fis .SC OF REPRESENTATIVES:

Republic of the Philippines RECEIVED
HOUSE OF REPRESENTATIVES — paze 1 JUL 2016
Quezon City, Metro Manila —-

TIME:
SEVENTEENTH CONGRESS} BY:

First Regular Session

REGISTRATION UNIT
BILLS AND INDEX SERVICE

House Bill No, 1357

Introduced by Hon. Karlo A. B. Nograles and Hon. Jericho Jonas B. Nograles

EXPLANATORY NOTE

Republic Act No. 6971 or the “Productivity Incentives Act of 1990” was enacted to
provide incentives to capital to undertake voluntary programs, in cooperation with labor,
that will ensure that workers will have a greater share in the fruits of their labor:

Under the said Act, the creation of labor-management committees is encouraged in
order to establish productivity incentives programs in business enterprises that will promote

gainful employment, improve working conditions, and result in increased productivity,

including cost savings, to be shared with the employees. However, more than ten years into
the implementation of the law, only a handful of business enterprises have adopted the
program due to certain restrictive provisions that make it hard to implement.

This bill addresses such restrictive provisions by repealing Republic Act No. 6971
and introducing a new law more responsive to the situation. Among its key provisions are as
follows:

1. To provide tax incentives to business enterprises that adopt a productivity
incentives program for their employees by granting a special deduction from the

gross income equivalent to fifty per cent (50%) of the total productivity bonuses

ven to the employees under the program over and above the total allowable

ordinary and necessary business deductions for said bonuses:

2. To make available additional special deduction from gross income of business
enterprises equivalent to fifty per cent (50%) of the total grants for manpower
training and special studies to their rank and file employees over and above the
allowable ordinary and necessary business deductions ; and

3. To offer the services of the Department of Labor and Employment (DOLE) and
in giving priority training programs and services to

partner government agencii
businesses adopting productivity incentives programs.



© more participation by business enterprises in productivity incentives
eater share of workers in productivity bonuses, the
arnestly requested

To encou
programs and thereby provide a
immediate passage of this bill is

Qh aw

KARLO A. B. NOGRALES JERICHO  NOGRAL



Republic of the Philippines

HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

First Regular Session

House Bill No. 1357

Introduced by Hon. Karlo A. B. Nograles and Hon. Jericho Jonas B. Nograles

AN AC

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. — It is 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

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

SEt

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

tor 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

(d)Gainsharing refers to a  productivity-based  incentiv.

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

SEC. 4. Advisory on Productivity Incentives Schemes. The Regional Tripartite

'y Boards (RTWPBs) shall issue an advisory on productivity incentive
schemes based on the guidelines issued by the National Wages and Productivity

Commission (NWPC).

SE

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.
ion, the NWPC or the RTWPBs may provide

At the request of any party to the negotia



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 di

ignated 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 business
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 amende

(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
(50%) of the total grants over and above the allowable ordinary and necessary business
deductions under the National Internal Revenue Code of 1997, as amended.

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

(d)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 enterprise 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. Il. 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.

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 efffect fifteen (15) days after its
publication in the Official Gazette or in a newspaper of general circulation.
Approved,