Guidelines on Job Order and Contract of Service Workers for LGUs Philippines

I. Overview and policy intent

Local Government Units (LGUs) may engage additional manpower through Job Order (JO) or Contract of Service (COS) arrangements to meet temporary, intermittent, or highly specialized needs not adequately covered by existing plantilla positions. These mechanisms are exceptions—not substitutes—to regular staffing and must not be used to defeat the constitutional and statutory policies on merit selection, security of tenure, and equal protection for government personnel.

At their core:

  • JO typically covers short-term, piecework or time-bound tasks where compensation is tied to days worked or deliverables (e.g., clean-up drives, clerical backlogs, survey encoding).
  • COS is a civil contract for services with specified outputs or professional/technical expertise, often paid on a lump-sum or milestone basis.

Neither arrangement creates an employer–employee relationship with the government for civil service purposes, and workers do not acquire civil service status by reason of such engagement.

II. Legal bases and general rules

  1. 1987 Constitution (Art. IX-B) – Merit-based public employment and security of tenure apply to positions in the civil service, i.e., plantilla posts filled through appointment.
  2. Administrative and audit issuances (e.g., inter-agency joint circulars of the CSC, DBM, and COA; COA rules on compensation and disbursements) recognize JO/COS as non-plantilla, non-civil service engagements, subject to audit.
  3. Local Government Code of 1991 (RA 7160) – Vests LGUs with authority over local organization and budgeting, subject to national standards and audit rules.
  4. Government Auditing Code & COA regulations – Require lawful purpose, sufficient appropriation, and proper documentation for payments to JO/COS.
  5. Labor Code (as amended) – Generally does not govern JO/COS with government where there is no employer–employee relationship; however, general labor standards (e.g., OSH where applicable), and tax/social insurance laws still apply in certain respects.
  6. National procurement and contracting rules – COS with firms (not individuals) for services may implicate public procurement rules; COS with individuals is generally treated as a civil contract outside plantilla appointment, but LGUs must observe principles of transparency, competition (where applicable), and value for money.

Key principle: JO/COS must not be used to fill regular, necessary, and permanent functions of government on a continuing basis. Where the work is permanent and necessary, create and fill a plantilla item.

III. Definitions and distinctions

  • Plantilla/regular position: A budgeted position in the LGU’s staffing pattern filled by appointment subject to CSC rules. Entitles the appointee to civil service benefits and security of tenure.

  • Job Order (JO):

    • Nature: Short-term engagement for manual or clerical tasks or time-bound projects.
    • Compensation: Usually daily wage or per-output rate; paid for actual days or outputs.
    • Funding: Charged to MOOE (not Personnel Services), unless specific budgeting guidelines provide otherwise.
    • Status: No civil service appointment; no employer–employee relationship for CSC purposes.

  • Contract of Service (COS):

    • Nature: Professional/technical or specialized services with defined deliverables and limited duration; may be individual or firm-based.
    • Compensation: Lump-sum or per milestone; reflects expertise and scope.
    • Funding: Typically MOOE.
    • Status: Civil contract, not an appointment; no civil service status.

Practical tests used by auditors and HR:

  • Are the duties core and continuing? (If yes, use plantilla.)
  • Is compensation time-keeping based vs deliverables-based?
  • Is there line supervision akin to employees (e.g., fixed daily schedule, leave approval)? Excessive control suggests misclassification.

IV. Scope of allowable work

Permissible under JO/COS

  • Backlog reduction or surge needs (e.g., tax mapping catch-up, social program payouts, elections-related assistance).
  • Projects with defined start/end (infrastructure support, health missions, digitization).
  • Specialized expertise not available in plantilla (e.g., IT security review, legal research for a specific case, urban planning advisory).

Prohibited or disfavored

  • Filling permanent, necessary functions on a continuous basis (frontline licensing, routine treasury cashiering, permanent health staff).
  • Circumventing hiring freezes, qualification standards, or salary standardization.
  • Granting benefits reserved for regular personnel (e.g., step increments, leave credits under civil service rules) by mere contract label.

V. Engagement authority and documentation

A. Authority

  • The Local Chief Executive (LCE) or authorized official may enter into JO/COS consistent with the Annual/Supplemental Budget, Annual Procurement Plan (if applicable), and Personal Services/MOOE caps.

B. Minimum documents

  1. Request/Justification stating:

    • Necessity, scope, and duration (time-bound).
    • Why plantilla staff cannot perform the work.

  2. Terms of Reference (TOR):

    • Objectives, deliverables, timelines, location, required qualifications, reporting lines, and acceptance criteria.

  3. Selection records:

    • Mode of sourcing, evaluation notes, and conflict-of-interest clearance.

