Freelance Workers Protection Act

TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES JUL -9 P5:23 First Regular Session BICE SENATE 5. No. 337 INTRODUCED BY SENATOR IV EJERCITO PROVIDING PROTECTION AND INCENTIVES TO FREELANCE WORKERS EXPLANATORY NOTE In recent years, the global economy has undertaken significant changes that has led to a substantial rise of the freelance workforce!. A freelance worker is generally defined as an independent contractor who provides their services for compensation while exercising autonomy over their methods and being primarily responsible for their work rather than the process itself?. Since the global Covid-19 pandemic, the Philippines has positioned itself as a major hub for freelancing, with the number of registered freelancers estimated to be around 1.5 million in 2025, thus making the country one of the fastest growing freelance-markets globally and has emerged as a vital sector of the Philippine economy, particularly because of the high English proficiency of our workforce. 3 The continuing shift towards digitalization of the global economy has further drawn more Filipinos to pursue freelancing work, appealing to various demographics such as 1 Alvarez de la Vega, C., et al. (2020). The Gig Economy in Times of COVID-19: Designing for Gig Workers' Needs. 2 Investopedia. (n.d.). What Is a Freelancer: Examples, Taxes, Benefits, and Drawbacks. 3 Ibrahim, M. (2025). The Filipino online freelancers: Digital workforce of the world. Philippine Institute for Development Studies.

students and parents alike in both rural and urban areas that are looking for more flexible arrangements. But in spite of the dynamic growth of the freelance sector and the economic benefits it brings to the table, our existing legal framework has not fully caught up to sufficiently provide protections and guarantee the welfare of Filipino freelancers. The unique nature of freelancing work often leaves freelancers vulnerable to issues such as late or non-payment of their services, lack of clear contractual terms, and inadequate legal remedies in disputes, and the lack of access to essential employment benefits such as healthcare insurance and guaranteed paid leaves that workers in other sectors of the economy are able to haves. To mitigate and provide the necessary safeguards from these challenges faced by freelancers we must institutionalize protections for their welfare as mandated by Article II, Section 18 of the 1987 Constitution that declares: "The State affirms labor as a primary social economic force. It shall protect the rights of workers and promote their welfare. " Further reinforcing this doctrine, Article XIII, Section 3 commands that: "The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all." In light of the significant contributions of freelancers to the national economy and the urgent need to safeguard their rights and welfare, the passage of this bill is urgently sought. JV EJERCITO 4 Ibid sIbid

TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES First Regular Session 25 JUL -9 P5:23 SENATE S. No. 337 INTRODUCED BY SENATOR IV EJERCITO PROVIDING PROTECTION AND INCENTIVES TO FREELANCE WORKERS Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled: CHAPTER I GENERAL PROVISIONS

SECTION 1. Short Title. - This Act shall be known as the " Freelance Workers

2 Protection Act."

SECTION 2. Declaration of Policy. - Pursuant to Article II, Section 18, and

Article XIII, Section 3 of the Constitution, it is hereby declared the policy of the State 5 to protect the rights of workers, promote their welfare, and ensure their entitlement to humane conditions of work and just share in the fruits of production. To this end, the State shall recognize the right of freelance workers to protection from late or nonpayment of fees for services rendered.

SECTION 3. Definition of Terms. - As used in this Act:

a. Freelance worker refers to any natural person or entity composed of no more than one (1) natural person, whether incorporated under the Securities and Exchange Commission, registered as a sole proprietorship under the Department of Trade and Industry (DTI) or registered as self- employed with the Bureau of Internal Revenue (BIR), who is hired or

retained to provide services, in exchange for compensation, as an independent contractor to do work according to one's own methods and without being subjected to the control of the hiring party, except only as to the results of the work; b. Hiring party refers to any person or entity that obtains or retains the services of a freelance worker; and c. Retaliation refers to any act reasonably likely to prevent a freelance worker from further being offered freelance work and contracts.

