Republic of the Philippines
HOUSE OF REPRESENTATIVES
(Quezon City

First Regular Session
‘Thirteenth Congress

nouse sino. 4251

Introduced by BENIGNO S. AQUINO III

Explanatory Note

“The aim and the reason and, therefore, the justification of labor laws is social
justice,” thus said by a legal luminary of labor and social legislation.

This principle was given paramount significance by no less than the 1987
Constitution which commands the State in the Declaration of State Policies to “promote a
just and dynamic social order that will ensure the prosperity and independence of the
nation and free the people from poverty through policies that provide adequate social
services, promote full employment, a rising standard of living and an improved quality of
life for all” (Article H, Sec. 9) and to “promote social justice in all phases of national
development” (Article Il, Sec. 10).

And also, when it affirmed that labor is “a primary social and economic force” and
‘mandated the State to “ promote the welfare and protect the rights of workers”.

This landmark initiative which seeks to graht productivity incentive bonus to
workers in the private sector is in accordance with these principles.

The rationale is based on the very plight of the Filipino worker and the dearth of
laws that can effectively implement the many noble pro-labor provisions of the 1987
Constitution. It is a fact that the essential recognition and promotion of their rights had
Jong been in place and the mantle of protection had also been invariably set.

Again, the bases are the social justice provisions of the 1987 Constitution as
aforementioned and its most related provision is paragraph 4, Section 3, Article XIII:

“The State shall regulate the relations between workers and employers, recognizing
{the right of labor to its just share in the fruits of production and the right of enterprises
to reasonable retums on investments, and to its expansion of its growth”. (emphasis
supplied)

It must be pointed out that Constitution requires the State to implement a living
wage which is defined as one that ensures a “decent standard of human existence
beyond mere subsistence level” in contrast to a minimum wage which is the basic pay or
daily wage plus cost of living allowance received by a worker, not falling under the
exemptions as provided under the Wage Rationalization Act.


This legislative initiative, thus, seeks to help the workers advance their rights to
uplift and improve their lives through policies that effectively contribute to greater
economic gains, protection of their rights and improvement of their welfare, as we keep
alive in our collective struggle all the other laudable causes for their upliftment.

‘This is an affirmation of our duty and commitment as members of Congress to tilt
the balance of the scales in favor of labor towards their just share in the fruits of
production especially at these times when the country is battered by a worsening
economic recession, staggering foreign debt and a ballooning budget deficit.

And it does not violate nor affect the right of employers to a reasonable return on

their investments and to the expansion and growth of their enterprises. Exemptions from
the grant are also provided where it is also just under such circumstances.

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

Las


Republic of the Philippines
HOUSE OF REPRESENTATIVES

‘Quezon City

First Regular Session
‘Thirteenth Congress

HOUSE BILL NO. 42 5 1

Introduced by BENIGNO S. AQUINO IIT

AN ACT

GRANTING AN ANNUAL PRODUCTIVITY INCENTIVES TO ALL WORKERS IN
THE PRIVATE SECTOR, ESTABLISHING MECHANISMS FOR ITS
IMPLEMENTATION, AND FOR OTHER PURPOSES

Beit acted by the Senate and House of Representatives of the Philippines in Congr bled

SECTION 1. Title—This Act shall be known as the "Workers Productivity
Incentives Act of 2005."

SEC. 2. Statement of Policy—It is hereby declared the policy of the State to
continuously empower Filipino workers in their continuing struggle to uplift and improve
their lives through policies that effectively contribute to greater economic gains,
protection of their rights and advancement of their welfare. The State shall, therefore,
promote the rights of workers in their just and fair share in the profits from the
production of goods and services in all endeavors where their labors and expertise are
employed by virtue of a management-labor/employer-employee relation.

SEC. 3. Extent of Grant.—All workers in the private sector not excluded by this Act
shall be granted an annual productivity incentive bonus which shall be equivalent to not
less than ten percent (10%) of net profits before taxes gained by any company or business
establishment for every fiscal year that engages their labor, skills and expertise for any
period or duration and regardless of the terms of the work contract and tenure of the
worker or employee. The amount of this incentive shall be determined by the external
auditors enlisted by the company for such purpose to be approved by the Department of
Labor and Employment (DOLE).

SEC. 4. Non-diminution of the grant.—The productivity incentive bonus shall not
suffer any diminution nor deduction from any act of the employer, the company’s labor
union nor through the State's power of taxation, except by lawful garnishment and any
other legal court order or process of the courts. It cannot be transferred or assigned to any
other individual or entity, except the legal heirs and representatives of the worker.

SEC. 5. Unlawful interference or restraint.—It shall be unlawful for an employer or
labor union o for any government official or employee and any other business enterprise
or entity to interfere with, restrain gr coerce emtployees in the right to receive this grant
and to require as a condition of employment that the employee shall not collect this grant
in his favor.


SEC. 6. Exemptions.—The provisions of this Act shall not apply to government
employees, including those in government-owned and controlled corporations;
managerial employees; house helpers; non-resident aliens; project employees; seasonal
workers; piece-rate/piecework, pakiaw and other non-time workers; workers employed
by retail service establishments employing not more than ten (10) workers; employees or
workers in companies or enterprises undergoing receivership/liquidation; and those
employed in new business enterprises only for a period of one (1) year from
commencement of business operations, Applications for exemption strictly in accordance
with those exempted employers, enterprises or establishments herein stated shall be duly
filed with the Office of the Regional Director of the Department of Labor and Employment
(DOLE) whose decision can be appealed to the DOLE Secretary within ten (10) days from
its promulgation,

SEC. 7. Compliance Order.— All Regional Directors of the DOLE shall issue an
annual compliance order for the payment of the grant as provided for in this Act. The
order shall, among other things, direct the employer or manager to pay the amount due to
each worker or employee, fifteen (15) days after the end of every fiscal year and shall also
include the computation on which the order was based.

SEC. 8, Penalties.—Any person, corporation, trust, firm, partnership, association or
entity which refuses or fails to pay the herein prescribed grant in accordance with this Act
shall be punished by a fine of at least thrice (3x) the accrued grant for every affected
worker plus moral damages not exceeding thirty thousand pesos (30,000.00) for each
affected worker and the costs of litigation including attorney's fees.

If the violation is committed by a corporation, trust or firm, partnership, association
or any other entity, the penalty of imprisonmertt shall be imposed on the entity’s
responsible officers, including, but not limited to, the president, vice-president, chief
executive officer, general manager, managing director or partner. If the violation is
‘committed by a foreign individual, he/she shall be summarily deported.under applicable
laws after complete satisfaction of his adjudged liabilities.

In cases where a fine is decreed by the National Labor Relations Commission
(NLRC) against person/s who violated the provisions of this Act and cannot be
immediately satisfied because of the unavailability or inadequacy of funds, the assets of
the owner, president or manager of the corporation or any other entity, or fractions
thereof, either movable and immovable property, estimated to be capable of fully
satisfying the imposed fines shall be the subject of a summary forfeiture proceedings to be
litigated by the same body which imposed the said penalty.

SEC. 9. Saving clause—The provisions of this Act shall not prejudice existing
productivity agreements lawfully entered into by labor and management.

SEC. 10. Separability Clause.—If any provision of this Act shall be declared
unconstitutional, any other provision not affected thereby shall remain in full force and
effect



SEC. 11. Repealing Clause.— All laws, decrees, orders, rules and regulations, or
parts thereof inconsistent with this Act are hereby repealed or amended accordingly.

SEC. 12. Effectivity.—This Act shall take effect fifteen (15) days after its publication
in at least two (2) newspapers of general circulation.

Approved,