FBP RE BON

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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

Eighteenth Congress
First Regular Session

HOUSE BILL NO. 6498

Introduced by Honorable Mark O. Go

EXPLANATORY NOTE

This bill seeks to affirm and further fortify the intentions of Republic Act No.
6971, otherwise known as the “Productivity Incentives Act of 1990”, through
promoting an inclusive and sustainable work productivity programs.

The abovementioned mandate is an initiative to promote a working environment
with increased level of productivity, maintain industrial harmony, and propel shared
commitment and responsibility among employers and employees. As a policy of the
State, the preservation of balance in the workplace is necessary to recognize both the
rights of the workers and their employers: the former, to their right to a fair and just
share of labor; and the latter, to their right to reasonable returns of investment vital
for growth and expansion.

One important indicator of our country’s economic development is labor
productivity. The average labor productivity growth from 1985 to 2018 is measly
2.77% although the year 2017 recorded a higher growth rate of 8.43%. This
productivity trend, despite the implementation of RA 6971, remains a growing

concern.

The ability of enterprises to compete globally is dependent on the capacitiy of
these enterprises to produce and offer goods and services at the most effective and
efficient way. Accordingly, it is imperative that enterprises must address this
productivity challenge so as not only to meet this concern but to explore more


business opportunities.

This proposed measure seeks to reinforce labor productivity through: 1.) the
establishment of a Productivity Incentives Committee (PIC); 2.) the adoption of
productivity incentive programs; 3.) granting productivity incentives to employees;
and 4.) providing tax incentive to business establishments for granting incentives to

employees.

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



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

Eighteenth Congress
First Regular Session

House Bill No._ 6406

Introduced by Hon. Mark 0. Go

AN ACT
PROMOTING INCLUSIVE AND SUSTAINABLE PRODUCTIVITY
GROWTH, AMENDING 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. Section 2 of Republic Act No. 6971, otherwise known as the
Productivity Incentives Act of 1990, is hereby amended to read as follows:

“Section 2. Declaration of Policy. - It is the declared policy of the State to

(a) Encourage higher levels of productivity IN ALL INDUSTRIES TO
ENABLE ENTERPRISES TO COMPETE GLOBALLY;

(b) Maintain industrial peace and harmony and promote the principle 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 and [to] FOR expansion and growth [, and
accordingly to]; AND

(©) Provide corresponding incentives to both labor and capital for undertaking
[voluntary programs to ensure greater sharing by the workers in the fruits
of their labor] PRODUCTIVITY IMPROVEMENT PROGRAMS AND
GAINSHARING.”

SEC. 2. Section 3 of Republic Act No. 6971 is hereby amended to read as
follows:


“Section 3. Coverage. - This Act shall apply to all business enterprises with or
without existing and duly recognized COLLECTIVE NEGOTIATION AND
BARGAINING REPRESENTATIVES. [or certified labor organizations, including
government-owned and controlled corporations performing proprietary functions.] It
shall cover all employees and workers [including casual, regular, supervisory and
managerial employees] REGARDLESS OF THEIR POSITION, DESIGNATION,
OR STATUS, AND THE MANNER BY WHICH THEIR SALARIES/WAGES ARE
PAID.”

SEC. 3. Section 4 of Republic Act No. 6971 is hereby amended to read as
follows:

“Section 4. Definition of Terms. - As used in this Act:

(a) "Business Enterprise” refers to [industrial, agricultural, or agro-industrial
establishments engaged in the production manufacturing, processing,
repacking, or assembly of goods, including service-oriented enterprises,
duly certified as such by appropriate government agencies.] AN ENTITY
DULY INCORPORATED, ORGANIZED, OR REGISTERED
PURSUANT TO THE PREVAILING APPLICABLE LAWS, RULES
AND REGULATIONS;

