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13'h CONGRESS OF THE REPUBLIC ) 
) 
~Wl J!L -0 
:i~5 
OF THE PHILIPPINES 
FIRST REGULAR SESSION 
) 
SENATE 
S. BILL NO. 
INTRODUCED BY HONORABLE RALPH G. RECTO 
EXPLANATORY NOTE 
This bill seeks to protect workers in the event of company closures or cessation of 
operations by establishing the proper mechanism and standards. 
This legislation provides for a mandatory notification requirement of 90 days in case of 
businessiplant closure, mass layoff, shutdown or any form of cessation of operations 
Allowing the affected employees to use a specific amount of paid work time lo seek 
alternative employment would not unduly prejudice the employer, but it will definitely 
benefit the employee concerned. 
Under this Act, the Labor Protection Board as herein created shall investigate possible 
anomalies arising from the intended closure or cessation of operations by an employer. 
Furthemiore, the proposal recognizes the right of affected employees or their collective 
bargaining representative to file civil actions against unscrupulous employers. 
In line with the policy of the State to protect workers from economic insecurity due to 
involuntary unemployment and promote their rights in the event of said contingencies, 
the immediate approval of this proposed measure is urgently 
c 
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THIRTEENTH CONGRESS OF THE REPUBLIC 
) 
"04 JUL -6 
:45 
OF THE PHILIPPINES 
) 
First Regular Session 
) 
.'(:EIVED O Y : _ _  
S E N A T E  
S. BILLNO. 
Introduced bv SENATOR RALPH G. RECTO 
AN ACT 
TO PROTECT WORKERS IN THE EVENT OF COMPANY CLOSURES OR 
CESSATION OF OPERATIONS BY ESTABLISHING THE MECHANISM AND 
PROPER STANDARDS THEREFOR, AND FOR OTHER PURPOSES 
Be it enacted by the Senate and House of Representatives of the Philippines in Congress 
assem bled. 
CHAPTER 1 - PRELIMINARY PROVISIONS 
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of2004." 
SECTION '1. Short Title. - This Act may be cited as the "Workers' Protection Act 
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SEC. 2. Declaration of Policy. - It is hereby declared the policy of the State to 
protect workers from economic insecurity due to involuntary unemployment and promote 
their rights in the event of such. For this purpose, the State hereby recognizes the right of 
all workers: 
(1) 
(2) 
(3) 
(4) 
to a reasonable period of notice for termination of employment; 
to seek alternative employment during the period of notice; 
to guarantee payments of wage claims, and 
to petition the proper government agency to review any act of an employer 
to close shop, cease operations, andor order a mass layoff of employees. 
SEC. 3. De3nition of Terms. -As used in this Act, the following terms: 
a. Bankruptcy shall mean a condition whereby an employer, who after a petition 
to the court by himself or his creditors, is judged legally insolvent. 
b. Closure shall mean the permanent cessation of operations due to insolvency, 
bankruptcy, foreclosure, and/or dissolution resulting in an employment loss. 
c. Cessation ofoperations shall mean the permanent or temporary shutdown of a 
single site of employment or one or more facilities or operating units within a 
single site of an employment, if the shutdown results in an employment loss at 
the single site of employment. For purposes of this Act, it shall include but not 
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exclusive of, cessation of operations due to bankruptcy, closure, foreclosure, 
insolvency, dissolution and other similar acts. 
d. Insolvency shall mean the condition whereby an employer is unable to meet 
his obligations as they accrue in the course of his trade or business. 
e. Employer shall mean any person acting directly or indirectly in the interest of 
an employer in relation to an employee and shall include, all govemment- 
owned or controlled corporations and institutions, as well as non-profit private 
institutions, or organizations. 
f. Employee shall mean any individual employed an employer. 
g. Mass lay-off shall mean a reduction in force which (i) is not a result of a 
closure and (ii) results in an employment loss at the single site of employment 
during any 30-day period for (1) at least 33% of employees, and/or (2) at least 
50 employees, excluding part-time employees. 
h. Aflected employees shall mean employees who may reasonably be expected to 
experience an employment loss as a consequence of a proposed cessation of 
operations or mass layoff by their employer. 
i. Involuntary unemployment shall mean the termination of employment by an 
employer as a result of cessation of operations. 
Employment loss shall mean (i) a termination of employment, other than a 
discharge for cause, voluntary departure or retirement, (ii) a layoff exceeding 
six (6) months, or (iii) a reduction in hours of work of more than fifty per cent 
(50%) during each month of any six-month period. 
k. Foreclosure shall mean the process by which a mortgagee acquires an 
absolute title to the property of which he had previously been only the 
conditional owner, or upon which he had previously a mere lien or 
encumbrance. 
j. 
CHAPTER 2 - NOTIFICATION REQUIREMENT 
SEC. 4. Notification Requivement. - An employer shall not order a plant closure, 
mass layoff, shutdown or any form of cessation of operations until the end of a 90-day 
period after the employer serves written notice of such an order: 
(a) 
to each affected employee; 
(b) 
(c) 
to each collective bargaining representative; 
to the chief elected official of the local government unit within such 
closing or lay-off to occur, and 
to the Labor Protection Board as herein created. 
