Republic of the Philippines
HOUSE OF REPRESENTATIVES

SEVENTEENTH CONGRESS
First Regular Session

— REBISTRATION UNIT
House Bill No. 1288 BiLLS AND INDEX SERVICE

Introduced by Representative Gloria Macapagal-Arroyo

AN ACT ESTABLISHING A PRODUCTIVITY IMPROVEMENT
PROGRAM, REPEALING FOR THE PURPOSE REPUBLIC ACT NO, 6973
OTHERWISE KNOWN AS THE “PRODUCTIVITY INCENTIVES AC’
OF 1990”

EXPLANATORY NOTE

Presently, labor and management relations are characterized as

confrontational when discussing and settling basic and significant issues
affecting wages, benefits and conditions of work. As a result, the productivity
expected both from labor and management suffers thereby lessening their ability
to compete and survive as one entity.

It is ideal as it is realistic that the success of any business enterprise largely

depends on the atmosphere and cooperation of labor with management and vice
versa.

‘This bill, granting productivity incentives to laborers in the private sector,

is a recognition of their indispensable contribution to the success of the business
enterprise. It likewise seeks to promote and provide measures for the mutual
benefit and industrial harmony between labor and management.

Through this legislative initiative, the worker's rights to uplift and

improve their lives as well as the management's rights to a reasonable return on
their investments are satisfied through their cooperative endeavors.

The granting of Productivity Incentive Bonus for labor will not only serve

as additional income but will work as an incentive for greater productivity. This
increased productivity will definitely benefit the business enterprise,

Itis in this light that the approval of this measure is earnestly requested.

REP. GLO: |ACAPAGAL-ARROYO.
Second District, Pampanga


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Republic of the Philippines
HOUSE OF REPRESENTATIVES

SEVENTEENTH CONGRESS
First Regular Session

House Bill No. 1238

Introduced by Representative Gloria Macapagal-Arroyo

AN ACT ESTABLISHING A PRODUCTIVITY IMPROVEMENT
PROGRAM, REPEALING FOR THE PURPOSE REPUBLIC ACT NO. 6971,
OTHERWISE KNOWN AS THE “PRODUCTIVITY INCENTIVES ACT
OF 1990"

Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

SECTION 1, Declaration of Policy. - Itis the declared policy of the State to:
(a) Encourage higher levels of productivity in all industries so that Philippine

products and services can compete in the global economy;

(b) Maintain industrial peace and harmony and promote the principles of partnership
and shared responsibility in the relations between workers and employers, recognizing the
right of labor to its just share in the fruits of production and the right of business enterprises
to reasonable returns on investments for expansion and growth; and

() Provide corresponding incentives to both labor and capital for undertaking
voluntary programs to improve productivity.

SEC.2, Coverage. - This Act shall apply to all business enterprises with or without
existing and duly recognized collective bargaining representatives, It shall cover all private
sector employees and workers regardless of their position, designation or status and
irrespective of the manner by which their wages are paid.

SEC.3, Definition of Terms. - As used in this Act:

(a)Business Enterprise refers to a private industrial, agricultural or agro-industrial
establishment engaged in the production, manufacturing, processing, repacking, or assembly
of goods. It also refers to a service-oriented enterprise;

(b) Productivity Incentives Committee refers to a negotiating body in a business
enterprise composed of representatives of labor and management created to establish a
productivity incentives program, and to settle issues arising from the interpretation or
implementation of the said program;

(c)Productivity Incentives Program refers to a formal agreement voluntarily established
by a productivity incentives committee or to any existing labor management mechanism
containing a productivity incentives program that will promote gainful employment,
improve working relations and conditions, and result in increased productivity and
efficiency, including cost savings; and

(4) Gainsharing refers to a productivity-based incentives pay formulated to
complement the productivity incentives program where workers and employers share in the
positive results of business operations brought about by productivity improvements. The

gainsharing system may take the form of profit sharing or other forms of gainsharing


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mechanisms such as productivity bonus, performance bonus, production bonus, and other
similar schemes,

SEC.4, Advisory on Productivity Incentives Schemes, - ‘The Regional Tripartite
Wages and Productivity Boards (RTWPBs) shall issue an advisory on productivity incentive
schemes based on the guidelines issued by the National Wages and Productivity
Commission (NWPC).

SEC.5. Productivity Incentives Committee. - A business enterprise or its employees,
through their authorized representatives, may initiate the formation of a productivity
incentives committee that shall be composed of an equal number of representatives from the
workers and from the management. Both workers and management shall have equal voting
rights in the committee.

In case there is an existing labor-management mechanism in the enterprise similar to a
productivity incentives committee, the mechanism may suffice: Provided, That its
composition, voting rights, and the manner by which the labor-management mechanism is
created is in accordance with the provisions of this section. The productivity incentives
committee shall establish and implement a productivity incentives program and settle issues
arising from it in accordance with Section 9 of this Act.