(b) ("Labor-Management Committee" refers to a negotiating body in a
business enterprise composed of the representatives of labor and
management created to establish a productivity incentives program, and to
settle disputes arising therefrom in accordance with Section 9 hereof]
“PRODUCTIVITY IMPROVEMENT PROGRAM” REFERS TO A SET
OF ACTIONS IDENTIFYING AND ADDRESSING PRODUCTIVITY
PROBLEM AREAS USING EITHER A PRINCIPLE, TOOL,
TECHNIQUE, METHOD, PRACTICE, GUIDELINE, MODEL, OR
APPROACH. IT MAY INCLUDE REALIZATION OF

PRODUCTIVITY IMPROVEMENT IN PEOPLE,
INPUTS/TECHNOLOGIES, PRODUCT/SERVICE, POLICY, AND
PROCESS.

(c) “PRODUCTIVITY INCENTIVES COMMITTEE” REFERS TO A
BODY IN A_ BUSINESS ENTERPRISE COMPOSED OF
REPRESENTATIVES OF MANAGEMENT/EMPLOYERS AND
EMPLOYEES CREATED TO FORMULATE AND IMPLEMENT
PRODUCTIVITY INCENTIVES PROGRAM, AND TO SETTLE
ISSUES ARISING FROM THE INTERPRETATION OR
IMPLEMENTATION OF THE SAID PROGRAM;

(d) "Productivity Incentives Program" refers to a formal agreement
[established] FORMULATED by the _ [labor-management]
PRODUCTIVITY INCENTIVES committee containing [a process that
will promote] POLICIES AND PROCEDURES PURSUING gainful
employment, AND improveD working RELATIONS AND conditions
THAT WILL [and] result [in] TO increased productivity, BASED ON
WHICH, A PRODUCTIVITY-BASED INCENTIVE SCHEME SHALL


BE IMPLEMENTED [, including cost savings, whereby the employees
are granted salary bonuses proportionate to increases in current
productivity over the average for the preceding three (3) consecutive
years. The agreement shall be ratified by at least a majority of the
employees who have rendered at least six (6) months of continuous
service.]; AND

(D) PRODUCTIVITY-BASED INCENTIVE SCHEME REFERS TO AN
INCENTIVE PLAN WHERE MANAGEMENT/EMPLOYERS AND
EMPLOYEES RECEIVE MONETARY AND/OR NON-MONETARY
BENEFITS ACCRUING FROM THE GAINS AND/OR SAVINGS
RESULTING FROM THE IMPLEMENTATION OF A
PRODUCTIVITY IMPROVEMENT PROGRAM.”

SEC. 4. Section 5 of Republic Act No. 6971 is hereby amended to read as
follows:

“Section 5. [Labor-Management Committee]. [a) A business enterprise or its
employees, through their authorized representatives, may initiate the formation of a
labor-management committee that shall be composed of an equal number of
representatives from the management and from the rank-and-file employees

Provided, That both management and labor shall have equal voting rights: Provided,
further, That at the request of any party to the negotiation, the National Wages and
Productivity Commission of the Department of Labor and Employment shall provide
the necessary studies, technical information and assistance, and expert advice to
enable the parties to conclude productivity agreements

b) In business enterprises with duly recognized or certified labor organizations, the
representatives of labor shall be those designated by the collective bargaining agent(s)
of the bargaining unit(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.

PRODUCTIVITY INCENTIVES COMMITTEE. -— BUSINESS
ENTEPRISES SHALL ESTABLISH A PRODUCTIVITY INCENTIVES
COMMITTEE, HEREINAFTER REFERED TO AS PIC, COMPOSED OF
REPRESENTATIVES FROM MANAGEMENT/ EMPLOYERS AND
EMPLOYEES.”

SEC. 5. Section 6 of Republic Act No. 6971 is hereby amended to read as
follows:

“Section 6. Productivity Incentives Program

[a) The productivity incentives program shall contain provisions for the manner of
sharing and the factors in determining productivity bonuses: Provided, That the
productivity bonuses granted to labor under this program shall not be less than half of
the percentage increase in the productivity of the business enterprise.


b) Productivity agreements reached by the parties as provided in this Act supplement
existing collective bargaining agreements,

) If, during the existence of the productivity incentives program or agreement, the
‘employees will join or form a union, such program or agreement may, in addition to
the terms and conditions agreed upon by labor and management, be integrated in the
collective bargaining agreement that may be entered into between them.]