(d) 
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SEC. 5. Right to Alternative Employment. - During the 90-day notice period 
which shall commence upon the receipt of the said notice by the affected employee, an 
employer shall allow the affected employee to use a specific amount of paid work time to 
seek alternative employment. 
SEC. 6. Right to Petition the Act of the Employer. - During the 90-day notice 
period, the affected employees or their collective bargaining representative may 
petition the Labor Protection Board as herein created to 
investigate possible 
anomalies arising from the intended closure 
or cessation of operations by an 
employer. 
SEC. 7. Civil actions against employers. - Any employer who orders a closure or 
mass layoff or shutdown or any form of cessation of operations or mass layoff in 
violation of Sec. 4 of this Act shall be liable to each aggrieved employee who suffers 
an employment loss as a result of such closure or mass layoff or any form of cessation 
of operations for the following: 
(a) back pay for each day of violation at a rate of compensation not less than 
the final regular rate received by such employee, including benefits and contributions, 
and 
(b) mandatory severance pay. 
Any employer who violates Sections 4 and 5 of this Act shall be subject to a civil 
penalty of fifteen thousand pesos (Pl5,OOO.OO) for each day of violation, provided 
however that such penalty shall not apply if the employer pays to each aggrieved 
employee' the amount for which the employer is liable to that employee within three (3) 
weeks f?om the date the employer orders the closure or mass layoff or shutdown or 
cessation of operations. 
CHAPTER 2 - THE LABOR PROTECTIONBOARD 
SEC. 8. The Labor Protection Board. - For purposes of this Act, there shall be 
created an independent agency to be known as the Labor Protection Board (LPB). 
SEC. 9. Composition. - The Board shall be composed of a Chairman and three 
Members who shall be nominated and elected in a Labor Conference called for this 
purpose except for the Chairman who shall be appointed by the President froin a selection 
of three nominees submitted by the Labor Conference. The Labor Conference shall be 
held within thirty days following the effectivity of this Act and shall be attended by 
delegates representing major labor federations. 
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SEC. 10. ' Qualifications of Nominees - The nominees for both the Chairman 
and Members must have the following qualifications: 
(a) Satisfactory background on labor and commerce particularly on corporation 
rules and laws. 
(b) Must not have worked or performed functions in any management of a 
company or establishment in the past. 
(c) Must not have business interests in any corporation or establishment. 
(d) Must not be related to any corporate official within the fourth degree of 
consaguinity: 
SEC. 11. Powers and Functions - The Board shall, in coordination with the 
Department of Labor and Employment (DOLE), Securities and Exchange Commission 
(SEC), and the Department of Justice (DOJ), perform the following functions: 
(a) Undertake the investigation of companies and establishments that would 
undergo closure or cessation of operations, shutdown, rotation or retrenchment of 
workersiemployees due to labor saving devices, to prevent losses, dissolution, insolvency 
or bankruptcy; 
(b) Compel the disclosure and submission of its book of accounts and other 
financial records following an information to the Board that the company or 
establishment will lead to closure or cessation of operation, shutdown, rotation or 
retrenchment of employeesiworkers; 
(c) Issue subpoenas to any official o f  a company or establishment and other 
parties concerned to require attendance in the investigation; 
(d) Hold custody of the company's machinery and other production equipment 
from the commencement of the investigation, or to require the posting of bond or both to 
secure the interests, of the affected workersiemployees; 
(e) Ensure that payment of wagesisalaries and other benefits were being made 
continuously while the company is undergoing an investigation; 
(f) Ensure the issuance of notices to workersiemployees as required in this Act 
and the enforcement of the period to seek alternative employment; 
(g) Facilitate the immediate release of monetary claims of workerdemployees 
which may be made though banks or which may be deemed sufficient by the Board; 
(h) Conduct quarterly inspection on the book of accounts and financial records of 
the companies and establishments registered with the Securities and Exchange 
Commission to monitor its operations, and 
(i) Initiate legal action against any company or establishment found to violate any 
of the provisions of this Act. 
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SEC. 12. Funding - All employees except managerial employees registered 
under this Act shall pay annual contributions in the amount to be determined by the 
Board; Provided That, it shall not exceed the amount of twenty pesos (20.00) and not be 
lower than ten pesos (10.00); Provided Further That, it shall be used solely for the 
operations of the Board. 
Any additional funding requirements necessary to carry out the provisions of this 
Act shall be charged to the current fiscal year appropriations of the Department of Labor 
and Employment. Thereafter, such sum as may be necessay is hereby authorized to be 
appropriated in the General Appropriations Act o f  the year following its enactment into 
law. 
CHAPTER 3 - FINAL PROVISIONS 
SEC. 13. Implementing Rules and Regulations. - The implementing rules and 
regulations to carry out the provisions of this Act shall be adopted and promulgated by 
the Department of Labor and Employment. 
SEC. 14. Repealing Clause. - All laws, executive orders and provisions thereof 
inconsistent with this Act are hereby repealed or modified accordingly. 
SEC. 15. Separability Clause. - If any provision or part o f  this Act, or the 
application thereof to any person or circumstance, is held invalid or unconstitutional, the 
remainder of this Act or the application of such provision or part thereof to other persons 
or circumstances shall not be affected thereby. 
SEC. 16. Effectiviq Clause. - This Act shall take effect fifteen days after its 
publication in at least two (2) national newspapers of general circulation. 
Approved, 
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