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| HOUSE 1F REPRESENTATIVES

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Republic of the Philippines iD

HOUSE OF REPRESENTATIVE! paie3 0 UN 2016
‘Quezon City, Metro Mar 7H: ‘

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SEVENTEENTH CONGRESS
First Regular Session

354

REGISTRATION CNIT

House Bill No. BiLLS AND INDEX SERVICE

Introduced by DIWA Party-list Representative Emmeline Y. Aglipay — Villar

EXPLANATORY NOTE

This bill seeks to establish a Productivity Improvement Program, repealing for the
purpose Republic Act No. 6971, otherwise known as the “Productivity Incentives Act of
1990”

Anticle XIII, Section 3 (Social Justice and Human Rights) of the Constitution provides
that the State shall regulate the relations between workers and employers, recognizing the
right of labor to just share in the of production and the right of enterprises to reasonable
return on investments and to expansion and growth.

R.A. No. 6971, in turn, states that it is the policy of the State to encourage higher
levels of productivity, maintain industrial peace, and promote the principle of shared
responsibility in employer-employee relationship. It provides fiscal incentives to
esiablishments that voluntarily undertake productivity improvement programs, and _
encourages sharing the gains of improved productivity performance with workers. “

While R.A. No. 6971 is seen as a good piece of social legislation which can
effectively contribute to the attainment of economic development for the country, it is widely
ignored by target sectors because of its seemingly unattractive provisions. It has been
observed, for instance, that since its effectivity in November 1990, only a handful of business
enterprises have adopted and implemented productivity improvement programs because of
perceived policy and operational difficulties.

The National Wages and Productivity Commission regularly conducts regional and
sectoral consultations and evaluations on wages and productivity. The result of the
consultations shows the need to liberalize the law to make it more attractive to its intended
beneficiaries and to attain its intended purpose.

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Adoption of productivity programs will result not only in increased incomes for both
the workers and the establishments. It will likewise make the Filipino workforce more
competitive in international trade, thereby contributing to poverty reduction through job
generation.

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

K. Villon
EMMELINE Y. AGLIPAY - VILLAR
Representative, DIWA Party-list

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

SEVENTEENTH CONGRESS
First Regular Session

354

House Bill No._?*

Introduced by DIWA Party-list Representative Emmeline Y. Aglipay ~ Villar

AN ACT ESTABLISHING A PRODUCTIVITY IMPROVEMENT PROGRAM,
REPEALING 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. Declaration of Policy. — It is the declared policy of the State to:
(a) Encourage higher levels of productivity in all industries so that Philippine
products and services can compete in the global economy;
(b) Maintain industrial peace and harmony and promote the principles 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 for
expansion and growth; and

(©)Provide corresponding incentives to both labor and capital for undertaking

voluntary programs to improve productivity.

SECTION 2. Coverage. ~ This Act shall apply to all business enterprises with or

without existing and duly recognized collective bargaining representatives. It shall cover all

private sector employees and workers regardless of their position, designation or status and

irrespective of the manner by which their wages are paid.

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

(a) Business Enterprise refers to a private industrial, agricultural or agro-industrial

establishment engaged in the production, manufacturing, processing, repacking,

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or assembly of goods. It also refers to a service-oriented enterprise,

(b) Productivity Incentives Committee refers to a negotiating body in a business
enterprise composed of representatives of labor and management created to
establish a productivity incentives program, and to settle issues arising from
the interpretation or implementation of the said program;

(c) Productivity Incentives Program refers to a formal agreement voluntarily
established by a productivity incentives committee or to any existing labor
management mechanism containing a productivity incentives program that will
promote gainful employment, improve working relations and conditions, and
result in increased productivity and efficiency, including cost savings; and

(a) Gainsharing refers to a productivity-based incentives pay formulated to
complement the productivity incentives program where workers and employers
share in the positive results of business operations brought about by
productivity improvements. The gainsharing system may take the form of
profit sharing or other forms of gainsharing mechanisms such as productivity

bonus, performance bonus, production bonus, and other similar schemes.

SECTION 4. Advisory on Productivity Incentives Schemes. ~ The Regional
‘Tripartite Wages and Productivity Boards (RTWPBs) shall issue an advisory on
productivity incentive schemes based on the guidelines issued by the National Wages and
Productivity Commission (NWPC).

SECTION 5. Productivity Incentives Committee. — A business enterprise or its
employees, through their authorized representatives, may initiate the formation of a
productivity incentives committee that shall be composed of an equal number of
representatives ftom the workers and from the management. Both workers and management
shall have equal voting rights in the committee. In case there is an existing labor-
management mechanism in the enterprise similar to a productivity incentives committee,
the mechanism may suffice: Provided, That its composition, voting tights, and the
manner by which the labor-management mechanism is created is in accordance with the
provisions of this section. The productivity incentives committee shall establish and
implement a productivity incentives program and settle issues arising from it in accordance

with Section 9 of this Act.

