;

7) An undertaking that the SSC/PSA shall directly remit monthly the employers’ share and employees’ contribution to the Social Security System (SSS), Employees’ Compensation Commission (ECC), Philippine Health Insurance Corporation (PhilHealth), and Home Development Mutual Fund (Pag-lBlG); and,

8) An undertaking that the expenses for any training required by the principal or other government instrumentalities, in addition to those required by the PNP, shall be shouldered by the principal. (Section 4, Ibid.)

a. Submission of original copy to DOLE Regional Director

The SSC/PSA and/or the principal shall produce or submit the original copy of the Service Agreement when directed to do so by the [DOLE] Regional Director or his/her duly authorized representative. (Section 4, Ibid.)

b. Duty to produce copy of Service Agreement between the Principal and the Security Service Contractor/Private Security Agency during Assessment

The principal and SSC/PSA shall have the obligation to produce a copy of the Service Agreement in the ordinary course of assessment. The SSC/PSA shall likewise have an obligation to produce a copy of any contract of employment when directed to do so by the DOLE Regional Director or his/her authorized representative. (Section 9.5, Ibid.)

3. Pre-termination of Service Agreement

In case the termination of employment is caused by the pre-termination of the Service Agreement not due to any authorized cause under Article 298 (formerly 283), the right of the security guard and other private security personnel to accrued and unpaid wages and other wage-related benefits, including unremitted legal mandatory contributions such as SSS, PhilHeaIth, Pag-lBlG, and ECC, shall be borne by the party at fault, without prejudice to the solidary liability of the parties to the Service Agreement. (Section 10.1[D}, Ibid.)

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References

DOLE D.O. No. 150, Series of 2016

▪ Jurisprudence or Supreme Court Decisions

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