Law Summary
Constitutional and Legal Basis
- Presidential Decree No. 1597 (1978) mandates the Executive Branch agencies, including GOCCs, to follow prescribed compensation and position classification systems.
- Section 5, Article IX-B of the 1987 Constitution requires Congress to standardize compensation for government officials and employees, including those in GOCCs.
- Joint Resolution No. 4 (2009) reiterates the applicability of P.D. No. 1597 and authorizes the President to modify the CPCS.
- Republic Act No. 10149 establishes the Governance Commission for GOCCs (GCG) with authority to classify GOCCs, conduct compensation studies, develop, and recommend a competitive CPCS.
- Section 9 of R.A. No. 10149 states that no GOCC shall be exempt from the GCG-developed CPCS, regardless of conflicting laws.
Prohibition on Negotiation of Economic Terms in CBAs
- Governing Boards of all GOCCs, whether chartered or non-chartered, are prohibited from negotiating economic terms of Collective Bargaining Agreements (CBAs) or Collective Negotiation Agreements (CNAs) with their employees.
- CNA incentives related to savings from the Corporate Operating Budgets (COBs) of chartered GOCCs shall continue under Department of Budget and Management (DBM) policies and are extended to non-chartered GOCCs to promote uniformity.
- Incentives governed by the Civil Service Commission (CSC), such as awards for service excellence, remain under CSC policies and relevant laws.
Role of the Governance Commission for GOCCs (GCG)
- GCG is tasked to implement and administer the CPCS.
- GCG will formulate implementing rules and guidelines covering hiring rates, promotions, overtime, night shift differential, merit increases, and Early Retirement Incentive Programs (ERIPs).
- Implementation considers prevailing private sector practices and principles from the CPCS and the Executive Order.
Funding and Financial Considerations
- Compensation adjustments depend on the GOCC's financial capability and approved corporate operating budgets.
- For GOCCs receiving government allocations or subsidies, approvals from both GCG and DBM are required.
Protection Against Salary Reduction
- No reduction in authorized salaries as of December 31, 2015, shall occur during CPCS implementation for incumbent officers and employees.
Additional Incentives Outside the CPCS
- GCG may recommend additional incentives outside the CPCS for certain positions based on GOCC performance.
- Such incentives require the GOCC to have fully paid taxes and dividends mandated under its charter or applicable law.
Early Retirement Incentive Plan (ERIP)
- Officers and employees covered by the CPCS who voluntarily retire or are separated due to GOCC reorganization under R.A. No. 10149 shall receive additional incentive benefits.
- The incentive is calculated based on the Basic Monthly Pay (BMP) multiplied by a factor depending on years of service:
- Up to 20 years: 1.00 x BMP x number of years
- Over 20 to 30 years: 1.25 x BMP x number of years
- Over 30 years: 1.50 x BMP x number of years
Transitory Provision
- GOCCs not yet reorganized, rationalized, or those under pending abolition, dissolution, or privatization recommendations must maintain current compensation frameworks despite CPCS effectiveness.
Repeal of Inconsistent Issuances
- All conflicting orders, circulars, issuances, board resolutions, rules, or regulations contrary to the Executive Order are repealed or modified accordingly.
Separability Clause
- If any provision of the Executive Order is declared invalid or unconstitutional, the remainder of the Order remains effective and enforceable.
Effectivity
- The Executive Order takes effect immediately upon publication in a newspaper of general circulation.