THE PRODUCTIVITY INCENTIVES PROGRAM DULY CONCURRED
BY MANAGEMENT/ EMPLOYERS AND EMPLOYEES OF THE BUSINESS
ENTERPRISE SHALL CONTAIN, AMONG OTHERS, PROVISIONS FOR
BENCHMARKS AND MEASURING PRODUCTIVITY, EFFICIENCY
IMPROVEMENTS, SHARING OF INCENTIVES, COVERAGE, PERCENTAGE
OF SHARING, AND FORMS, MANNER AND FREQUENCY OF PAYMENT OF
SUCH INCENTIVES IN ACCORDANCE WITH THE TERMS AND
CONDITIONS APPROVED BY THE PIC.

PRODUCTIVITY INCENTIVES PROGRAM AS PROVIDED IN THIS
ACT SHALL BE BASED ON THE IMPLEMENTED PRODUCTIVITY
IMPROVEMENT PROGRAM, AND WITHOUT PREJUDICE TO ANY
COMPANY POLICY AND PROGRAM, CONTRACT OR COLLECTIVE
BARGAINING AGREEMENT PROVIDING FOR HIGHER PRODUCTIVITY
INCENTIVES.”

SEC. 6. Section 7 of Republic Act No. 6971 is hereby amended to read as
follows:

“Section 7. [Benefits and] Tax Incentives. [(a) Subject to the provisions of
Section 6 hereof, a business enterprise which adopts a productivity incentives
program, duly and mutually agreed upon by parties to the labor-management
committee, shall be granted a special deduction from 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, as amended

b) Grants for manpower training and special studies given to rank-and-file employees
pursuant to a program prepared by the labor-management committee for the
development of skills identified as necessary by the appropriate government agencies
shall also entitle the business enterprise to a special deduction from gross income
equivalent to fifty per cent (50%) of the total grants over and above the allowable
ordinary and necessary business deductions for said grants under the National Internal
Revenue Code, as amended.

c) Any strike or lockout arising from any violation of the productivity incentives
program shall suspend the effectivity thereof pending settlement of such strike or
lockout: Provided, That the business enterprise shall not be deemed to have forfeited
any tax incentives accrued prior to the date of occurrence of such strike or lockout,
and the workers shall not be required to reimburse the productivity bonuses already
granted to them under the productivity incentives program. Likewise, bonuses which
have already accrued before the strike or lockout shall be paid the workers within six
(6) months from their accrual.



4) Bonuses provided for under the productivity incentives program shall be given to
the employees not later than every six (6) months from the start of such program over
and above existing bonuses granted by the business enterprise and by law: Provided,
That the said bonuses shall not be deemed as salary increases due the employees and
workers.

¢) The special deductions from gross income provided for herein shall be allowed
starting the next taxable year after the effectivity of this Act.]

PRIVATE ESTABLISHMENTS MAY AVAIL OF THE FOLLOWING TAX
INCENTIVES:

(A)SUBJECT TO THE PROVISIONS OF SECTION 6, A BUSINESS
ENTERPRISE WHICH ADOPTS A PRODUCTIVITY INCENTIVES
PROGRAM DULY AND MUTUALLY AGREED UPON BY THE
PRODUCTIVITY INCENTIVE COMMITTEE SHALL BE GRANTED
A SPECIAL DEDUCTION FROM GROSS INCOME EQUIVALENT TO
FIFTY PERCENT (50%) OF THE TOTAL PRODUCTIVITY
INCENTIVES GIVEN TO EMPLOYEES UNDER THE
PRODUCTIVITY INCENTIVES PROGRAM OVER AND ABOVE THE.
TOTAL ALLOWABLE ORDINARY AND NECESSARY BUSINESS
DEDUCTIONS FOR SAID INCENTIVES UNDER PREVAILING
RULES AND REGULATIONS;

