Republic of the Philippines
HOUSE OF REPRESENTATIVES:
Quezon City

20 CONGRESS
First Regular Session

HOUSE BILL NO. 387

Introduced by. REP. JUAN CARLOS “ARJO” C. ATAYDE

AN ACT REGULATING THE USE OF ARTIFICIAL INTELLIGENCE AND
AUTOMATION SYSTEMS IN THE LABOR INDUSTRY AND FOR OTHER
PURPOSES

Artificial Intelligence (Al) refers to development of computer systems that can
perform tasks typically requiring human intelligence. AI algorithms are designed to
develop expert systems capable of making predictions or classifications using input
data means systems that can: (a) perceive an environment through data acquisition,
process and interpret the derived information, and take actions or imitate intelligent
behavior to achieve a specified goal; and (b) learn from past behavior and results and
adapt their behavior accordingly.

According to advocates for the use of AI, the said technology has the capacity
to greatly enhance productivity and efficiency thus ushering a new era marked by
increased employment opportunities. In other jurisdictions, AI has already been
applied in the human resources sector particularly in the following aspects: (a)
recruitment and hiring; (b) process improvement; and (c) automation of
administrative tasks; and (d) records management. However, many fear that the same
poses threats to the labor force. There is fear that the use of AI will result in
displacement by substituting human workers who will then lose their jobs.

Addressing these industry-related concerns demand a multifaceted approach.
This means developing transparent AI systems and governance policies, ensuring the
passage of regulatory laws, and investing in education and reskilling programs to help
workers adapt to the changing landscape in the labor industry.

It is important to create a clear framework on the use of AI to minimize the
chances of discrimination. The government should set forth policies in welcoming the


adoption of new technologies such as artificial intelligence that would augment
human intelligence and skills without destroying or replacing jobs.

This measure seeks to promote labor augmentation as employers may deem
useful and/or beneficial in the workplace as an administrative tool or an integrated
or complementary part to process workflows provided that AI governance policies
are in place for compliance.

To address the growing concerns of the industry stakeholders, this proposed
measure prohibits employers from making their decisions based solely on
recommendations or results solely generated by the use of AI or automated systems.
Moreover, replacement of human workers, displacement, loss of security of tenure, or
diminution of existing salaries and/or benefits because of the adoption and use of AI
and automation technologies.

In view of the state policy to promote labor augmentation rather than labor
replacing technologies, the passage of this bill is urgently sought.

REP. JUAN LOS “ARJO” ATAYDE


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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

20" CONGRESS
First Regular Session

387

HOUSE BILL NO.

Introduced by. REP. JUAN CARLOS “ARJO” C. ATAYDE

AN ACT REGULATING THE USE OF ARTIFICIAL INTELLIGENCE AND
AUTOMATION SYSTEMS IN THE LABOR INDUSTRY AND FOR OTHER
PURPOSES

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 “Protection of Labor
Against Artificial Intelligence (AI) Automation Act.”

Section 2. Declaration of Policy. - It is the policy of the State to ensure
protection and safeguard the livelihood and security of tenure of its citizens through
regulation of the possible implementation of artificial intelligence (AI) and/or
automation technologies in the workforce. The State is mandated to strike a balance
between the right of business owners or employers to reasonable return on investment
aided by technological advancements and the preservation of employment
opportunities for the people.

Section 3. Definition of Terms. - For purposes of this Act, the following terms
shall be defined as stated below:

a. Artificial Intelligence (Al) - refers to an interdisciplinary domain that blends
computer science with extensive datasets to facilitate problem-solving. It encompasses
subdomains like machine learning and deep learning, which are often discussed in
association with AI. These subfields involve Al algorithms designed to develop expert
systems capable of making predictions or classifications using input data means
systems that can: (a) perceive an environment through data acquisition, process and
interpret the derived information, and take actions or imitate intelligent behavior to


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achieve a specified goal; and (b) learn from past behavior and results and adapt their
behavior accordingly;

b. Automated Systems - refers to technologies or software that rely on algorithms
and data-driven processes which shall in effect make the hiring decision without
significant human intervention;

c. Automation - refers to the use of technology and machinery to perform tasks
or processes with minimal human intervention. It involves the design, development,
and implementation of systems and software that can carry out repetitive or complex
actions automatically, efficiently, and accurately; and

d. Human Workers - refers to any human personnel engaged by an employer
regardless of employment status.

Section 4. Artificial Intelligence (AI) Governance Policies. - Employers may
adopt AI software that they may deem useful and/or beneficial in the workplace as
an administrative tool or an integrated or complementary part to process workflows,
Provided, that the use of Al in operations is regulated through the creation of an AI
Governance Policy to provide employees with guidelines for AI adoption and usage
in the workplace, how the collection, use and storage of data are compliant to the Data
Privacy Act of 2612, and other important information relating thereto.

Such ATI Governance Policy may allow employees to use AI in business
processes and workflows, subject to limitations made known to the employees
through said policy. Employees are enjoined to consult their policy in the event of
uncertainty as to a specific application and use of AI and on the propriety of use
thereof.

Employers shall ensure the use of AI software in a legally compliant manner.
They shall see to it that AI Governance Policies are periodically updated to comply
with existing laws and policies.

Section 5. Prohibited Acts. -

a, Employers and recruitment entities shall be prohibited from using AI or
automated systems as their sole or primary basis in the hiring and termination
of employees. Human evaluation, discretion and judgment shall always be a
significant factor or part in the hiring and termination process. Any use of AI
or automated systems during the said processes shall be directly supervised
and complemented by human oversight.


