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House Bill No. ~ “"'

Introduced by Representative FRANZ FERNANDEZ LEGAZPI

AN ACT
PROVIDING PROTECTION TO FREELANCERS, PROVIDING PENALTIES.
THEREFOR AND FOR OTHER PURPOSES

EXPLANATORY NOTE

Freelance workers or “Freelancers” are self-employed professionals who offer their
services to clients on a per-project or per-task basis, rather than being employed by a single
company. Oftentimes freelancers manage their own schedules, negotiate contracts, and handle
their own taxes and business expenses, as well as work with multiple clients simultaneously,
making the profession attractive to many tech-savvy individuals.

Driven by the ubiquity of digital connectivity and higher compensation, more Filipinos are
choosing freelance jobs. In a 2018 study, the Philippines was recorded to have one of the highest
number of freelancers per capita among the 22 countries surveyed at around 2% of the population,
or an estimated 1.5 million freelancers.' In 2019, Forbes listed the Philippines in 6" place for the
fastest growing market for freelancers, recording a 35% income growth from the previous year.?
In a 2020 study, it was estimated that the oversupply of online workers globally reached 1.576
million. Of this number, around 12% or 188,300 are Filipinos, showing that there are potentially
221,100 Filipino online workers but only 32,800 are successful online workers in the country.}

As the pandemic accelerated the shift to digitalization, the Philippines recorded a 208%
growth in freelance revenues in 2020, much faster than the 35% percent growth registered in 2019
according to the Philippine Institute for Development Studies (PIDS). According to the Philippine
Statistics Authority (PSA) as of early 2024, an estimated 27% of Filipino workers or 13.3 million
Filipinos are self-employed, among them include freelancers.‘

It is thus imperative to support, protect and empower Filipino freelancers which serve as a
vital and growing segment of our modem workforce. This legislation secks to provide protection
to freelancers by setting minimum standard requirements for froclancing employment contracts
and compensation rates, creating the Bureau of Freelance Work in the Department of Labor and
Employment and the Freelance Workers Portal to become the primary government entity and
digital service to protect the rights of freelancers, and ultimately, provide legal recognition to
freelancers and freelance work in the Philippines.

For the foregoing reasons, the approval of this bi

FRAN: EGAZPI
Representative, Pinoy Workers Partylist

+ haps vvww:philstar comv/the-freeman/cebu-business/2025/05/30/244695 l/educated-filpinos-backbone-phi-econom:
2 hitpsswww forbes.com/sites/elainepofeld/2019/08/18/the-top-O-fastest-growing-freclance-markets-in-the-world/
* https /www.pids gov ph/details/online-workers-must-agree-on-a-wage-floor-pids-studs

“http /ipsa gov phistatistics/abor-force-survey



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

HOUSE OF REPRESENTATIVES
House Bill No. 3920

Introduced by Representative FRANZ FERNANDEZ LEGAZPI

AN ACT
PROVIDING PROTECTION TO FREELANCERS, PROVIDING PENALTIES
THEREFOR AND FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:
CHAPTERI
GENERAL PROVISIONS
SECTION 1. Title. - This Act shall be known as the “Freelance Workers Protection Act.”
SEC. 2. Declaration of Policy. — Pursuant to Article II, Section 18, and Article XIII,
Section 3 of the Constitution, it is hereby declared the policy of the State to protect the rights of

workers and just share in the fruits of production. To this end, the State shall recognize the right
of freelance workers to protection from late or nonpayment of fees or services render.

SEC. 3. Definition of Terms, — As used in this Act:

a) Freelance worker refers to any natural person or entity composed of no more than one
(1) natural person, whether incorporated under the Securities and Exchange
Commission (SEC), registered as a sole proprietorship with the Department of Trade
and Industry (DTH), or registered as self-employed with the Bureau of Internal Revenue
(BIR), who is hired or retained as an independent contractor to do work according to
one’s own methods and without being subjected to the control of the hiring party,
except only as to the results of the work;

b)

Hiring party refers to any person or entity that obtains or retains the services of a
freelance worker, and

©)

Retaliation refers to any act reasonably likely to prevent a freelance worker from
further being offered freelance work and contracts.

SEC. 4. Written Contract. ~ Any hiring party obtaining or retaining the services of a

freelance worker shall execute a written contract with the freelance worker before the services are
rendered. The hiring party and the freelance worker shall each retain a signed copy of the contract.

The written contract shall be written in plain language, understood by both parties. It shall

include, at the minimum following:


(a) Itemization of all services to be provided by the freelance worker,

(b) Details of compensation and other worker's benefits, including rate, method and schedule of

payment;
(c) Period of employment;

(d) Grounds for breach of contract on the part of the hiring party and of the freelance workers;

and

(e) Any other conditions, term or clause that the Department of Labor Employment (DOLE) may

direct, subject to the provisions of this Act.