(B)A BUSINESS ENTERPRISE SHALL BE GRANTED A SPECIAL
DEDUCTION FROM GROSS INCOME EQUIVALENT TO FIFTY
PERCENT (50%) OF THE TOTAL GRANTS FOR TRAINING AND
SPECIAL STUDIES GIVEN TO EMPLOYEES PURSUANT TO THE
PRODUCTIVITY INCENTIVES PROGRAM PREPARED BY THE
PRODUCTIVITY INCENTIVE COMMITTEE OVER AND ABOVE
THE TOTAL ALLOWABLE ORDINARY AND NECESSARY
BUSINESS DEDUCTIONS FOR SAID INCENTIVES UNDER
PREVAILING RULES AND REGULATIONS;

BUSINESS ENTERPRISES SHALL SUBMIT A COPY OF ITS
PRODUCTIVITY INCENTIVES PROGRAM AND OTHER REQUIRED
DOCUMENTS TO THE CONCERNED REVENUE DISTRICT OFFICE OF THE
BUREAU OF INTERNAL REVENUE TO AVAIL OF THE CORRESPONDING
BENEFITS AND TAX INCENTIVES PROVIDED IN THIS ACT;

THE BUSINESS ENTERPRISE SHALL BE ENTITLED TO THE
AFOREMENTIONED TAX INCENTIVES STARTING THE NEXT TAXABLE
YEAR AFTER THE EFFECTIVITY OF THIS ACT; AND

THE BUREAU OF INTERNAL REVENUE SHALL MAINTAIN AND
FURNISH NWPC AN ANNUAL RECORD OF BUSINESS ENTERPRISES THAT
AVAILED OF TAX INCENTIVES UNDER THIS ACT FOR PROGRAM
MONITORING.”


SEC. 7. Section 8 of Republic Act No. 6971 is hereby amended to read as
follows:

“Section 8. [Notification) PRODUCTIVITY ADVISORIES. - [A business
enterprise which adopts a productivity incentives program shall submit copies of the
same to the National Wages and Productivity Commission and to the Bureau of
Internal Revenue for their information and record] THE REGIONAL TRIPARTITE
WAGES AND PRODUCTIVITY BOARDS (RTWPB) SHALL ISSUE
ADVISORIES ON PRODUCTIVITY IMPROVEMENT PROGRAMS AND
PRODUCTIVITY INCENTIVE SCHEMES, AND RELATIVE THERETO, SHALL
PROVIDE TRAINING AND TECHNICAL ASSISTANCE TO ENTERPRISES.”

SEC. 8. Section 9 of Republic Act No. 6971 is hereby amended to read as
follows

Section 9. [Disputes] ISSUES and Grievances.- Whenever [disputes]
ISSUES, grievances, or other matters arise from the interpretation or implementation
of the [p]Productivity [iJIncentives [p]Program, the [labor-management committee]
PIC shall meet to resolve the [dispute] SAME[, and may seek the assistance of the
National Conciliation and Mediation Board of the Department of Labor and
Employment for such purpose. Any dispute which remains unresolved] within
[twenty] FIFTEEN ({20]15) days from [the time of its submission to the labor-
management committee shall be submitted for voluntary arbitration in line with the
pertinent of the Labor Code, as amended] RECEIPT OF A FORMAL COMPLAINT
FROM ANY AGRIEVED PARTY, SUBJECT TO THE FOLLOWING
CONDITIONS:

(A)PARTIES MAY AGREE ON WHETHER OR NOT TO SUSPEND THE
IMPLEMENTATION OF THE PRODUCTIVITY INCENTIVES
PROGRAM PENDING THE RESOLUTION OF THE COMPLAINT;

