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Republic of the Philippines RECEIVED ~
HOUSE OF REPRESENTATIVES

Quezon City, Metro Manila

TWENTIETH CONGRESS
First Regular Session

HOUSE BILL NO. _853

Introduced by Representative MARK ANTHONY G. SANTOS

EXPLANATORY NOTE

Under the Article II Section 18 of the 1987 Philippine Constitution, it is the
declared policy of the State that labor is a primary social economic force. The state
shall protect the right of workers and promote their welfare.

During the Covid-19 Pandemic, a lot of workers were affected by the closing
of businesses and we saw the need to provide displaced workers with assistance to
help them meet their daily expenses and provide resources for them to find new
employment or alternative livelihood.

This bill aims to enhance the SSS and GSIS provision for unemployment
insurance. It seeks to create the Labor Insurance Corporation and establish an
Unemployment Insurance Program to help workers, whether in the formal or informal
labor sector, who have been involuntarily separated from work.

Hence approval of this bill is earnestly sought.

MARK ANTHONY G. S: 1S
Representative, Lone District of Las Pifias


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

TWENTIETH CONGRESS
First Regular Session

HOUSE BILL NO. 853

Introduced by Representative MARK ANTHONY G. SANTOS

AN ACT INSTITUTING A NATIONAL UNEMPLOYMENT INSURANCE
PROGRAM FOR THE PHILIPPINES AND APPROPRIATING FUNDS THEREFOR

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

SECTION 1. Short Title. - This Act shall be known as the “LABOR INSURANCE ACT
OF 2025”

SECTION 2. Declaration of Policy. - It is the policy of the State that labor is affirmed
as a primary social economic force. As such, the State shall protect the rights of
workers and promote their welfare. During episodes of unemployment, the State shall
provide assistance to displaced workers and provide temporary income replacement
to insured persons who lose their jobs while they seek to obtain new employment.

SECTION 3. Definition of Terms. - For purposes of this Act, these terms are defined
as follows:

(a) Board - refers to the Board of Directors of the Corporation;

(b) Contribution - the amount payable to the Fund by the government, member,
and employer in accordance with Section 9 of this Act;

(c) Employee - includes any person who performs services for an employer in
which either both mental or physical efforts are used and who receives
compensation for such services; where there is an employer-employee
relationship; Provided, That a self-employed worker shall be both the employee
and employer at the same time;

(d) Employer - any person, natural or juridical, domestic or foreign, who carries on
in the Philippines any trade, business, industry, undertaking, or activity of any
kind and uses the services of another person who under his or her orders as
regards the employment. For purposes of this Act, employer includes national


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government agencies, political subdivisions, local government units, branches,
instrumentalities, and government owned and controlled corporations;

(e) Eligible employee - any member as defined herein who lost his or her gainful
‘occupation through no fault of his or her own, is able to available to work, is
actively seeking work, and has paid the minimum number of contributions as
provided for in Section 11 (b) of this Act;

(f) Formal sector employees - workers with specific working hours and regular
wages, wherein the worker's job is assured. These workers are employed by
national government agencies, instrumentalities or government owned and
controlled corporations or private sector enterprises and their employment is
subject to standard labor legislation, taxation, social protection or entitlement to
certain employment benefits;

(9) Gainful occupation - any productive activity that provides an employee as
defined herein with income;

(h) Informal sector workers - those whose employment is not subject to standard
labor legislation, taxation, social protection or entitlement to certain employment
benefits such as but not limited to advance notice of dismissal, severance pay,
paid annual or sick leave, for reasons, such as but not limited to, the worker or
his or her job are undeclared; the job is causal or of a limited short duration; the
hours of work or wage are below a certain threshold; or the employer is an
unregistered enterprise;
Involuntary separation - separation of a worker from employment or pre-
termination of a contract of employment without his or her consent and without
cause by the worker, for reasons including but not limited to installation of labor-
saving devices, redundancy, retrenchment to prevent losses or the closing or
cessation of operation of the establishment; disease as ground for termination;
and termination by employee, as provided for by Articles 283, 284, and 285 of
the Labor Code of the Philippines, or abolition of office or position or other
similar cases for government employees occupying plantilla positions,
respectively, or separation due to significant economic downturn or natural or
human-induced calamities/disasters.