The contract must state the necessary personal circumstances of the freelance worker,
including the worker’s tax identification number. No modification of the terms of the contract shall
be enforceable unless signed by both the hiring party and freelance worker.

SEC. 5. Down Payment. An initial partial payment for the contracting of services of the
freelance worker shall be made upon engagement, which shall be not less than thirty (30%) of the
contract price.

SEC. 6. Night Shift Differential. ~ Freelance workers who are required to be physically
present in the workplace, or those on field assignments, shall be paid a night shift differential of
not less than ten percent (10%) of their regular compensation for each hour of work performed
between ten o'clock in the evening and six o'clock in the morning, unless there is a more favorable
fee stipulated in the contract.

SEC. 7. Hazard Pay. — All freelance workers deployed in dangerous areas such as strife-
tom or embattled locations, distressed or isolated stations, prison camps, mental hospitals,
radiation-exposed clinic, laboratories or disease-infested areas, or in areas declared under a state
of calamity or emergency for the duration of deployment and unduly exposes them to great danger,
contagion, radiation, occupational risks or perils to life, shall be compensated with a hazard pay
equivalent to at least twenty-five percent (25%) of the total payment for the period of such
deployment as agreed upon in the contract, unless there is a more favorable fee stipulated therein.

SEC. 8 Unlawful Practices. - It shall be unlawful for any hiring party to:

a) Pay the compensation due the freelance worker later than fifteen (15) days after the date of

payment of compensation stated in the written contract or after the rendition of services in cases

where there is no written contract;

b) Require as a condition of payment of compensation at any time after a freelance worker has

commenced rendition of services, that the latter accept less than the specified contract price; or

c) Commit any act of retaliation against any freelance worker for:
1.) Opposing any practice prohibited by this Act;
2.) Filing a complaint authorized under this Act,
3.) Testifying or assisting in any proceeding authorized under this Act;
4.) Commencing a civil action alleging a violation of this Act;

5.) Assisting the DOLE in an investigation commenced pursuant to this Act; or


6.) Providing information to the DOLE pursuant to the terms of a mediation o conciliation

agreement under this Act.

SEC. 9. Civil Penalty. — A person who commits any of the unlawful practices enumerated
in Section 8 of this Act shall be punished by a fine not less than Fifty thousand pesos (P50,000.00)
but not more than Five Hundred Thousand Pesos (P500,000.00)

CHAPTER IL
BUREAU OF FREELANCE WORK AND FREELANCE WORKERS PORTAL

SEC. 10. Bureau of Freelance Workers. ~ The Bureau of Freelance Workers is hereby
created as a line bureau under the Department of Labor and Employment. It shall be primarily
responsible for overseeing, supervising, regulating, enforcing, protecting, implementing and
promoting the welfare of all freelancer workers and shall serve as the controlling authority on all
matters relating to freelance work

SEC. 11. Freelance Workers Portal. ~ The Freelance Workers Portal is hereby created, as
an internet-based, digital platform dedicated to registered bonu fide freelance workers. The
platform shall perform the following functions:

(a) Fair Pay and Contract Standards ~ Provide model freelance contracts with clauses on
payment terms, ownership of work, and cancellation policies, and publish industry-
standard pay benchmarks or award rates for freelancers

(b) Freelancer Rights and Protections - Explain the legal distinction between contractor
and employee and outline rights under this Act, the Labor Code and all relevant laws,
rules and regulations regarding freelance work, and provide guidance on sham
contracting and remedies upon misclassification

(c) Payment Security - Introduce a freelance payment calculator which covers rates, taxes,
social security benefits, and expenses among others, and offer dispute resolution or
mediation services for unpaid invoices, wage and backpay recovery

(d) Workplace Wellbeing - Provide resources on mental health, isolation, and work-life
balance for freelancers, and share tax, social security, and insurance guidance tailored
to various industries of freelance work

(e) Platform and Client Transparency - Require gig platforms and major clients to disclose
standard terms, fees, and dispute policies, and provide a platform for employer review
and rating system so freelancers can make informed choices about where to work

(£) Support and Advocacy ~ Introduce a dedicated helpline or chatbot for freelancers that
provide guides for employment transitioning to freelancing, and information about
government grants or programs available to freelancer workers

The Freelance Workers Portal shall be maintained, administered and operated by the
Bureau of Freelance Workers, subject to the guidelines set by the DOLE.

CHAPTER Il
AGENCY ENFORCEMENT AND ADMINISTRATIVE PROCESS

SEC. 12. Complaints. - Any person or such person's authorized representative aggrieved
by a violation of this Act, may file a complaint with the DOLE, without prejudice to the filing of
civil action in appropriate cases.


SEC. 13. Prohibition Against Forum Shopping. - Prohibition Against Forum Shopping. -
When a civil action has been initiated in a court of competent jurisdiction arising from any
violation of this Act, a breach of contract, or any similar claim at law or equity arising out of the
same transaction or series of transactions, no other case involving the same cause of action shall
be filed with the DOLE.

