Question & AnswerQ&A (Republic Act No. 6971)
The short title is the "Productivity Incentives Act of 1990."
The policy is to encourage higher levels of productivity, maintain industrial peace and harmony, and promote shared responsibility between workers and employers, recognizing business enterprises' rights to reasonable returns and expansion, while providing corresponding incentives to labor and capital for voluntary programs sharing the fruits of labor.
It applies to all business enterprises with or without existing and duly recognized or certified labor organizations, including government-owned and controlled corporations performing proprietary functions.
It covers all employees and workers including casual, regular, supervisory, and managerial employees.
It refers to industrial, agricultural, or agro-industrial establishments engaged in production, manufacturing, processing, repacking, or assembly of goods, including service-oriented enterprises certified by appropriate government agencies.
It is a negotiating body in a business enterprise composed of equal representatives from labor and management created to establish a productivity incentives program and settle disputes arising therefrom.
It is a formal agreement by the labor-management committee promoting gainful employment, improving working conditions, and resulting in increased productivity and cost savings, whereby employees get salary bonuses proportional to productivity increases over the preceding three years' average.
The committee must have an equal number of representatives from management and rank-and-file employees, with both having equal voting rights.
They are elected by at least a majority of all rank-and-file employees who have rendered at least six months of continuous service.
Labor must receive not less than half of the percentage increase in the productivity of the business enterprise.
Yes, productivity agreements shall supplement existing collective bargaining agreements.
The program or agreement may be integrated into the collective bargaining agreement entered into thereafter, in addition to agreed terms between labor and management.
A special deduction from gross income equivalent to 50% of the total productivity bonuses given to employees over and above ordinary and necessary business deductions is granted, starting the next taxable year after the Act's effectivity.
Conviction may result in imprisonment of 6 months to 1 year, a fine from P2,000 to P6,000, or both, at the discretion of the court; in corporations or partnerships, responsible officers or employees may be penalized.
No, the Act shall not diminish or reduce any benefits or privileges under existing laws, company policies, contracts, or agreements.
The labor-management committee must meet to resolve disputes and may seek assistance from the National Conciliation and Mediation Board; unresolved disputes within 20 days must be submitted to voluntary arbitration.
Bonuses must be given not later than every six months from the start of the program, over and above existing bonuses.
It must submit copies of the program to the National Wages and Productivity Commission and the Bureau of Internal Revenue for information and record.
The Secretary of Labor and Employment and the Secretary of Finance jointly promulgate the necessary rules and regulations within six months from the Act's effectivity.