(

In the case of probationary employees, pre-termination of contract by the
employer for reason/s other than the failure to meet the regularization
standards, as indicated in the employment contract, is not considered
involuntary separation under this Act, except in the case of significant economic
downturn or closure of the employer's business;

() Member- any worker who is an existing and current member of the Government
Service Insurance System (GSIS) or the Social Security System (SSS) upon
the effectivity of this Act or any worker who is not a member of the same but
shall register with the Program. Member registration can either be compulsory
or voluntary;

(i). Compulsory member - refers to any formal sector employee, receiving
compensation while in the service of an employer as defined herein,

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whether the premiums have been paid successively or intermittently.
Any member separated from employment and any member who
becomes self-employed may opt to continue paying contributions as a
voluntary member;

(ii). Voluntary member - includes informal sector workers, self-employed,
and previous compulsory members who have become self-employed
Voluntary members become compulsory members once they are
employed by employers as defined herein;

(k) Program Manager - refers to Interim Program Manager as provided in Section
6 of this Act or the Corporation as provided in Section 14 of this Act;

(1) Unemployment Insurance Benefits Payments - benefits in the form of monthly
cash payments as provided for in Section 12 of this Act.

SECTION 4. Establishment of the Program. - There is hereby established a National
Unemployment Insurance Program which shall provide assistance to workers during
periods of unemployment. It shall be administered by the Labor Insurance Corporation
(LIC) as provided in Section 14 hereof.

SECTION 5. Coverage. - The program shall cover all employees as defined in Section
3 of this Act. All SSS and GSIS members are automatically covered by the Program.
Workers who are neither SSS nor GSIS members, including but not limited to, workers
in the informal sector shall be encouraged to join the Program.

SSS and GSIS shall transfer membership data to the Labor Insurance Corporation
(LIC) upon execution of a data sharing agreement in compliance with the requirements
of the Data Privacy Act of 2012.

The Corporation shall incorporate in their identification systems and databases the
PhilSys Number of covered individuals as provided in Section 6 of the Philippine
Identification System Act. Covered individuals shall be assigned a separate LIC
member.

SECTION 6. Interim Program Manager. - The SSS shall manage the Program until
five (5) years after the effectivity of this Act, or until such a time when the Program has
demonstrated financial viability, whichever is earlier.

As Interim Program Manager, the SSS shall perform the powers and functions under
the Unemployment Insurance Program until it is transferred to the Corporation.

SECTION 7. Contributions. - It shall be compulsory for the national government,
members and employers to contribute to the Fund in accordance with a reasonable,
equitable and progressive contribution schedule, to be determined by the Program
Manager.

The national government, employers, and employees shall equally share compulsory
premium contributions, as follows:


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(a) Formal sector employees, regardless of tenure status, shall pay monthly
contributions based on a contribution schedule to be actuarially determined by
the Program Manager: Provided, that their monthly contributions shall not
exceed one and one-half percent (1.5%) of their respective monthly salaries;

(b) Contributions from self-employed employees shall be based primarily on their
reported earnings; their monthly contributions shall not, however, exceed one
and one-half percent (1.5%) of their estimated actual net monthly income for
the preceding year;

(c) Contributions made by informal sector workers for the first year of membership
shall be lower than the minimum contributions set for formally employed
workers, as a form of incentive to formalize their employment.

A cap for maximum premium contributions shall be set by the Program Manager, to
be actuarially determined.

Unemployment insurance benefits under existing SSS and GSIS programs shall be
integrated with the Program created under this Act. SSS and GSIS shall continue the
provision of unemployment insurance benefits to classes of workers that are not
covered by this Act.

SECTION 8. Endowment Fund. - To provide a source for the | funding of the
Program under the administration of the Interim Program Manager, there is hereby
established an Endowment Fund which shall be self-sustaining and shall subsequently
consist of premium contributions, investment revenues, donations, bequests, grants
and loans from domestic and/or foreign sources, government subsidy appropriations
and other income accruing from the operations of the Program. For the initial
organizational and operational requirements of the Program, there is hereby
appropriated out of any fund in the National Treasury or other sources not otherwise
appropriated the sum of Thirty Billion Pesos (P30,000,000,000.00).

The Endowment Fund shall also serve as a subsidy for workers and economic stimulus
during the period of economic downturn caused by the COVID-19 pandemic. The
Program Manager shall determine the initiation of charging of premium contributions
to employers and employees, on the basis of general economic and labor market
conditions.

All program administration costs to be incurred by the Interim Program Manager shall
be charged against this Endowment Fund.

