16TH CONGRESS OF THE REPUBLIC OF THE PHILIP)
First Regular Session

HOUSE OF REPRESENTATIVES,
HOUSE BILL NO.

Introduced by HONORABLE GUS S. TAMBUNTING

EXPLANATORY NOTE

This bill seeks to protect workers in cases of company closures or cessation of operations
of establishments. Workers as partners in the production of wealth and income have to be
protected and afforded with their basic workers’ rights.

While poverty increases in the country, so does inequality thus, workers in times of
economic depression should be protected. Company closures and cessation of business
activities are inevitable. Various factors affect the business cycle and business productivity
hence, workers in most inopportune times of economic recessions are caught in the web of
unemployment. The loss of business is tantamount to loss of employment.

The DOLE Bureau of labor and Employment Statistics reported that in year 2012 the total
number of establishments resorted to permanent closures or retrenchment due to economic
reasons totaled 1,925 enlisted in 2013 displacing a total of 36,639 workers nationwide.
Suffice to say that, a vast number of minimum wage earners and their families has been
economically displaced.

The figure was significantly higher than the 35,526 workers who lost their jobs in 2011
when some 2,211 companies shutdown and 31,778 in 2012.

Metro Manila recorded the highest number of displaced workers. A total of 1,925
commercial establishments filed Notice of Closures affecting 17,144 workers in 2013.

Employers cited downsizing as main reason for the retrenchment and closures, financial
losses and lack of market are factors that caused establishments to lay off or close shop
which led to underemployment of nearly 13,000 workers.

The creation of Workers’ Protection Board shall ensure that the workers? rights are
protected and rightful benefits are afforded to them,

‘This humble piece of legislation aims to protect workers and their families. More so, the
State affirms labor as a primary social economic force. It shall protect the tights of workers.
and promote their welfare.

ion is earnestly sought.



16TH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES
First Regular Session

HOUSE OF REPRESENTATIVES

HOUSE BILLNO. _ 4338

Introduced by HONORABLE GUS S. TAMBUNTING

AN ACT
TO PROTECT WORKERS IN THE EVENT OF COMPANY CLOSURES OR
CESSATION OF OPERATIONS BY ESTABLISHING THE MECHANISM AND
PROPER STANDARDS THEREFOR AND FOR OTHER PURPOSES,

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

CHAPTER 1 - PRELIMINARY PROVISIONS

SECTION 1. Short Title, - This Act may be cited as the "Workers' Protection Act
of 2014."

SI

protect workers from economic insecurity due to involuntary unemployment and promote

>. 2. Declaration of Policy. - It is hereby declared the policy of the State to

their rights in the event of such. For this purpose, the State hereby recognizes the right of
all workers:

(1) Toareasonable period of notice for termination of employment;

(2) Toseek alternative employment during the period of notice:

(3) To guarantee payments of wage claims, and

(4) To petition the proper government agency to review any act of an employer

to close shop, cease operations, and/or order a mass layoff of employees.

SEC. 3. Definition of Terms. - As used in this Act, the following terms:
a. Bankruptcy shall mean a condition whereby an employer, who after a petition

to the court by himself or his creditors, is judged legally insolvent.


b. Closure shall mean the permanent cessation of operations due to insolvency,
bankruptcy, foreclosure, and/or dissolution resulting in an employment loss.

©. Cessation of operations shall mean the permanent or temporary shutdown of a
single site of employment or one or more facilities or operating units within a
single site of an employment, if the shutdown results in an employment loss at
the single site of employment. For purposes of this Act, it shall include but not
exclusive of, cessation of operations due to bankruptcy, closure, foreclosure,
insolvency, dissolution and other similar acts.

. Insolvency shall mean the condition whereby an employer is unable to meet his
obligations as they accrue in the course of his trade or business,

€. Employer shall mean any person acting directly or indirectly in the interest of
an employer in relation to an employee and shall include, all government-
owned or controlled corporations and institutions, as well as non-profit private
institutions, or organizations.

Employee shall mean any individual employed an employer.

8. Mass lay-off shall mean a reduction in force which (i) is not a result ofa closure
and (ii) results in an employment loss at the single site of employment during
any 30-day period for (1) at least 33% of employees, and/or (2) at least 50
‘employees, excluding part-time employees.

h. Affected employees shall mean employees who may reasonably be expected to

experience an employment loss as a consequence of a proposed cessation of
operations or mass layoff by their employer.

i, Involuntary unemployment shall mean the termination of employment by an

employer as a result of cessation of operations.

J. Employment loss shall mean (i) a termination of employment, other than a

charge for cause, voluntary departure or retirement, (ii) a layoff exceeding

six (6) months, or (iii) a reduction in hours of work of more than fifty per cent
(50%) during each month of any six-month period.

k. Foreclosure shall mean the process by which a mortgagee acquires an absolute
title to the property of which he had previously been only the conditional owner,

or upon which he had previously a mere lien or encumbrance.