  4. Contract instrument (JO or COS):

    • Parties, term (with start/end dates), scope of work, outputs, schedule, compensation, taxes, and grounds for termination.

  5. Budget certification:

    • Availability of funds and proper uACS (object of expenditure) coding.

  6. Performance/acceptance reports and DVs/ORs supporting payment.

  7. If firm-based COS: applicable procurement and post-qualification records.

VI. Compensation, benefits, and statutory deductions

  1. No civil service benefits: JO/COS are not entitled to step increments, PERA, mid-year/Year-end bonuses under Salary Standardization, leave credits under the Civil Service leave law, or Magna Carta benefits reserved for plantilla positions—unless a specific statute extends them to non-plantilla workers (rare).

  2. Rates:

    • Must be reasonable, market-consistent, and commensurate with qualifications and outputs.
    • For JO (daily): a rate not lower than relevant regional wage considerations is prudent policy, subject to budget and legal limits.
    • For COS (lump-sum): tie amounts to deliverables with clear acceptance criteria.

  3. Funding source: Generally MOOE; avoid charging to PS to remain consistent with the non-plantilla nature of the engagement.

  4. Taxes:

    • Withholding tax on professional/compensation income applies to individuals; firms follow standard withholding for services.
    • Workers must file income tax returns as applicable.

  5. Social insurance:

    • JO/COS are not covered by GSIS as government employees.
    • Encourage/require SSS, PhilHealth, and Pag-IBIG coverage as self-employed/voluntary (or through the contractor in firm-based COS). Contracts may stipulate proof of membership and updated contributions as a pre-condition to payment.

  6. Other allowances:

    • Permissible only if expressly provided in the contract and not equivalent to civil service benefits reserved to plantilla personnel. Avoid labels that mimic permanent benefits.

VII. Hours of work, supervision, and performance management

  • JO: May observe duty schedules aligned with project needs, but avoid treating them indistinguishably from regular staff (e.g., assigning permanent shifts indefinitely).
  • COS: Emphasize outputs over time-keeping. If the arrangement requires fixed daily reporting and line-by-line supervision, re-examine classification.
  • Leave: No civil service leave credits. Absences affect deliverables or days worked per the contract.
  • Performance: Use deliverable checklists, acceptance certificates, and milestone reports as bases for payment.

VIII. Duration, renewal, and phase-out

  • Short, definite terms (e.g., up to one year, aligned to project availability) are standard.
  • Automatic renewal or rolling contracts for the same permanent functions are audit red flags.
  • LGUs should review long-running JO/COS roles and, where functions are continuing and necessary, create plantilla items and fill them via CSC-compliant appointment.

IX. Procurement interface

  • COS with firms for services (e.g., janitorial/security via an agency, systems development by an IT firm) generally follows government procurement principles (annual procurement plan, appropriate modality, contract management).
  • COS with individuals is a civil contract, not a civil service appointment. Even when procurement law does not strictly require competitive bidding for individual expertise, LGUs should adopt transparent selection (public calls for consultants, comparative proposals) to ensure best value and withstand audit.

X. Accounting, budgeting, and audit trail

  • Charge expenses to proper object codes under MOOE.
  • Maintain complete supporting documents: TOR, contract, proof of service (timesheets for JO; outputs/acceptance for COS), billing statement/OR, tax and social insurance proofs where required, and inspection/acceptance reports.
  • Audit focuses on: (1) necessity and legality, (2) reasonableness of rates, (3) misclassification (i.e., JO/COS doing regular functions), and (4) proper documentation.

XI. Rights, protections, and limitations of JO/COS workers

  • No security of tenure under civil service rules; contracts may be pre-terminated per agreed grounds (e.g., non-performance, breach, or project discontinuance) subject to due notice and opportunity to be heard consistent with contract and basic due process.
  • Occupational Safety and Health (OSH): LGUs must provide a safe and healthy work environment for all persons working in LGU premises or project sites, including JO/COS.
  • Data privacy: Where JO/COS handle personal data, LGUs must ensure Data Sharing/Processing Agreements, access controls, and confidentiality clauses compliant with the Data Privacy Act.
  • Grievance handling: Use contractual dispute mechanisms; civil service grievance procedures apply to plantilla employees, but LGUs should provide an administrative channel for JO/COS concerns to prevent disputes from escalating.