SECTION 4. Written Contract. - Any hiring party obtaining or retaining the

services of a freelance worker shall execute a written contract with the freelance worker before the services are rendered. The hiring party and the freelance worker shall each retain a signed copy of the contract. The contract shall be written in plain language, understood by both parties. It shall include, at the minimum, the following: a. Itemization of all services to be provided by the freelance worker; b. Details of compensation and other worker's benefits, including rate, method and schedule of payment; c. Period of employment; d. Grounds for breach of contract on the part of the hiring party and of the freelance worker; and e. Any other condition, term or clause that the Department of Labor and Employment (DOLE) may direct, subject to the provisions of this Act. The contract must state the necessary personal circumstances of the freelance worker, such as but not limited to the freelance worker's name, address and the worker's Tax Identification Number. No modification of the terms of the contract shall be enforceable unless signed by both the hiring party and the freelance worker.

SECTION 5. Down Payment Required. - An initial partial payment for the

contracting of services of the freelance worker shall be made upon engagement, which shall be not less than thirty percent (30%) of the contract price.

SECTION 6. Night Shift Differential. - Freelance workers who are required to

2 be physically present in the workplace, or those on field assignments, shall be paid a night shift differential of not less than ten percent (10%) of their regular 4 compensation for each hour of work performed between ten o'clock in the evening 5 and six o'clock in the morning, unless there is a more favorable fee stipulated in the 6 contract.

SECTION 7. Hazard Pay. - All freelance workers deployed in dangerous areas

such as strife-torn or embattled locations, distressed or isolated stations, prison 9 camps, mental hospitals, radiation-exposed clinic, laboratories or disease-infested areas, or in areas declared under a state of calamity or emergency for the duration of deployment and unduly exposes them to great danger, contagion, radiation, occupational risks or perils to life, shall be compensated with a hazard pay equivalent to at least twenty-five percent (25%) of the total payment for the period of such deployment as agreed upon in the contract, unless there is a more favorable fee stipulated therein.

SECTION 8. Unlawful Practices. - It shall be unlawful for any hiring party to:

a. Engage with a freelance worker without a written contract; b. Pay the compensation due the freelance worker later than fifteen (15) days after the date of payment of compensation stated in the written contract or after the rendition of services in cases where there is no written contract; c. Require as a condition of payment of compensation at any time after a freelance worker has commenced rendition of services, that the latter accept less than the specified contract price; or d. Commit any act of retaliation against any freelance worker for: 1. Opposing any practice prohibited by this Act; 2. Filing a complaint authorized under this Act; 3. Testifying or assisting in any proceeding authorized under this Act; 4. Commencing a civil action alleging a violation of this Act;

5. Assisting the DOLE in an investigation commenced pursuant to this Act; or 6. Providing information to the DOLE pursuant to the terms of a mediation or conciliation agreement under this Act.

SECTION 9. Civil Penalty. - A person who commits any of the unlawful

6 practices enumerated in Section 8 of this Act shall be punished by a fine of not less than Fifty thousand pesos (P50,000.00) but not more than Five hundred thousand 8 pesos (P500,000.00). CHAPTER II AGENCY ENFORCEMENT AND ADMINISTRATIVE PROCESS

SECTION 10. Complaints. - Any person or such person's authorized

representative aggrieved by a violation of this Act, may file a complaint with the DOLE, through the Undersecretary for Workers with Special Concerns, without prejudice to the filing of civil action in appropriate cases.

SECTION 11. Prohibition Against Forum Shopping. - When a civil action has

17 been initiated in a court of competent jurisdiction arising from any violation of this 18 Act, a breach of contract, or any similar claim at law or equity arising out of the same transaction or series of transactions, no other case involving the same cause of action shall be filed with the DOLE.

SECTION 12. Investigation. - Upon receiving a complaint aileging a violation

of this Act, the DOLE shall notify the respondent in writing and investigate such complaint in a timely manner. Within fifteen (15) calendar days of receiving such written notification, the respondent shall provide the DOLE with a written response and such other information as the DOLE may request. The DOLE shall notify each complainant in writing, not less than thirty (30) calendar days after the complaint is filed, of the status of the complaint and any resulting investigation.

