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There are many types of illegal employment agencies, the most notorious of which is the illegal recruiter for jobs abroad. But there is another type that is astonishingly widespread and yet is apparently left unchecked by authorities: the cabo agency.

A cabo agency is an employment agency that practices labor-only contracting, a type of job recruitment and placement that is prohibited primarily because it circumvents the laws on the protection of labor.

Labor-only contracting applies when the contractor or subcontractor merely recruits and supplies workers to perform a job for a principal. This, for instance, is the case when a contractor, say ABC Manpower Agency, supplies delivery riders to XYZ Fastfood Company but does not exercise control over the performance of the work of the riders and does not have substantial capital or investment in the form of motorcycles, among others, to have the job actually performed under its own account and responsibility.

THE CABO SYSTEM

In other words, ABC Manpower is merely a “revolving door.” It recruits as many riders as it can and then quickly turns them over to XYZ Fastfood, which in turn hires the riders as “casual employees” and uses their services for a short and specified period only, usually around four months per contract. And at the end of this period, XYZ will either renew the contracts for another three to four months or so, or—citing “unsatisfactory performance during the probationary period”—will dismiss the riders before their employment becomes regular under the law (that is, six months after date of hiring).

Either way, XYZ avoids having regular employer-employee relations with the riders and avoids the responsibilities that come with it. These responsibilities include granting them fair wages, security of tenure, safe and healthful working conditions, separation benefits, overtime pay, 13th month pay, holiday pay, rest leaves, social security and welfare, and the right to self-organization, collective bargaining, and peaceful concerted action.

SYSTEM DESIGNED FOR PROFITS

This constant hiring and firing may seem tedious, but to some very profit-oriented businesses, a long-term investment in people is considered a waste of time and resources. In the first place, XYZ would rather invest in state-of-the-art ovens, grills, freezers, dining area, drive-through window equipment, and other fast-food must-haves. XYZ’s justification for this choice is that unlike people, these facilities do not form labor unions, never aspire for collective bargaining, never go on maternity leaves, never go on vacation and sick leaves, and can be replaced at any time with newer models without need for severance pay and without worrying about threats of lawsuits on grounds of illegal dismissal.

Finally, XYZ knows that there are millions of desperate job hunters out there who are willing to take any job, no matter how low the pay and how bad the working conditions. Indeed, to replace dismissed riders, XYZ simply knocks on ABC’s revolving door to get a fresh batch of riders.

ORIGINS OF THE CABO SYSTEM

This system is called cabo because it arose out of Philippine shipping ports, where each gang of cargo handlers was headed by a cabo (foreman) who contracted to perform the loading and unloading of goods directly with the vessel owner. The cabo made money by pocketing the difference between what the vessel owner paid him and what he paid to his cargo handlers.

Under present laws, a cabo refers to a person or group of persons or to a labor group that, in the guise of a labor organization, supplies workers to an employer with or without any monetary or other consideration, and whether in the capacity of an agent of the employer or as an ostensible independent contractor.

In our current economy, the cabo system is no longer confined to cargo handlers, messengers, janitors, riders, security guards, and other blue-collar workers. It has invaded even the sphere of white-collar jobs such as IT specialists, accountants, and even lawyers.

The strongest but not the sole indicator of labor-only contracting is the worker’s being required to sign (as a precondition to employment or continued employment) an antedated resignation letter, a blank payroll, a waiver of labor standards including minimum wages and social or welfare benefits, or a quitclaim releasing the principal (for example, XYZ Fastfood) and the contractor (for example, ABC Manpower) from any liability as to payment of future claims.

Despite a worker’s acceptance of these conditions, however, XYZ and other hiring companies can still be held directly liable under the law to pay the claims of their agency-supplied workers if it is subsequently determined that they had engaged the workers through labor-only contracting.