At the end of the first fiscal year of the Program's implementation, all funds remaining
in the Endowment Fund shall be transferred to the Reserve Fund and shall be utilized
in accordance with Section 14 of this Act.


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SECTION 9. Unemployment Insurance Fund. - An Unemployment Insurance Fund
(‘Fund’) will be created for purposes of financing the unemployment insurance
benefits and the administration of the Program as provided in this Act.

SECTION 10. Reserve Fund. - To ensure that the Program has the capacity to provide
sufficient unemployment insurance benefits during periods of unexpectedly high
unemployment levels caused by general economic downturn, national disasters, or
such other crises of massive scale, the Program shall, on an annual basis, set aside
a portion of its funds as reserve funds, Provided, That a ceiling on reserve funds shall
be actuarially determined, taking into consideration the need to provide for
extraordinary payments in the short- and long-run, Provided, further, That the balance
of the Endowment Fund at the time of the creation of the Corporation shall form part
of the Reserve Fund, Provided, further, That whenever there are Unemployment
Insurance Fund balances at the end of the Corporation's fiscal year, either whenever
premium contributions exceed unemployment insurance benefits or whenever there
are unutilized portions of the reserved funds, the Program's benefits shall be increased
in amounts, expanded in scope, or member contributions decreased prospectively in
order to adjust expenditures or revenues to meet the required ceiling for reserve funds.

No portion of the Reserve Fund shall accrue to the General fund of the National
Government or to any of its agencies or instrumentalities, including government-
owned or -controlled corporation.

SECTION 11. Eligibility. - A worker shall be eligible for unemployment benefits under
the Program if they meet the following requirements:

(a) The worker is a “member” as defined under Section 3 (j) of this Act;

(b) The member has paid at least 6 monthly contributions in the 12-month period
prior to separation from work;

(c) The member was involuntarily separated from employment as defined in
Section 3 (i) of this Act;

(d) The member has undergone job counselling provided by the Program or by its
accredited partners, and has signed an agreement with the Corporation to
commence active job search, the compliance of which will be determined and
monitored by the Corporation; and

(e) The member has submitted an affidavit duly signed and notarized indicating
availability and willingness to work at any time after the filing of claims for
unemployment benefits.

SECTION 12. Unemployment Insurance Benefit Payments. - Unemployment
insurance benefits amounting to eighty percent (80%) of the member's basic monthly
pay at their last employment, shall be paid to the eligible worker on the 30" day of
unemployment. A second and third payment of equivalent amounts shall be given on
the 60" and 90" day of unemployment, respectively, as applicable, Provided that
monthly benefits per beneficiary shall not to exceed the cap of one hundred thousand

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pesos (P100,000.00), subject to regular review by the Program Manager, based on
actuarial studies, Provided, further, That unemployment insurance benefit payments
shall cease upon the completion of the job search, or 90 days after involuntary
separation from employment, whichever is earlier, Provided, further, That the Program
Manager is authorized to provide incentives for the completion of job search prior to
90 days after the involuntary separation from employment, Provided, further, That the
Program Manager is authorized to adjust the amount of benefits defined in this Section
on the basis of labor market conditions and as validated by actuarial studies pursuant
to Section 19 (e) of this Act, Provided, finally, That sufficient consultation with the
Department of Labor and Employment and labor groups is conducted prior to any such
adjustment.

SECTION 13. Govemment-provided Unemployment Benefits. - In addition to
unemployment insurance benefit payments as defined in Section 5 of this Act, the
Program shall facilitate the provision of additional unemployment benefits, at no
additional cost to members:

(a) Training or re-tooling programs by TESDA;

(b) Job search assistance, including the provision of localized information on job
market opportunities, job matching, and identification of education and training
opportunities by Public Employment Service Offices;

(c) Other training or re-tooling programs or job search assistance services
accredited by the Corporation.

The Corporation shall enter into agreements with the relevant government agencies
or private entities to ensure the effective and efficient provision of training and re-
tooling programs and other forms of job search assistance for unemployed members
to improve their chances for reemployment.

The Program shall provide members with a training allowance to cover the cost of
attending their chosen training program, including training fees and transportation,
‘subject to the member's compliance with training program requirements.

The Corporation shall include in its annual appropriation a provision for training
allowance of members.

SECTION 14. Establishment of the Corporation. - There is hereby created a Labor
Insurance Corporation, which shall manage and administer the Program and its funds
at such point in time that the fund viability has been established, not later than 5 years
after the effectivity of the Act. In the discharge of its mandated responsibilities under
this Act, the Corporation shall function and operate as an independent and
accountable government-owned and controlled corporation within the corporate
governance standards and principles of Republic Act No. 10149, except as may be
otherwise provided herein.


