DAVAO CITY -- The Philippines' incoming labor secretary said companies that skirt laws to hire employees on a contractual basis just to cut costs were in danger of being shut down.

Presumptive president Rodrigo Duterte, who will assume office on June 30, has vowed to stop contractualization, more popularly known as "endo," calling it an injustice.

"Under the law mayroon silang administrative liability. Pwedeng i-stop ang operations," Duterte's labor secretary, Silvestro Bello III, told ABS-CBN News.

Bello said companies could hire contractual employees, if they operate on a per-project basis. He cited a shipbuilder in the coastal town of Balamban, Cebu, which has 800 employees, but can take in 10,000 more on a contractual basis depending on demand.

"Kapag natapos ang barko ‘di mo na pwedeng i-absorb…Na-bankrupt naman iyan," he said.

Bello said government should be "stricter" on mall operators, where salespersons are hired then fired by the fifth month to avoid promoting them to regular status by the sixth month as required by law.

"Ang mga operation diyan, sini-circumvent ang contractualization law. After five months, papalitan ka para hindi ka pagkaroon ng security of tenure," he said.

"Bawal yun, May penalty yan, pwede mo-istop ang operation," he said.

Most malls don't hire salespersons directly and instead tap employment agencies to supply their manpower.

Nearly four in 10 employees in the country are non-regular, according to the statistics bureau's Integrated Survey on Labor and Employment in 2014. This means they are deprived of health care and other benefits.

Labor groups have particularly criticized the country's largest mall operator, SM, for contractualization. The company, however, said they hire "for seasons" and denied being engaged in "endo."

The SM Group is owned by the country's richest man, Henry Sy. It operates 57 giant malls in the Philippines and several others in China.

Bello, who was initially eyed as presidential peace adviser, said he would assess the performance of the labor departments' bureaus, particularly the National Labor Relations Commission, which handles disputes.

He also pledged to visit Filipino workers abroad, whose remittances have been credited for spurring domestic consumption.

"Aalamin natin ang katayuan nila, ang sweldo, minamaltrato ba? Minomolestya? Kinakaltasan ba ang sweldo?" he said.