CHAPTER 2 - NOTIFICATION REQUIREMENT

SEC. 4. Notification Requirement. - An employer shall not order a plant closure,
mass layoff, shutdown or any form of cessation of operations until the end of a 90-day
period after the employer serves written notice of such an order:

(a) To each affected employee;


(b) To each collective bargaining representative;
(©) To the chief elected official of the local government unit within such closing
or lay-off to occur, and

(d) To the Labor Protection Board as herein created.

SEC. 5. Right to Alternative Employment. - During the 90-day notice period which
shall commence upon the receipt of the said notice by the affected employee, an employer
shall allow the affected employee to use a specific amount of paid work time to seek

alternative employment.

6. Right to Petition the Act of the Employer. - During the 90-day notice
period, the affected employees or their collective bargaining representative may petition
the Labor Protection Board as herein created to investigate possible anomalies arising

from the intended closure or cessation of operations by an employer.

SEC. 7. Civil actions against employers. - Any employer who orders a closure or

mass layoff or shutdown or any form of cessation of operations or mass layoff in violation

of Sec. 4 of this Act shall be liable to each aggrieved employee who suffers an
employment loss as a result of such closure or mass layoff or any form of cessation of
operations for the following:

(a) back pay for each day of violation at a rate of compensation not less than the
final regular rate received by such employee, including benefits and contributions, and

(b) Mandatory severance pay.

Any employer who violates Sections 4 and 5 of this Act shall be subject to a civil
penalty of fifteen thousand pesos (P15,000,00) for each day of violation, provided however
that such penalty shall not apply if the employer pays to each aggrieved employee the
amount for which the employer is liable to that employee within three (3) weeks from
the date the employer orders the closure or mass layoff or shutdown or cessation of

operations.

CHAPTER 2 - THE WORKERS PROTECTION BOARD

SEC. 8. The Workers Protection Board. - For purposes of this Act, there shall be
created an independent agency to be known as the Workers Protection Board (WPB).

SEC. 9. Composition. - The Board shall be composed of a Chairman and two (2)
Members who shall be nominated and elected in a Labor Conference called for this purpose

except for the Chairman who shall be appointed by the President from a selection of three


nominees submitted by the Labor Conference. ‘The Labor Conference shall be held within
thirty days following the effectivity of this Act and shall be attended by delegates

representing major labor federations.

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10. Qualifications of Nominees - The nominees for both the Chairman and
Members must have the following qualifications:

(a) Satisfactory background on labor and commerce particularly on corporation
rales and laws.

(b) Must not have worked or performed functions in any management ofa company

or establishment in the past.

(c) Must not have business interests in any corporation or establishment,
(d) Must not be related to any corporate official within the fourth degree of

consanguinity.

SEC. 11. Powers and Functions - The Board shall, in coordination with the
Department of Labor and Employment (DOLE), Securities and Exchange Commission
(SEC), and the Department of Justice (DOJ), perform the following functions:

(a) Undertake the investigation of companies and establishments that would

undergo closure or cessation of operations, shutdown, rotation or retrenchment of

workers/employees due to labor saving devices, to prevent losses, dissolution, insolvency
or bankruptey;

(b) Compel the disclosure and submission of its book of accounts and other
financial records following an information to the Board that the company or establishment
will lead to closure or cessation of operation, shutdown, rotation or retrenchment of

employees/worker

(c) Issue subpoenas to any official of a company or establishment and other parties
concemed to require attendance in the investigation;

(A) Hold custody of the company's machinery and other production equipment from
the commencement of the investigation, or to require the posting of bond or both to secure
the interests of the affected workers/employees;

(e) Ensure that payment of wages/salaries and other benefits were being made
continuously while the company is undergoing an investigation;

(f) Ensure the issuance of notices to workers/employees as required in this Act and
the enforcement of the period to seek alternative employment;

(g) Facilitate the immediate release of monetary claims of workers/employees

which may be made through banks or which may be deemed sufficient by the Board;


(h) Conduct quarterly inspection on the book of accounts and financial records of
the companies and establishments registered with the Securities and Exchange
Commission to monitor its operations, and

(i) Initiate legal action against any company or establishment found to violate any

of the provisions of this Act.

SEC, 12, Funding - The funding requirements necessary to carry out the provisions
of this Act shall be charged to the current fiscal year appropriations of the Department of
Labor and Employment. Thereafter, such sum as may be necessary is hereby authorized to
be appropriated in the General Appropriations Act of the year following its enactment into
law.

CHAPTER 3 - FINAL PROVISIONS.

SEC. 13. Implementing Rules and Regulations. - The implementing rules and
regulations to carry out the provisions of this Act shall be adopted and promulgated by the

Department of Labor and Employment.

SEC. 14. Repealing Clause. - All laws, executive orders and provisions thereof

inconsistent with this Act are hereby repealed or modified accordingly.

SEC. 15. Separability Clause. - If any provision or part of this Act, or the
application thereof to any person or circumstance, is held invalid or unconstitutional, the
remainder of this Act or the application of such provision or part thereof to other persons

or circumstances shall not be affected thereby.

SEC, 16. Effectivity Clause. - This Act shall take effect fifteen days after its

publication in at least two (2) national newspapers of general circulation.

Approved.