(B)BUSINESS ENTERPRISES SHALL NOT BE DEEMED TO HAVE
FORFEITED ANY TAX INCENTIVES ACCRUED PRIOR TO THE
SAID COMPLAINT AND THE EMPLOYEES AND WORKERS SHALL
NOT BE REQUIRED TO REIMBURSE THE PRODUCTIVITY
INCENTIVES ALREADY GRANTED;

(C)LIKEWISE, PRODUCTIVITY INCENTIVES THAT HAVE ALREADY
ACCRUED PRIOR TO THE SAID COMPLAINT SHALL BE PAID TO
THE ENTITLED EMPLOYEES AND WORKERS WITHIN SIX (6)
MONTHS FROM THE DATE OF ACCRUAL OF THE SAME; AND

(D)ANY COMPLAINT WHICH REMAINED UNRESOLVED WITHIN
THIRTY (30) DAYS FROM THE TIME OF RECEIPT OF COMPLAINT
SHALL BE REFERRED BY THE PIC TO VOLUNTARY
ARBITRATION PURSUANT TO PREVAILING LAWS, RULES, AND
REGULATIONS ON THE MATTER.


[The productivity incentives program shall include the name(s) of the voluntary
arbitrator or panel of voluntary arbitrators previously chosen and agreed upon by the
labor-management committee. ]

SEC. 9. Section 10 of Republic Act No. 6971 is hereby deleted.

SEC. 10. A new section is hereby inserted to read as follows:

“Sec. 10. LOAN AVAILMENT. - ALL BANKING INSTITUTIONS SHALL
PROVIDE MSMEs THAT WILL IMPLEMENT A_ PRODUCTIVITY
IMPROVEMENT PROGRAM A LOAN OR CREDIT WINDOW AT AN
INTEREST RATE LOWER THAN THE PREVAILING MARKET RATE.”

SEC. 11. A new section is hereby inserted to read as follows:

“Sec. 11. SUBMISSION OF PRODUCTIVITY INCENTIVES PROGRAM.
- A BUSINESS ENTERPRISE WHICH ADOPTS A PRODUCTIVITY
INCENTIVES PROGRAM SHALL SUBMIT A COPY OF THE SAME TO THE
REGIONAL TRIPARTITE WAGES AND PRODUCTIVITY BOARDS FOR ITS
INFORMATION AND APPROPRIATE TECHNICAL ASSISTANCE, WHEN
NEEDED.”

SEC. 12. Section 11 of Republic Act No. 6971 is hereby renumbered and
amended to read as follows:

“Section [11] 13. Penalty. - Any person who shall make any fraudulent claim
under this Act, regardless of whether or not a tax benefit has been granted, shall upon
conviction be punished with imprisonment of not less than six (6) months but not
more than one (1) year or a fine of not less than [two] TWENTY thousand pesos
({P2,000.00] P20,000.00) but not more than [six] FIFTY thousand pesos ({P6,000.00]
50,000.00), or both, at the discretion of the Court, without prejudice to prosecution
for any other acts punishable under existing laws.

In case of partnerships or corporations, the penalty shall be imposed upon the
officer(s) or employee(s) who knowingly approved, authorized or ratified the filing of
the fraudulent claim, and other persons responsible thereof.”

SEC. 13. Implementing Rules and Regulations. ~ Within one hundred eighty
days (180) from the effectivity of this Act, the National Wages and Productivity
Council and the DOLE, in consultation with other government agencies and
concerned stakeholders, shall issue the rules and regulations necessary to effectively
implement the provisions of this Act.


SEC. 14. Separability Clause. — Should any provision of this Act be declared
unconstitutional, the remainder thereof not otherwise affected shall remain in full
force and effect.

SEC. 15. Repealing Clause. ~ All laws, presidential decrees, executive orders,
proclamations or administrative regulations that are inconsistent with the provisions
of this Act are hereby repealed, amended, or modified accordingly

SEC. 16. Effectivity. — This Act shall take effect fifteen (15) days after its
publication in the Official Gazette or in a newspaper of general circulation.

Approved,