Employment permit rules overhauled, companies must train local workers

16 Sep 15

PHILIPPINES

IMPACT – HIGH

What is the change? Employment permit rules have been significantly revised and tightened under an order by the Department of Labor and Employment.  

What does the change mean? Companies will be required to train two Filipino employees for each foreign worker in a non-managerial position to transfer skills to the local labor force. In addition, under updated job advertising rules, the department will publish the details – including salary ranges – of all applications for employment permits in the newspaper and on its website for 30 days.

  • Implementation time frame: Sept. 28.
  • Visas/permits affected: Alien Employment Permits (AEPs), 9(g) Work Visas, 47(a)(2) Visas.
  • Who is affected: Companies in the Philippines hiring and recruiting foreign employees in categories that require employment permits. Several exemptions and exclusions have been created.
  • Impact on processing times: The new requirements may lengthen processing times.
  • Business impact: Businesses must take additional steps to comply with the employment permit process and should anticipate the possibility of lengthier processing and greater difficulty in obtaining AEPs.
  • Next steps: Employers should prepare for the new rules and consult with their BAL representative for detailed information on the new procedures, any applicable exclusions, and compliance with the training programs.

Details:

Under the new rules published by the Department of Labor and Employment in August, AEP applications will be filed with the department’s regional office having jurisdiction over the place of work. In cases where the company has two offices, it should be filed in the jurisdiction where the corporate headquarters is located.

Labor Market Test

The applications will be advertised for 30 days in a general-circulation newspaper and on the department’s website. Published information will include the name and address of the employer, the position and a description of the job duties to be performed by the foreign national, the monthly salary range and other benefits of the position. Filipino workers may object to the permit applications, and the department will determine if local workers are available to fill the position.

Understudy program

Companies hiring foreign technical workers in non-managerial/executive positions must submit with their application a program for training two Filipino nationals for every foreign employee and must include the names of the understudies.

Exemptions and Exclusions

Several categories of foreign workers who normally are required to obtain AEPs will be exempt based on reciprocity agreements, treaties and other laws. In addition, some foreign workers will not be required to obtain AEPs, including intra-company transferees and contractual service suppliers in executive, manager or specialist roles who are sent to the Philippines and have been employed in a foreign branch for at least one year.

Foreign board members of Philippine companies are only required to obtain employment permits if they participate in the management or operations of the company in the Philippines.

BAL Analysis: Companies should anticipate a stricter environment for hiring and retaining foreign workers. They must now also plan for additional training programs in connection with the new understudy requirement to transfer skills to the local labor force. The authorities are still working on implementing these new regulations and changes are possible.

This alert has been provided by the BAL Global Practice group and our network provider located in the Philippines. For additional information, please contact your BAL attorney.

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