HOUSE OF REPRESENTATIVES
RECEIVED

Republic of the Philippines
HOUSE OF REPRESENTATIVE
Quezon City, Metro Manila

SEVENTEENTH CONGRESS
1st Regular Session

99

House Bill No. 28 REGISTRATION UNIT

BILLS AND INDEX SERVICE

Introduced by Hon. Francis Gerald Aguinaldo Abaya

EXPLANATORY NOTE

This bill aims to strengthen the promotion of productivity incentives and
gainsharing program in the Philippines, thereby amending for the purpose
Republic Act No. 6971, otherwise known as the “Productivity Incentives Act of
1990” by liberalizing specific provisions, providing for other incentives for
employers and employees to establish productivity incentives and gainsharing
program and enabling the Commission to provide the necessary studies,
technical information and assistance, and expert advice in order for the parties
to conclude productivity agreements.

Despite the declaration in R.A. No. 6971, that it is the policy of the State
to encourage higher levels of productivity, maintain industrial peace, and
promote the principle of shared responsibility in employee-employer
relationship, it has been observed that since its effectivity in November 1990,
only eleven (11) companies have applied to avail of the benefits under the Act
and only one (1) firm has met the requirements of the law because of the tight
mandatory requirements on productivity measurement and sharing schemes.
This contravenes the voluntary nature of the law.

The ability of the Philippines to compete in the world market hinges
critically on the ability of its enterprises to produce quality goods and services
in the most efficient and reliable way. To achieve this, it is necessary that firms
become oriented towards increasing the overall productivity and
competitiveness of managers and workers.

The proposed bill introduces an incentive based pay on productivity
improvement and gainsharing in support of wage policies under Republic Act
6727 or the Wage Rationalization Act

The incentive is a form of compensation, on top of the basic salaries and
wages, given to workers based on improvements in productivity and
performance of both the company and its workforce. It allows workers and
management to develop their own productivity incentives program, determine
the sharing scheme, frequency of distribution of bonus and the measurement of
productivity gains.


The creation of a Productivity Committee in the workplace is mandated,
but it also recognizes any labor-management mechanism composed of the
representatives of labor and management created to establish a productivity
incentives and gainsharing program. It also allows labor and management to
decide on the terms and conditions of the productivity incentives and
gainsharing program, and permits the same to be outside the ambit of
collective bargaining agreement.

Further, it entitles business enterprise adopting productivity improvement
and performance incentive program, special deductions from the gross income
up 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 grants under the National Internal Revenue Code,
as amended

For the foregoing reasons, the approval of this bill is earnestly sought.

foes ZA

FRANCIS GERALD AGUINA| A100 BAYA
Representative, FirsD1Strict, Cavite


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH CONGRESS
First Regular Session

House Bill No. 928

Introduced by Hon. Francis Gerald Aguinaldo Abaya

“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. - 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,

SECTION 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

SECTION 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

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

SECTION 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)

SECTION 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.

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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

SECTION 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.

SECTION 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 amended.

(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


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(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.

SECTION 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.

SECTION 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

SECTION 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.

SECTION 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

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

SECTION 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.

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

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

Approved,