At the request of any party to the negotiation, the NWPC or the RTWPBs may provide
the necessary studies, technical information and assistance, and expert advice to enable the
parties to comply with productivity agreements.

In business enterprises with duly recognized collective bargaining representatives, the
representatives of labor shall be those designated by the collective bargaining agent(s) of the
bargaining units(s)

In business enterprises without duly recognized or certified labor organizations, the
representatives of labor shall be elected by at least a majority of all rank-and-file employees
who have rendered at least six (6) months of continuous service.

SEC. 6. Productivity Incentives Program. - The productivity incentives program,
duly ratified by the employees, shall contain, among, others, provisions for measuring
productivity and efficiency improvements, sharing of productivity bonuses, coverage,
percentage sharing, forms of bonus payment, and manner and frequency of distribution, in
accordance with the terms and conditions that may be agreed upon by both labor and
management.

Productivity agreements voluntarily reached by the parties as provided in this Act are
without prejudice to any company policy, contract or collective bargaining agreement (CBA)
providing higher productivity incentives.

SEC. 7. Incentives. - (a) Subject to the provisions of Section 6 of this Act, a busin

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enterprise which adopts a productivity incentives program, duly and mutually agreed upon
by parties to the productivity incentives committee or any labor-management mechanism,
shall be granted a special deduction from the gross income equivalent to fifty percent (50%)
of the total productivity bonuses given to employees under the program over and above the
total allowable ordinary and necessary business deductions for said bonuses under the

National Internal Revenue Code of 1997, as amended.


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(b) Grants for manpower training and special studies given to rank-and-file
employees, pursuant to a skills development program prepared by the productivity
incentives committee under the productivity incentives program, shall also entitle the
business enterprise to a special deduction from gross income equivalent to fifty percent
(60%) of the total grants over and above the allowable ordinary and necessary business
deductions under the National Internal Revenue Code of 1997, as amended.

(©) The special deductions from gross income provided for herein shall be allowed
starting the next taxable year after the effectivity of this Act.

(a) Priority training programs and services from the Department of Labor and
Employment (DOLE) and other partner government agencies shall be given to business
establishments adopting productivity incentives programs.

SEC.8. Notification. ~ A business enterprise which adopts a productivity incentive
program shall submit copies of the same to the appropriate RTWPB and to the Bureau of
Internal Revenue (BIR) for their information and records,

SEC. 9, Issues and Grievances. - Whenever issues, grievances, or other matters arise
from the interpretation or implementation of the productivity incentives program, the
productivity incentives committee shall meet to resolve the issue within fifteen (15) days
from receipt of a formal complaint. The parties shall agree on whether or not to suspend the
implementation of the productivity incentives program pending the resolution of the issue:

Provided, That the business enterpi

shall not be deemed to have forfeited any tax
incentives accrued prior to the date of occurrence of such issue or grievance, and the workers
shall not be required to reimburse the productivity bonuses already granted to them under
the productivity incentives program. Likewise, bonuses that have already accrued before
the issue or grievance shall be paid to the workers within six (6) months from their accrual.
Any issue which remains unresolved within thirty (30) days from the time of its submission
to the productivity incentives committee shall be submitted for voluntary arbitration in line
with the pertinent provisions of the Labor Code, as amended.

SEC.10.  Non-diminution of Benefits. - Nothing in this Act shall be construed to
diminish or reduce any benefits and other privileges enjoyed by the workers under existing
laws, decrees, executive orders, company policy or practice, or any agreement or contract
between the employer and employees.

SEC.11. Implementing Rules and Regulations. - The Secretary of Labor and
Employment and the Secretary of Finance, in consultation with the NWPC, the National
Conciliation and Mediation Board (NCMB), the BIR, the Center for Industrial
Competitiveness (CIC), the Technical Education and Skills Development Authority (TESDA),
labor organizations and employer organizations, shall jointly promulgate and issue within
six (6) months from the effectivity of this Act such rules and regulations as are necessary to
carry out the provisions of this Act.

The DOLE, the Department of Trade and Industry (DTI), and the designated national
productivity organization in the Philippines shall conduct an extensive public information

campaign to promote the adoption of productivity incentives programs at the workplace.


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SEC.12,  Separability Clause. - If any provision of this Act is declared

unconstitutional, the same shall not affect the validity and effectivity of the other provisions
hereof.

SEC.13. Repealing Clause. - Republic Act No, 6971, otherwise known as the
“Productivity Incentives Act of 1990", is hereby repealed. All laws, decrees, executive
orders, issuances, rules and regulations or parts thereof inconsistent with the provisions of
this Act are hereby repealed or modified accordingly.

SEC. 14. Effectivity. - This Act shall take effect fifteen (15) days after its publication
in the Official Gazette or in a newspaper of general circulation.

Approved,