SECTION 13. Mediation and Conciliation. - The DOLE may, at any time after

the filing of a complaint, attempt to resolve the complaint by any method of dispute resolution, including mediation and conciliation. If a conciliation agreement is entered

1 into, the DOLE shall embody such agreement in an order and serve a copy thereof 2 upon all parties to the conciliation agreement. CHAPTER III CIVIL ENFORCEMENT

SECTION 14. Notice of Violation and Order of Payment. - If, as a result of

an investigation of a complaint or an investigation conducted upon its own initiative, the DOLE finds cause to believe that a violation of this Act has occurred, it shall issue a notice of violation to the respondent and order the corresponding payment of compensation due to the prevailing party.

SECTION 15. Violation of Order of Payment. - The order of payment shall

include an interest rate of six percent (6%) per annum which shall be awarded to the prevailing party in case the violation continues.

SECTION 16. Civil Action. - Except as otherwise provided by law, any person

aggrieved by a violation of this Act may file a complaint in a court of competent jurisdiction for damages, injunctive relief and such other remedies as may be appropriate, without prejudice to the filing of a criminal action in appropriate cases. The prevailing party shall be entitled to an award of reasonable attorney's fees and costs. No person claiming to be aggrieved by a violation of this Act may bring a civil action in a court of competent jurisdiction if such aggrieved person, or one's representative, has filed a complaint with the DOLE pursuant to Chapter II of this Act and based upon the same transaction or series of transactions, unless that complaint has been terminated without prejudice to a subsequent civil action.

SECTION 17. Non-Waiver. - Except as otherwise provided by law, any

provision of any contract or agreement purporting to waive rights under this Act is against public policy and shall be null and void.

SECTION 18. Coverage. - This Act shall apply only to contracts or

agreements entered into upon the effectivity of this Act.

• .. CHAPTER IV TAXATION

SECTION 19. Tax Relief. - Freelancers, as defined under this Act, shall be

entitled to tax relief within the threshold provided under the National Internal Revenue Code of 1997, as amended, and Republic Act No. 9178, otherwise known 7 as the "Barangay Micro Business Enterprises (BMBEs) Act of 2002."

SECTION 20. Special Assistance. - Every BIR Revenue District Office shall

designate a lane or a special assistance desk that shall be manned by an officer who shall assist freelance workers on their inquiries and in complying with the processing of documents, including the registration requirement under this Act. CHAPTER V FINAL PROVISIONS

SECTION 21. Report. - One (1) year after the effectivity of this Act, and every

year thereafter, the Secretary of Labor and Employment shall submit a report to the Committee on Labor and Employment of the House of Representatives and the Committee on Labor, Employment and Human Resources Development of the Senate of the Philippines regarding the effectiveness of the provisions of this Act in improving freelance contracting and payment practices. Similarly, the DOLE shall submit the report to the Philippine Creative Industries Development Council, through its Creative Workers' Welfare Standing Committee. The report shall include, at the minimum, the number of complaints received, investigations initiated and notices issued by the DOLE on violations of this Act, and complaints settled by mediation or conciliation.

SECTION 22. Information Campaign. - The DOLE shall, in coordination with

the DTI, BIR, local government units and other relevant agencies, initiate a program with the objective of informing freelance workers of their rights and obligations, the proper procedure of registering as a taxpayer, and the modes of legal redress as provided for in this Act, and in other laws and regulations.

SECTION 23. Suppletory Application. - The provisions of Republic Act No.

11058, entitled "An Act Strengthening Compliance with Occupational Safety and

1 Health Standards and Providing Penalties for Violations Thereof" shall be applied 2 suppletorily to this Act.

SECTION 24. Implementing Rules and Regulations. - Within fifteen (15) days

4 from the effectivity of this Act, the Secretary of Labor and Employment shall, in 5 coordination with the BIR and other relevant agencies, issue the rules and regulations from the implementation of this Act.

SECTION 25. Separability Clause. - If any part, section or provision of this Act

is declared invalid or unconstitutional, the other provisions not affected by such 9 declaration shall remain in full force and effect.

SECTION 26. Repealing Clause. - All laws, decrees, orders, rules, and

regulations, or other issuances or parts thereof inconsistent with the provisions of this Act are hereby repealed, amended or modified accordingly.

SECTION 27. Effectivity. - This Act shall take effect fifteen (15) days after its

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