Declaration of Policy
- Encourages higher productivity levels.
- Maintains industrial peace and harmony.
- Promotes shared responsibility between workers and employers.
- Recognizes businesses' right to reasonable returns and growth.
- Provides incentives for voluntary labor capital programs sharing gains.
Coverage
- Applies to all business enterprises regardless of labor organization status.
- Includes government-owned corporations performing proprietary functions.
- Covers all employees: casual, regular, supervisory, and managerial.
Definition of Terms
- "Business Enterprise": Industrial, agricultural, agro-industrial, or service-oriented establishments certified by government agencies.
- "Labor-Management Committee": Equal representatives from labor and management who negotiate productivity incentive programs and resolve disputes.
- "Productivity Incentives Program": Formal agreement to improve employment, conditions, and productivity; grants bonuses based on productivity gains over previous three years; requires majority employee ratification.
Labor-Management Committee
- Can be initiated by business or employee representatives.
- Composed of equal labor and management representatives with equal voting rights.
- Labor reps from certified union or elected by majority of rank-and-file with six months service.
- National Wages and Productivity Commission can assist with studies and advice on request.
Productivity Incentives Program
- Specifies sharing methods and bonus determination factors.
- Bonuses to labor not less than 50% of productivity increase percentage.
- Supplements existing collective bargaining agreements.
- Can be incorporated into collective bargaining if union forms during program duration.
Benefits and Tax Incentives
- Special deduction of 50% of productivity bonuses from gross income, additional to ordinary deductions.
- Similar 50% deduction for grants on manpower training and special studies.
- Strike or lockout from program violations suspend program but do not forfeit accrued tax incentives or bonuses.
- Bonuses must be paid within six months, not considered salary increases.
- Special deductions allowed starting next taxable year after effectivity.
Notification
- Enterprises must submit copies of adopted productivity incentive programs to National Wages and Productivity Commission and Bureau of Internal Revenue.
Disputes and Grievances
- Labor-management committee resolves disputes.
- Assistance can be sought from National Conciliation and Mediation Board.
- Unresolved disputes after 20 days submitted to voluntary arbitration.
- Productivity programs must include names of agreed voluntary arbitrators.
Rule-Making Power
- Secretaries of Labor and Finance jointly promulgate implementing rules within 6 months of effectivity.
Penalty
- Fraudulent claims: imprisonment (6 months to 1 year), fines (P2,000 to P6,000), or both.
- Applies to persons and corporate officers approving fraudulent claims.
- Does not preclude other existing legal prosecutions.
Non-Diminution of Benefits
- Does not reduce existing worker benefits from laws, company policy, contracts, or agreements.
Separability Clause
- Invalid provisions do not affect validity of remaining provisions.
Repealing Clause
- Inconsistent laws, decrees or orders repealed or amended accordingly.
Effectivity Clause
- Law takes effect 15 days after publication in the Official Gazette or two national newspapers.