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SECTION 15. Powers and Functions. - The Corporation shall have the following
powers and functions:

(a) To administer the National Unemployment Insurance Program according to the
provisions of this Act;

(b) To formulate, adopt, amend, and/or rescind such rules and regulations as may
be necessary to carry out the overall objectives of the Program and the other
provisions of this Act;

(c) Receive complaints, institute investigations, facilitate or enable settlement of
complaints through the use of alternative dispute resolution processes,
adjudicate, award indemnity on matters affecting any LIC member. That in
resolving any complaint or investigation (except where amicable settlement is
reached by the parties), the Board shall act as a collegial body. However, the
Chairperson shall only vote in case of a tie.

(d) To formulate and implement guidelines to determine contribution, benefits, and
disbursement arrangements, among others, in order to effectively implement
the objectives of this Act, Provided, That the Program may have different
contributions and benefits that are proportionately calculated, and which must
be fair, equitable, and actuarially sound and viable;

(e) To conduct continuing actuarial and statistical studies and valuations to
determine the financial condition of the Program, and to take into consideration
‘such studies and valuations in the determination and readjustment of benefits,
contributions, premium rates, among others;

(f) To authorize cooperatives registered with the Cooperative Development
Authority or associations registered with the appropriate government agency to
act as collection agents with respect to Program members, Provided, That the
Corporation shall accredit the cooperative or association, Provided, further,
That the person authorized to collect are bonded;

(g) To approve restructuring proposals for the payment of due but unremitted
contributions under such terms and conditions as it may be prescribe;

(h) Any law to the contrary notwithstanding, to condone, enter into a compromise,
or release, in whole or in part, such penalties imposed upon delinquent
contributions regardless of the amount involved under such valid terms and
conditions it may be prescribe through rules and regulations when the financial
position of the employer or worker demonstrates a clear inability to pay the
assessed delinquency arising from economic crisis, serious business losses or
financial reverses, or resulting from natural calamity or man-made disaster
without fault on the part of the employer or worker, Provided, That the
Corporation shall institute a condonation of penalties of delinquent employers
or workers under Republic Act No. 10361, subject to such rules and regulations
it may provide;

()) To collect, deposit, administer, and disburse the Unemployment Insurance
Fund in accordance with the provisions of this Act;


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(j) To submit to the President of the Philippines and to both Houses of Congress
its Annual Report which shall contain the status of the Fund, its total collections,
disbursements, reserves, average cost to eligible workers, unemployment
statistics, any requests for additional appropriation, and other data pertinent to
the implementation of the Program, and publish as synopsis of such report in
at least two (2) newspapers of general circulation and on its website;

(k) To require the Chief Actuary to submit a valuation report on the Program every
two (2) years, or more frequently as may be necessary, and to undertake the
necessary actuarial studies and calculations concerning adjustment in benefits,
contributions, among others;

(1) To organize its office, fix the compensation of and appoint personal as may be
deemed necessary and upon the recommendation of the president of the
Corporation;

(m)To enter into agreements or contracts for such service and aid as may be
needed for the proper, efficient, and stable administration of the Program,
including but not limited to partnerships with public and private entities for the
efficient delivery of job counselling, skills training, and job placement services,
among others;

(n) To receive and manage grants, donations, and other forms of assistance;

(0) To sue and be sued in court;

(p) To adopt or approve the annual and supplemental budget of receipts and
expenditures including salaries and allowances of the Corporation's personnel,
against all funds available to the Corporation under this Act, and to authorize
such capital and operating expenditures and disbursement of the Program as
may be necessary and proper for the effective management and operation of
the Program;

(q) To set up its accounting system and provide the necessary personnel therefor;

() To enter into the necessary agreements with existing insurance programs or
any other entity, enterprise, corporation, or partnership for the benefit of
members transferring between systems;

(s) To perform such other acts as it may deem appropriate for the proper
implementation and enforcement of this Act.

SECTION 16. Board of Directors. - The Corporation shall be governed by a Board of
Directors hereinafter referred to as the Board, composed of the following:

(a) Secretary of Labor and Employment, as the ex officio Chairperson,

(b) SSS President and Chief Executive Officer as Vice Chairperson,

(c) Director General of the National Economic and Development Authority, as ex
officio member,

(a) Six (6) appointive members, three (3) of whom shall represent employers’
groups, and three (3) shall represent labor groups, all of whom shall be
appointed by the President.


