A tech company in the Philippines faced a pressing issue related to its contingent workforce. They had to quickly reclassify temporary workers to avoid government fines and protect the company’s reputation.
By swiftly reclassifying workers, we helped our client comply with local labour laws and avoid $500,000 in fees.
According to the Department of Labour and Employment (DOLE) in the Philippines, companies must decide by month five if a temporary worker will become a permanent employee or be offboarded. Our client had many workers on contracts longer than five months. Their business was therefore at the risk of fines and negative publicity.
Based on this critical client need, we promptly reclassified and regularised all “non-compliant” contractors. We had to work fast and 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.
We took immediate action, reviewing each worker’s contract length and identifying those exceeding six months. To manage the regularisation issue, we shifted from hiring through agency suppliers to using Statements of Work (SOW).
Supplier partners now selected and managed the workers, in line with employment regulations. We cut the supplier base in half. Three local suppliers with on-site resources handled and classified the workers properly. As a result, we optimised the supplier base and ensured compliance with local laws. The suppliers managed the workers and updated their status in our system, preserving important historical data.
Additionally, our client wanted to retain the benefits of approvals, timesheets, and other features in the Vendor Management System (VMS). Our local team set up a new workflow to meet these needs, accurately tracking worker tenure and headcount.
In just three weeks, we reclassified over 800 workers, saving our client from potential fines and bad press. Without this effort, our client would have to pay fines and a supplier conversion fee, estimated at US $700 per worker. Conversion fees would have amounted to over half a million dollars.
By avoiding these penalties, we protected our client’s reputation. They can continue to attract and retain top talent without the fear of negative publicity.