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b, The use of Aland automation technologies to replace human workers resulting
in displacement, loss of security of tenure, diminution of existing salaries or
benefits or unemployment is hereby prohibited unless an equivalent
alternative employment opportunity for affected human workers are made
available.

Section 6. Retrenchment. - The prohibition set forth in Section 4(b) not apply
in cases of retrenchment, Provided, that (1) the losses incurred are substantial and not
de minimis; (2) the losses are actual or reasonably imminent; (3) the retrenchment is
reasonably necessary and is likely to be effective in preventing the expected losses; (4)
the alleged losses, if already incurred, or the expected imminent losses sought to be
forestalled, are proven by sufficient and convincing evidence; (5) the employer
exercises its prerogative to retrench in good faith; and (6) the employer uses fair and
reasonable criteria in ascertaining who would be retrenched or retained.

In the event of a valid retrenchment, AI and/or automation technologies may
be used for operational purposes, subject to approval of the Department of Labor, after
submission of a report containing the following details:

1. Reason/s or justification for the proposed retrenchment;
2. Proposed use of Aland/or automation systems in lieu of human workers solely
for operational purposes and other important details thereof;

3. The number of human workers likely to be affected by the proposed
retrenchment;

. The selection method of choosing retrenches which in no case be aided by AI;

The proposed date when retrenchment is to be effected;

The severance pay and other benefits to be provided to the affected workers;

. The number of employees retrenched in the past years; and

. The date, time, and place of consultation with the employees or their unions
with proof thereof.

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Section 7. Industry Necessity of AI and Automation Technologies - This Act
shall not apply to industries or positions where AI and automation technologies are
deemed necessary for safety, efficiency, or the overall benefit of society, provided that
appropriate measures are taken to mitigate job displacement.

Section 8. Reportorial Requirements. - Employers shall be required to report
any planned implementation of AI or automation technologies that may lead to job
displacement to the relevant labor authorities and provide documentation outlining
the impact assessment and mitigation measures. The said report shall likewise come
up with measures to mitigate the negative impact on human capital prior to the
implementation of Al or automation technologies.


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Section 9. Transition Assistance and Reskilling. -

a. Employers implementing AI or automation technologies that result in
permissible job displacement under this Act shall be obligated to provide transition
assistance to affected human workers. Transition assistance may include severance
packages, extended benefits, and support for skills development.

b. Government agencies shall establish reskilling and upskilling programs to
facilitate the transition of affected workers into new roles within the evolving job
market.

Section 10. Employee Evaluations and Performance Assessments Using
Artificial Intelligence. - Employers shall ensure fairness, non-discrimination, and
compliance with applicable laws relating to labor in the conduct of employee
evaluations and performance assessments aided by AI. They shall:

a. Maintain transparency in the use of AI systems in employee evaluations,
Provided, that employees are informed prior to the evaluation that AI
technology will be used in assessing their performance with the right to request
for further details regarding the evaluation process;

b. Put in place clear procedures for the calibration, monitoring, and validation of

Al systems to be used to ensure accuracy and reliability;

. Secure the informed consent from the employee before the use of Al;

d. Provide training to personnel in charge of using and administering of AI
systems; and

e. Conduct regular reviews and audits of all AI systems to assess the impact on
employees.

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Section 11. Right to Refuse. - Employees have the right to communicate with
their employer their objection to or refusal to undergo AI-driven evaluations and may
request for an alternative evaluation method. Such employees shall in no way be
discriminated against for such refusal.

Section 12. Role of the Department of Labor and Employment. - The
Department of Labor and Employment has the authority to oversee and compel the
submission of Al Governance Policies to ensure compliance with existing laws, rules,
and regulations, and are compliant with the ethical standards of business and the
industry in consultation with relevant government agencies or offices. It shall likewise
monitor and assess the compliance of employers with the provisions of this law.

Section 13. Data Privacy - All data collected and processed by AI systems in
employee evaluations shall be handled in accordance with the Data Privacy Act of


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2012. Employers are required to implement effective security measures to safeguard
employee data from unauthorized access.

Section 14. Penalties. - Any person who willfully or knowingly does or
permits, or causes to be done any violation of this Act shall be punished with
imprisonment of not less than six (6) months or more than six (6) years, and if the
offender is an alien, he/she shall be subject to deportation proceedings.

Section 15. Violations of Juridical Entities. - If the violation is committed by a
corporation, partnership, association, or other juridical entity, the penalty of
imprisonment mentioned in the preceding paragraph shall be imposed on the
responsible directors or officers thereof, and the lack of corporate personality shall not
be raised as a defense in case the juridical entity is unregistered.

Section 16. Implementing Rules and Regulations. - Within six (6) months from
the approval of this Act, the Department of Labor and Employment shall promulgate
the Implementing Rules and Regulations (IRR) of this Act.

Section 17 Separability Clause. - If any section or provision of this Act is held
unconstitutional or invalid, the other sections or provisions shall not be affected.

Section 18. Repealing Clause. - All laws, Presidential decrees, executive orders
and rules and regulations, or parts thereof, inconsistent with the provisions of this Act
are hereby repealed or modified accordingly.

Section 19. Effectivity. - This Act shall take effect fifteen (15) days from the
date of its complete publication in at least two (2) newspapers of general circulation.

Approved,