TWENTIETH CONGRESS )
OF THE REPUBLIC OF THE PHILIPPINES )
First Regular Session )

HOUSE OF REPRESENTATIVES

House Bill No, 3921

Introduced by Representative FRANZ FERNANDEZ LEGAZPI

EXPLANATORY NOTE

Article XIII, Section 3 of the 1987 Constitution directs the State to afford full protection
to labor, local and overseas, organized and unorganized, and to guarantee the rights of all
workers to security of tenure. In line with this Constitutional mandate, Presidential Decree No.
442, or the Labor Code of the Philippines, as amended was enacted as the principal law
governing employment practices and labor relations in the country. The Labor Code aims to
balance the interest of both labor and capital, ensuring the protection of workers’ rights while
recognizing the role of employers and enterprises as vehicles of economic growth.

Artificial Intelligence (AI) systems, including generative AI, machine learning, and
automated decision-making tools, are increasingly being utilized by enterprises to optimize
operations, resulting in reduced demand for certain types of human labor. It is estimated that the
adoption of AI systems will heavily disrupt the Philippine labor market, projected to lose over
300,000 jobs in the business process outsourcing (BPO) industry in the next five years alone.'

Article 298 (formerly Article 283) of the Labor Code provides that the employer may
terminate the employment of any employee due to the installation of labor-saving devices,
redundancy, or retrenchment to prevent losses, closing or cessation of operation of the
establishment. However, it is not clear whether AI systems are considered as “labor-saving
devices” and may prove to be a novel legal issue which will clearly affect the status of workers
in industries affected by the adoption of AI systems.

This bill seeks to include AI within the scope of a “labor-saving device” as provided in
the Labor Code to ensure the protection of employee rights and their entitlement to appropriate
separation benefits upon termination due to the introduction of AI systems in their workplace.

We believe on the paramount principle of protecting Filipino workers against unjust and
unfair labor practices derived from arbitrary interpretations of the law. Thus, we must therefore
ensure the maintenance of industrial peace and that social justice among our workers are always
met in light and anticipation of the exponential evolution of technology affecting all aspects of
life and society.

In view of the foregoing, the approval of this bill is earnestly sought.

FRANZ FE) ‘LEGAZPI

Representative, PINOY WORKERS PARTYLIST

‘tps: /businessmirror.com.plt/2025/07/06/ai-disrupts-philippine-labor-market-as-eperts-wam-of-existential-job-crsis/™utm


TWENTIETH CONGRESS )
OF THE REPUBLIC OF THE PHILIPPINES —)
First Regular Session )

HOUSE OF REPRESENTATIVES

House Bill NB 92 1

Introduced by Representative FRANZ FERNANDEZ LEGAZPI

AN ACT
‘LUDING ARTIFICIAL INTELLIGENCE (AI) SYSTEMS AS “LABOR-SAVING
DEVICES” UNDER ARTICLE 298 OF THE LABOR CODE OF THE PHILIPPINES, AS
AMENDED

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

SECTION 1. AJ as Labor-Saving Device. - For purposes of Article 298 of the
Labor Code of the Philippines, as amended, the term “installation of labor-saving devices” shall
be interpreted to include the introduction, adoption, or deployment of Artificial Intelligence (Al)
systems, including but not limited to automation technologies, machine learning applications,
and generative AI tools, which directly result in redundancy, displacement, or termination of
employees.

SEC. 2. Good Faith and Fair Criteria. - Employers are hereby mandated to
observe good faith and implement fair criteria in undertaking termination measures due to the
adoption of Al systems. The employer shall bear the burden of proof to show that:

a. That the Al system was introduced for legitimate business reasons and efficiency
gains,

b. That such introduction has made the position redundant or unnecessary; and

c. That fair and reasonable criteria were used in selecting employees for termination.

SEC. 3. Entitlement to Separation Pay. - Employees whose services are terminated
due to the installation or adoption of AI systems, as defined herein, shall be entitled to separation
pay equivalent to at least one (1) month pay or at least one-half (1/2) month pay for every year of
service, whichever is higher, in accordance with Article 298 of the Labor Code and applicable
Department of Labor and Employment (DOLE) regulations.

SEC. 4. Implementing Rules and Regulations. - he Department of Labor and
:mployment (DOLE) shall issue the necessary guidelines, circulars, or advisories within ninety
(90) days from the effectivity of this Act to operationalize its implementation, including criteria
to determine when AI adoption qualifies as a labor-saving device and safeguards to ensure good
faith in the implementation of termination

SEC. 5. Separability Clause. - \f any part or section of this Act is declared
unconstitutional, such declaration shall not affect in any manner other parts or sections hereof.

SEC. 6, Effectivity. - This Act shall take effect fifteen (15) days after its publication
in the Official Gazette or in a newspaper of general circulation

Approved,