SEC. 14, Investigation. - Upon receiving a complaint alleging a violation of this Act, the
DOLE shall notify the respondent in writing and investigate such complaint in a timely manner.
Within fifteen (15) calendar days of receiving such written notification, the respondent shall
provide the DOLE with a written response and such other information as the DOLE may request.
‘The DOLE shall notify each complainant in writing, not less than thirty (30) calendar days after
the complaint is filed, of the status of the complaint and any resulting investigation.

SEC. 15. Mediation and Conciliation. - The DOLE may, at any time after the filing of a
complaint, attempt to resolve the complaint by any method of dispute resolution, including
mediation and conciliation. If a conciliation agreement is entered into, the DOLE shall embody
such agreement in an order and serve a copy thereof upon alll parties to the conciliation agreement.

CHAPTER IV
CIVIL ENFORCEMENT

SEC. 16. Notice of Violation and Order of Payment. - \f, as a result of an investigation of
a complaint or an investigation conducted upon its own initiative, the DOLE finds cause to believe
that a violation of this Act has occurred, it shall issue a notice of violation to the respondent and
order the corresponding payment of compensation due to the prevailing party.

SEC. 17. Violation of Order of Payment. - The order of payment shall include an interest
rate of six percent (6%) per annum which shall be awarded to the prevailing party in case the
violation continues.

SEC. 18. Civil Action. - Except as otherwise provided by law, any person aggrieved by a
violation of this Act may file a complaint in a court of competent jurisdiction for damages,
injunctive relief and such other remedies as may be appropriate, without prejudice to the filing of
a criminal action in appropriate cases. The prevailing party shall be entitled to an award of
reasonable attorney's fees and costs.

No person claiming to be aggrieved by a violation of this Act may bring a civil action ina
court of competent jurisdiction if such aggrieved person, or one's representative, has filed a
complaint with the DOLE pursuant to Chapter II of this Act and based upon the same transaction
or series of transactions, unless that complaint has been terminated without prejudice to a
subsequent civil action.

SEC. 19. Non-Waiver. - Except as otherwise provided by law, any provision of any
contract or agreement purporting to waive rights under this Act is against public policy and shall
be null and void

SEC. 20. Coverage. - This Act shall apply only to contracts or agreements entered into
upon the effectivity of this Act.

CHAPTER V
TAXATION

SEC. 21. Tax Relief. - Freelancers, as defined under this Act, shall be entitled to tax relief
within the threshold provided under the National Internal Revenue Code of 1997, as amended, and
Republic Act No. 9178, otherwise known as the "Barangay Micro Business Enterprises (BMBEs)
Act of 2002."


SEC. 22. Special Assistance. - Every BIR Revenue District Office shall designate a lane
or a special assistance desk that shall be manned by an officer who shall assist freelance workers
on their inquiries and in complying with the processing of documents, including the registration
requirement under this Act.

CHAPTER VI
FINAL PROVISIONS

SEC. 23. Report. - One (1) year after the effectivity of this Act, and every year thereafter,
the Secretary of Labor and Employment shall submit a report to the Committees on Labor and
Employment of the Senate of the Philippines and the House of Representatives regarding the
effectiveness of the provisions of this Act in improving freelance contracting and payment
practices. The report shall include, at the minimum, the number of complaints received,
investigations initiated and notices issued by the DOLE on violations of this Act, and complaints
settled by mediation or conciliation.

SEC. 24. Information Campaign. - The DOLE shall, in coordination with the DTI, BIR,
local government units and other relevant agencies, initiate a program with the objective of
informing freelance workers of their rights and obligations, the proper procedure of registering as
a taxpayer, and the modes of legal redress as provided for in this Act, and in other laws and
regulations.

SEC. 25. Suppletory Application. - The provisions of Republic Act No. 11058, entitled
"An Act Strengthening Compliance with Occupational Safety and Health Standards and Providing
Penalties for Violations Thereof! shall be applied suppletorily to this Act.

SEC. 26. Implementing Rules and Regulations. - Within fifteen (15) days from the
effectivity of this Act, the Secretary of Labor and Employment shall, in coordination with the BIR
and other relevant agencies, issue the rules and regulations from the implementation of this Act.

SEC. 27. Separability Clause - If any part, section or provision of this Act is declared
invalid or unconstitutional, the other provisions not affected by such declaration shall remain in
full force and effect.

SEC. 28. Repealing Clause - All laws, decrees, orders, rules, and regulations, or other
issuances or parts thereof inconsistent with the provisions of this Act are hereby repealed, amended
or modified accordingly.

SEC. 29, Effectivity - This Act shall take effect fifteen (15) days after its publication in the
Official Gazette or in a newspaper of general circulation.

Approved.