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All those in the Board shall be of known competence, probity, integrity and recognized
expertise in any of the field of insurance, social security, investment, finance,
economics, management, law, actuarial science, or similar fields, with at least ten (10)
years of managerial or leadership experience. The six (6) members representing
workers and employer groups shall be chosen from among the nominees of
employees and employers’ organization respectively, as endorsed by the Governance
Commission for GOCCs following the fit and proper rule and standards on integrity,
experience, education, training, and competence. The term of office of the regular
appointive members of the Board shall be three (3) years, which can be extended for
another term of three (3) years, Provided, That the terms for the first six (6) appointive
members shall be one (1), two (2), and three (3) years for every two (2) Directors,
respectively, notwithstanding Section 17 of the GCG Law, Provided, further, That they
shall continue to hold office until their successors shall have been appointed and duly
qualified. All vacancies prior to the expiration of the term shall be filled for the
remaining unexpired term only.

SECTION 17. Settlement of Disputes. - Any dispute arising under this Act with respect
to contributions, penalties, benefits, and any other matter related thereto shall be
cognizable by the Board, and any case filed with respect hereto shall be heard by the
Board and decided within the period provided for under Republic Act No. 1103 (Ease
of Doing Business and Efficient Government Service Delivery Act of 2018) after the
submission of the evidence. The filing, determination and settlement of disputes shall
be governed by the rules and regulations promulgated by the Board.

Any decision of the Board in the absence of an appeal therefrom as herein provided
shall become final and executory after fifteen (15) days from receipt of notice of
decision, and judicial review thereof shall be permitted only after any party claiming to
be aggrieved thereby has exhausted his remedies before the Board. The Board shall
be deemed to be a party to any judicial action involving any such decisions, and may
be represented by an attorney employed by the Board, or when requested by the
Board, by the Solicitor General or any public prosecutor.

SECTION 18. Appeals. - Appeals from any decision of the Board shall be governed
by Rules 43 and 45 of the 1997 Rules of Civil Procedure. The appeal shall not stay
the execution of the decision unless ordered by the Board, Court of Appeals or by the
Supreme Court and the Appeal shall be without prejudice to the special civil action of
certiorari when proper.

SECTION 19. Execution of Decision. - When no appeal is perfected and there is no
order to stay by the Board, Court of Appeals or by the Supreme Court, any decision of
the Board shall be enforced and executed in the same manner as decisions of the
Regional Trial Court. For this purpose, the Board shall have the power to issue to the
city or provincial or its appointed sheriff such writs of execution as may be necessary
for the enforcement of such decision, and any person who shall fail or refuse to comply

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with such decision, writ or process after being required to do so, shall, upon application
by the Board, be punished for contempt.

SECTION 20. Appropriations. - An appropriation of Thirty Billion pesos
(P30,000,000,000.00) is hereby appropriated for the SSS as Interim Program
Manager, as the amount necessary for the creation of the Endowment Fund as
provided for in Section 12. Subsequently, the funds necessary for the continuous and
effective operation of the Program shall be included in the General Appropriations Act
(GAA), including the national government's share in the premium contributions and
funds for the provision of allowances for training programs and job search assistance.

SECTION 21. Oversight Provision. - Congress shall conduct a regular review of the
Program, which shall entail a systemic evaluation of the Program's performance and
impact. Every two years, an independent review shall be undertaken by an expert
third-party, at a cost to be shouldered by the Program, and whose results shall be
submitted to the Committees of the Senate and the House of Representatives which
have legislative jurisdiction over the Program.

SECTION 22. Implementing Rules and Regulations. - Within forty five (45) days from
the effectivity of this Act, the SSS as Interim Program Manager shall formulate the
rules and regulations necessary for the implementation of this Act, in consultation with
the DOLE and NEDA.

SECTION 23. Separability Clause. - If any provision of this Act is declared
unconstitutional or invalid, the remainder of the provisions thereof not affected shall
remain in force and effect.

SECTION 24. Repealing Clause. - All laws, executive orders, administrative rules and
regulations or parts thereof which are inconsistent with the provisions of this Act are
hereby amended, modified, or repealed accordingly.

SECTION 25. Effectivity Clause. - This Act shall take effect immediately upon its
publication in a newspaper of general circulation or in the Official Gazette.

Approved,

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