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At the request of any party to the negotiation, the NWPC or the RTWPBs may provide the
necessary studies, technical information and assistance, and expert advice to enable the
parties to comply with productivity agreements.

In business enterprises with duly recognized collective bargaining representatives, the
representatives of labor shall be those designated by the collective bargaining agent(s) of

the bargaining units(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

SECTION 6. Productivity Incentives Program. — The productivity incentives
program, duly ratified by the employees, shall contain, among others, provisions for
measuring productivity and efficiency improvements, sharing of productivity bonuses,
coverage, percentage sharing, forms of bonus payment, and manner and frequency of
distribution, in accordance with the terms and conditions that may be agreed upon by both
labor and management.

Productivity agreements voluntarily reached by the parties as provided in this Act are
without prejudice to any company policy, contract or collective bargaining agreement (CBA)
providing higher productivity incentives

SECTION 7. Incentives. —

(a) Subject to the provisions of Section 6 of this Act, a business enterprise which
adopts a productivity incentives program, duly and mutually agreed upon by
parties to the productivity incentives committee or any labor-management
mechanism, shall be granted a special deduction from the gross income
equivalent to fifty percent (30%) 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 of 1997, as amended.

(b)Grants for manpower training and special studies given to rank-and-file
employees, pursuant to a skills development program prepared by the productivity

incentives committee under the productivity incentives program, shall also

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entitle the business enterprise to a special deduction from gross income
equivalent to fifty percent (50%) of the total grants over and above the
allowable ordinary and necessary business deductions under the National
Internal Revenue Code of 1997, as amended.

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

(d)Priority training programs and services from the Department of Labor and
Employment (DOLE) and other partner goverment agencies shall be given to

business establishments adopting productivity incentives programs

SECTION 8. Notification. - _ A__ business enterprise. which adopts a
productivity incentive program shall submit copies of the same to the appropriate

RTWPB and to the Bureau of Internal Revenue (BIR) for their information and records.

SECTION 9. Issues and Grievances. — Whenever issues, grievances, or other
matters arise from the interpretation or implementation of the productivity incentives
program, the productivity incentives committee shall meet to resolve the issue within
fifteen (15) days from receipt of a formal complaint. The parties shall agree on whether
or not to suspend the implementation of the productivity incentives program pending the
resolution of the issue: Provided, That the business enterprise shall not be deemed to have
forfeited any tax incentives accrued prior to the date of occurrence of such issue or

grievance, and the workers shall not be required to reimburse the productivity bonuses

already granted to them under the productivity incentives program. Likewise, bonuses that
have already accrued before the issue or grievance shall be paid to the workers within six
(6) months from their accrual. Any issue which remains unresolved within thirty (30) days
from the time of its submission to the productivity incentives committee shall be submitted
for voluntary arbitration in line with the pertinent provisions of the Labor Code, as amended.
SECTION 10. Non-diminution of Benefits. — Nothing in this Act shall be
construed to diminish or reduce any benefits and other privileges enjoyed by the workers
under existing laws, decrees, executive orders, company policy or practice, or any agreement

of contract between the employer and employees

SECTION 11. Implementing Rules and Regulations. — The Secretary of Labor

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and Employment and the Secretary of Finance, in consultation with the NWPC, the National
Conciliation and Mediation Board (NCMB), the BIR, the Center for Industrial
Competitiveness (CIC), the Technical Education and Skills Development Authority
(TESDA), labor organizations and employer organizations, shall jointly promulgate and
issue within six (6) months from the effectivity of this Act such rules and regulations as are
necessary to carry out the provisions of this Act.

The DOLE, the Department of Trade and Industry (DTI, and the designated national
productivity organization in the Philippines shall conduct an extensive public information

campaign to promote the adoption of productivity incentives programs at the workplace.

SECTION 12. Separabili
unconstitutional, the same shall not affect the validity and effectivity of the other provisions

y Clause. ~ If any provision of this Act is declared

hereof.

SECTION 13. Repealing Clause. — Republic Act No. 6971, otherwise known as
the “Productivity Incentives Act of 1990”, is hereby repealed. All laws, decrees, executive
orders, issuances, rules and regulations or parts thereof inconsistent with the provisions of
this Act are hereby repealed or modified accordingly

SECTION 14. Effectivity. - This Act shall take effect fifteen (15) days after its

publication in the Official Gazette or in a newspaper of general circulation

Approved,

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