Revisiting the Labor Market Test

Napoleon L. Gonzales III

It has always been the policy of the Philippines to prioritize the welfare of Filipino workers in the country. Following the mandate of the Labor Code of the Philippines, employers may only engage the services of a non-resident alien upon a determination that there is no Filipino who is competent, able, and willing to perform the services for which the foreign national is desired. This method of analysis, also called the “Labor Market Test”, is utilized by the Department of Labor and Employment (DOLE) whenever foreign nationals intend to apply for an Alien Employment Permit (AEP). The AEP is a permit that is issued by the DOLE to foreign nationals who are working in the Philippines under an employment arrangement with a local company.

DOLE Department Order (D.O.) No. 221, series of 2021, or the Revised Rules and Regulations for the Issuance of Employment Permits to Foreign Nationals (the “New AEP Rules”), which took effect on 6 May 2021, aims to promote the preferential use of Filipino labor, afford heightened protection to Filipino nationals, and safeguard their interests by regulating the employment of foreign nationals in the Philippines.

Prior to the effectivity of D.O. No. 221-21, the Labor Market Test was satisfied once the DOLE has published/posted the AEP application in a newspaper of general circulation, the DOLE website, and the Philippine Employment Services Office job boards. The notice had to indicate that any qualified Filipino national may file an objection at the DOLE Regional Office in order to contest the foreign national’s AEP application.

Under the New AEP Rules, however, employers are now required to publish the job vacancy that is intended for the foreign national at least 15 calendar days prior to filing the AEP application. The employer’s publication of the job vacancy is in addition to the Labor Market Test that is conducted by the DOLE once the AEP application is filed, and was imposed to guarantee that priority is given to Filipino nationals in terms of seeking opportunities for work. This is similar to the practice of companies that advertise their job vacancies in order to inform the public, especially jobseekers, that they are in need of manpower for specific positions. While the DOLE may utilize other forms of quad media (i.e., print, broadcast, support communications, and social media) in conducting the Labor Market Test, employers should cause the required publication only in a newspaper of general circulation. Thereafter, a notarized affidavit stating that no applications were received, or that no Filipino applicant was considered for the position, is required to be attached to the AEP application, along with other documentary requirements.

Employers who intend to apply for the renewal of their foreign employees’ AEPs are not covered by the new publication requirement. However, the New AEP Rules provide that foreign nationals who were assigned an additional position during the validity of their current AEPs should file a new AEP application within 15 working days from their respective dates of appointment. The additional position shall require a new AEP application and should be published in a newspaper of general circulation. The rationale behind this requirement is that the foreign national’s current AEP is only valid for the position for which it was previously issued.

Another significant change brought about by the New AEP Rules is the period to file the AEP application. Previously, AEP applications could be filed, without penalty, within 15 working days from the signing of the employment contract or appointment. Under the New AEP Rules, all applications for the issuance of AEPs shall now be filed within 10 working days after the foreign national signs his contract or after the commencement of his employment. The DOLE shall impose a fine of Php 10,000.00 against the employer, and another Php 10,000.00 against the foreign national for every year or a fraction thereof, for filing the AEP application beyond the prescribed period.

The New AEP Rules also sanction foreign nationals who are found to be working without a valid AEP, together with their employers, by barring them from applying for an AEP for five (5) years. Those who are found to possess fraudulent AEPs, including their employers, shall be indefinitely barred from filing an AEP application, and will be made to settle the applicable penalties.

Notably, the DOLE has also removed foreign consultants who do not have employers in the Philippines from the list of foreign nationals who are excluded from securing an AEP.

Under the New AEP Rules, it appears that foreign consultants who shall work for a local employer for a period of more than six (6) months are now required to apply for an AEP. This is inconsistent with the fact that AEPs are only issued to foreign nationals who are working under an employment arrangement with a Philippine-based company, and may potentially be an additional variable which employers may need to consider.

Further, to ensure that those who have been issued with AEPs are still in the Philippines and are working for their respective employers, the DOLE now requires employers to submit a quarterly report or an updated list of foreign nationals it has employed within 30 days from the report’s reference period, as well as any changes in the employer’s information such as its name, address, or contact details.

The objective of the New AEP Rules is to strengthen the Labor Market Test and ultimately provide the general public with more comprehensive guidelines on regulating the employment of foreign nationals in the country. Towards this end, we may only hope that the DOLE systematically implements the New AEP Rules and strikes a healthy balance between the protection of labor and ease of doing business.

The views and opinions expressed in this article are those of the author. This article is for general information and educational purposes, and not offered as, and does not constitute, legal advice or legal opinion.

Napoleon L. Gonzales III is a Senior Associate of the Immigration Department of the Angara Abello Concepcion Regala & Cruz Law Offices (ACCRALAW).

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