XII. Model clause checklist (for JO/COS contracts)

Essential clauses

  1. Parties and capacity (LGU represented by the LCE; contractor/individual details).
  2. Scope of work / TOR attached and incorporated.
  3. Term and effectivity (start/end dates; no automatic regularization).
  4. Compensation and payment terms (rate or lump-sum; schedule; taxes; documentary requirements).
  5. Deliverables and acceptance (measurable outputs, inspection, acceptance certificate).
  6. Performance standards (KPIs, timelines, reporting).
  7. Confidentiality & data protection (if handling personal/sensitive data).
  8. Conflict of interest and non-assignment.
  9. Ownership of outputs/intellectual property (default to LGU ownership).
  10. Compliance with laws (taxes, SSS/PhilHealth/Pag-IBIG membership; OSH).
  11. Grounds and procedure for termination (notice, opportunity to explain, liquidation of advances).
  12. Liquidated damages/penalties for delay or substandard work (for COS).
  13. Dispute resolution (venue, governing law).
  14. No employer–employee relationship statement and no civil service benefits disclaimer.

XIII. Red flags and common audit findings

  • Using JO/COS to staff permanent frontline functions year-round.
  • Paying JO/COS from Personnel Services or granting employee-exclusive benefits (e.g., step increments, paid leave under civil service rules, bonuses reserved by statute for plantilla).
  • Vague TOR with no clear outputs or acceptance process; paying full amounts without deliverable evidence.
  • Rates lacking basis (no market survey, wage board reference, or comparative canvass).
  • Overly employee-like control (bundy clocks, strict daily schedules, leave approvals) for COS intended to be output-based.
  • Renewals that span many years without reviewing the necessity to regularize the function.

XIV. Practical governance tips for LGUs

  1. Plan staffing annually: Identify continuing needs and propose plantilla creation early in the budget cycle; reserve JO/COS for genuine surge or specialized tasks.
  2. Strengthen TOR quality: Use SMART (Specific, Measurable, Achievable, Relevant, Time-bound) outputs and acceptance criteria.
  3. Reasonable and transparent rates: Maintain market scans/comparative offers; align JO daily rates with regional wage realities while observing legal budget limits.
  4. Keep contracts short and review: Prefer project-bound terms; evaluate whether repeat engagements indicate a regular function.
  5. Document everything: Complete files ease audit and protect both the LGU and the worker.
  6. Provide orientation: Brief JO/COS on scope, standards, and limitations (no civil service benefits, tax responsibilities, OSH rules, and data privacy).
  7. Pathways to regularization: Where functions prove permanent and funding is sustainable, create positions and open them to competitive appointment.

XV. Frequently asked questions

1) Can JO/COS receive the same bonuses as plantilla employees? No. Bonuses and allowances under civil service compensation laws are for employees holding plantilla positions unless a statute expressly extends them to non-plantilla workers.

2) Can a COS individual be required to report 8 a.m.–5 p.m. daily? If the control exercised mirrors that of an employee (fixed hours, daily supervision), reconsider the classification. COS should be output-oriented; otherwise, create/fill a plantilla post or, if truly temporary, consider a JO with appropriate guardrails.

3) May a JO/COS contract run for multiple years? Terms should be time-bound and project-tied. Serial renewals for the same ongoing functions risk audit disallowance and policy violations; evaluate for plantilla creation.

4) Are JO/COS covered by GSIS? No, not as government employees. They should secure SSS, PhilHealth, and Pag-IBIG coverage as self-employed/voluntary or through their agency (for firm-based COS).

5) Who signs the acceptance of deliverables? The end-user/implementing office designated in the TOR issues inspection/acceptance documents that support payment.

XVI. Conclusion

JO and COS give LGUs limited, lawful flexibility to address temporary surges and specialized tasks. Properly designed, documented, and time-bounded engagements protect public funds, program delivery, and worker welfare while preserving the primacy of merit-based regular appointments for permanent functions. The golden rule is simple: use JO/COS for what is truly temporary or specialized; use plantilla items for what is permanent and necessary.

Annex A — Sample outlines

A. TOR Outline (COS)

  1. Background and objectives
  2. Scope and specific tasks
  3. Deliverables and timelines
  4. Required qualifications/experience
  5. Reporting and coordination lines
  6. Acceptance criteria and evaluation metrics
  7. Contract period
  8. Payment schedule and documentary requirements
  9. Confidentiality and data protection
  10. Other terms (IP ownership, conflict of interest, termination)

B. JO Contract Essentials

  • Work items and daily rate
  • Duration and schedule (if any)
  • Output verification/timesheets
  • Taxes and social insurance statements
  • Safety and conduct requirements
  • Termination and penalties for nonperformance

Note: This article provides general governance guidance for LGUs. For specific cases, always read the latest CSC-DBM-COA joint issuances, COA circulars, and DBM budget memoranda, as well as local ordinances and your approved annual budget documents. Where doubt exists, seek a formal opinion from the LGU’s legal office and coordinate with CSC/DBM/COA field offices.

Disclaimer: This content is not legal advice and may involve AI assistance. Information may be inaccurate.

Privacy Policy

Terms of Use

Lawyer Login

 
 
Privacy Policy         Terms of Use         Lawyer Login