Our tech customer in the Philippines needed to quickly reclassify their contingent workforce to avoid government fines. They also needed to mitigate reputational risk, ensuring compliance with local labour laws.
According to DOLE, the Department of Labour and Employment in the Philippines, companies must decide at month five if a contingent or “project-based” worker will be “regularised” to become a permanent employee from month six or if the worker is to be offboarded. Working with local suppliers, Pontoon regularised over 800 workers in three weeks under a new managed service model. Our solution spared our client from costly conversion fees, prevented any unfavourable press, and safeguarded their reputation.
At first, Pontoon was engaged to run our client’s MSP, including hiring temps or contractors and resource tracking SOWs. Since our client had just gone public with their IPO, we quickly consulted their managing director regarding a possible regularisation issue. Many of their short-term contracts were longer than five months.
Based on this critical client need, Pontoon was asked to promptly help reclassify and regularise all “non-compliant” contractors. We needed to be swift and execute without disrupting business as usual, as our client was at risk of breaches being publicised in local media. If government labour auditors intervened, this could mean heavy fines for non-compliance.
Pontoon took a deep dive into the tenure of each contractor in the programme, identifying all workers on the same contract for longer than six months. Moving away from hiring contractors through agency suppliers, we changed the service model to SOW to help manage the regularisation issue.
Workers were now to be selected and managed by supplier partners, in line with employment regulations. The supplier base was cut in half, as Pontoon handpicked three local suppliers with onsite resources to manage contractors. These suppliers handled assignment changes and accurately updated worker classification status in the VMS, labelling them as employees of the supplier partner. Through this process, Pontoon seamlessly preserved critical historical data.
After manually reclassifying labour, our client expressed an interest in retaining the advantages of approvals, time sheets, and other functionalities within the VMS. To meet client expectations, our in-country team implemented a new workflow. They successfully configured current headcount tracking modules while accurately tracking labour tenure.
We reclassified over 800 contingent workers in three weeks and protected our client from potential government fines and negative press. If regularisations were enforced, our client would be responsible for paying fines and a supplier conversion fee, estimated at US $700 per worker. Conversion fees would have amounted to over half a million dollars.
However, the real value lies in mitigating reputational risk and avoiding negative publicity in local media. By doing so, our client can easily continue attracting and retaining top talent.
