Adoption of Alternative Work Arrangements in Enterprises

Sell. «Difice of the Secretary TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES ) 26 MAY 20 P5:25 First Regular Session RECEIVED BY SENATE 2148 Senate Bill No. _ Introduced by Senator JOEL VILLANUEVA AN ACT ALLOWING THE ADOPTION OF ALTERNATIVE WORK ARRANGEMENTS IN ENTERPRISES REGISTERED WITH INVESTMENT PROMOTION AGENCIES, AMENDING FOR THE PURPOSE SECTION 309 OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED EXPLANATORY NOTE as the The enactment of Republic Act No. 11165, otherwise known "Telecommuting Act," marked an important step in recognizing flexible and technology-enabled work arrangements as legitimate and viable modes of employment. Since its passage, alternative work arrangements such as work-from- home, hybrid work, compressed workweek arrangements, and other flexible work arrangements have proven effective in improving productivity, promoting work-life balance, and ensuring business continuity across various industries. The COVID-19 pandemic further demonstrated the critical role of these work arrangements in sustaining employment, preserving investments, and maintaining economic activity during periods of disruption. In particular, enterprises registered with Investment Promotion Agencies (IPAs), especially those in the IT-BPM sector, successfully implemented alternative work arrangements while continuing to deliver services efficiently and competitively on a global scale. However, existing provisions under Section 309 of the National Internal Revenue Code of 1997, as amended by the CREATE Act, continue to create uncertainty regarding the continued entitlement of IPA-registered enterprises to fiscal incentives when implementing alternative work arrangements outside economic zones and freeports.

This measure seeks to address this concern by expressly allowing registered business enterprises to adopt alternative work arrangements, including telecommuting, work-from-home, hybrid work arrangements, compressed workweek arrangements, flexible work arrangements, and other similar arrangements authorized under existing laws and regulations, without loss of entitlement to fiscal incentives under the Tax Code. At the same time, the bill ensures that the adoption of these arrangements remains voluntary and mutually agreed upon by employers and employees, and that labor standards, security of tenure, compensation and benefits, occupational safety and health standards, data privacy, cybersecurity protections, and other rights guaranteed under the Constitution and existing labor laws are fully protected. As technology continues to transform the modern workplace, our laws must likewise adapt to the evolving realities of work. More than merely providing convenience, flexible work arrangements offer meaningful relief to workers facing rising transportation costs, long commuting hours, and increasing economic pressures, while enabling businesses to remain resilient, competitive, and investment-friendly. This measure ultimately seeks to strike a balanced approach between protecting workers' welfare, promoting ease of doing business, encouraging investments, and ensuring that the Philippines remains globally competitive in an increasingly digital and flexible economy. In view of the foregoing, the immediate passage of this bill is earnestly sought. JOEI ALLANUEVA q

Senate Office of the Secretarp TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES 26 MAY 20 P5:25 First Regular Session SENATE Senate Bill No. 2148 Introduced by Senator JOEL VILLANUEVA AN ACT ALLOWING THE ADOPTION OF ALTERNATIVE WORK ARRANGEMENTS IN ENTERPRISES REGISTERED WITH INVESTMENT PROMOTION AGENCIES, AMENDING FOR THE PURPOSE SECTION 309 OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

SECTION 1. Amendment of Section 309 of the National Internal

2 Revenue Code. - Section 309 of the National Internal Revenue Code of 1997, 3 as amended by Republic Act No. 11534, otherwise known as the "Corporate 4 Recovery and Tax Incentives for Enterprises (CREATE) Act," is hereby amended 5 to read as follows: "SEC. 309. Prohibition on Registered Activities. - A qualified registered project or activity under an Investment Promotion Agency administering an economic zone or freeport shall, AS FAR AS PRACTICABLE, be exclusively conducted or operated within the geographical boundaries of the zone or freeport being administered by the Investment Promotion Agency (IPA) in which the project or activity is registered: Provided, That NOTWITHSTANDING THE FOREGOING, [al registered business enterpriseS may [conduct or operate more than one qualified registered project or activity within the same zone or freeport under the same

Investment Promotion Agency] ADOPT ALTERNATIVE WORK ARRANGEMENTS, INCLUDING TELECOMMUTING, WORK-FROM- HOME, HYBRID WORK ARRANGEMENTS, COMPRESSED WORKWEEK FLEXIBLE WORK ARRANGEMENTS, ARRANGEMENTS, OR OTHER SIMILAR ARRANGEMENTS AUTHORIZED UNDER EXISTING LABOR LAWS, RULES, AND REGULATIONS, WITHOUT LOSS OF ENTITLEMENT TO FISCAL INCENTIVES GRANTED UNDER THIS CODE: Provided, further, That [any project or activity conducted or performed outside the geographical boundaries of the zone or freeport shall not be entitled to the incentives provided in this Act, unless such project or activity is conducted or operated under another Investment Promotion Agency.] SUCH ALTERNATIVE WORK ARRANGEMENTS SHALL BE VOLUNTARY AND MUTUALLY AGREED UPON BETWEEN THE EMPLOYER AND EMPLOYEE PURSUANT TO REPUBLIC ACT NO. 11165, OTHERWISE KNOWN AS THE 'TELECOMMUTING ACT,' AND OTHER APPLICABLE LAWS, RULES, AND REGULATIONS: PROVIDED, FURTHERMORE, THAT THE ADOPTION OF ALTERNATIVE WORK ARRANGEMENTS SHALL NOT DIMINISH LABOR STANDARDS, SECURITY OF TENURE, COMPENSATION AND BENEFITS, OCCUPATIONAL SAFETY AND HEALTH STANDARDS, DATA PRIVACY AND CYBERSECURITY PROTECTIONS, AND OTHER RIGHTS GUARANTEED UNDER THE CONSTITUTION, THE LABOR CODE OF THE PHILIPPINES, AND RELATED LAWS: PROVIDED, FINALLY, THAT THE CONCERNED INVESTMENT PROMOTION AGENCY MAY PRESCRIBE REASONABLE AND NECESSARY GUIDELINES FOR THE IMPLEMENTATION, MONITORING, REPORTING, AND COMPLIANCE OF ALTERNATIVE WORK ARRANGEMENTS, CONSISTENT WITH THIS SECTION AND WITHOUT IMPAIRING THE CONTINUED ENTITLEMENT OF REGISTERED BUSINESS ENTERPRISES TO INCENTIVES UNDER THIS CODE."

SEC. 2. Implementing Rules and Regulations. - The rules and

2 regulations necessary for the effective and efficient enforcement of the provisions of this Act shall be formulated by the Department of Finance, in consultation with the Department of Trade and Industry, Department of Labor 5 and Employment, Department of Information and Communications Technology, 6 Bureau of Internal Revenue, Board of Investments, Philippine Economic Zone 7 Authority, other concerned Investment Promotion Agencies, and other relevant 8 government agencies, LGU, the private sector, and other stakeholders, and 9 shall be implemented within ninety (90) days from the effectivity of this Act. Unjustified or willful failure or refusal of the concerned government agencies to promulgate the implementing rules and regulations (IRR) within the specified period shall subject the heads of these government agencies to administrative penalties under applicable civil service laws. Should the IRR contain provisions that are contrary to this Act, the heads of the government agencies responsible for such provision, when done in bad faith or with gross negligence, shall be held administratively liable.

SEC. 3. Separability Clause. - If any portion or provision of this Act is

declared unconstitutional, the remainder hereof or any provisions not affected 19 thereby shall remain in force and effect.

SEC. 4. Repealing Clause. - Any law, presidential decree or issuance,

executive order, letter of instruction, rule, or regulation inconsistent with the provisions of this Act is hereby repealed or modified accordingly.

SEC. 5. Effectivity. - This Act shall take effect fifteen (15) days after its

complete publication in the Official Gazette or in a newspaper of general circulation. Approved,