The Senate has recently approved the Alternative Working Arrangement Bill which will enable employers and employees to agree and adopt flexible working arrangements.
While the Bill has not yet passed into law, employers now have questions. What does the Bill mean for my business? Are flexible working arrangements now compulsory? Do I have to change my existing processes for accounting, bookkeeping or payroll? Will this affect my income tax filings or tax compliance in general?
See below for the implications that the Bill might have for your business!
Why have people recently been talking about flexible working?
The Senate approved Senate Bill No. 1571, also known as the Alternative Working Arrangement Bill, which will provide employers and employees in the Philippines with an option to agree new flexible working arrangements.
In short, the Bill provides that an employer and an employee can agree and adopt a voluntary work arrangement that is more flexible than the typical 8 hour working day that employees in the Philippines are used to.
The Bill allows for the adoption of a voluntary work arrangement “when national emergency requires or the parties mutually agree”.
There are, however, some limitations and restrictions on the arrangement.
How does the Bill work?
The Bill aims to amend Article 83 of the Presidential Decree No. 442, which is commonly known as the Labor Code of the Philippines.
The Labor Code contains the law of employment practices and labor relations in the Philippines. For example, it includes rules for hiring and terminating employees, restrictions on working hours and breaks, statutory benefits (e.g. 13th month pay) and the requirements for union memberships and strikes.
The amendment is being proposed via the insertion of a new article – Article 83A – into the Labor Code of the Philippines.
Why was the Bill introduced?
Senator Joel Villanueva is the Chair of the Senate Committee on Labor, Employment and Human Resources Development and he has sponsored the Bill.
Senator Villanueva said the Bill was being introduced as an “answer to the changes in the labor market and in the nature of employment”. He also believes that the “Bill will provide employees and employers with more options when performing their work.”
He said that the proposed arrangement contained in the Bill “provides a guide and institutionalizes the policy on the adoption of alternative work arrangements”.
Will this apply to all companies?
Its important to remember that the Bill aims to amend the existing Labor Code of the Philippines. So if it passes into law, the Bill will apply to the same companies that are currently covered by the Labor Code.
What if a company already operates a flexible working scheme?
Many employers in the Philippines already operate flexible working arrangements such as flexitime, compressed working weeks or shift work. These arrangements would not be impacted by the arrangement proposed by the Bill.
Remember – it will not be compulsory for employers to adopt a flexible working arrangement. Employers will have no mandatory legal obligation to do so and employees cannot force the employer to adopt such an arrangement.
In fact, in his sponsorship speech in support of the Bill, Senator Villanueva acknowledged that there are types of work that are not yet suitable to flexiwork.
So whether or not an employer decides to adopt a flexible working arrangement is likely to depend on the type of work the employer performs, what kind of industry it operates in and how the employer wishes to develop its own internal policies.
Are there any restrictions when adopting a flexiwork arrangement?
Yes. The primary restriction under the Bill is that any voluntary work arrangement cannot require an employee to work more than 48 hours per week.
What about existing benefits for employees?
Existing statutory benefits (13th month pay, holiday leave, etc) and other benefits should not be impacted.
The Bill specifically states that any voluntary working arrangement agreed between employer and employee must not result in the reduction or violation of existing benefits.
Are there benefits for employers?
According to Senator Villanueva, flexible working arrangements are less expensive for employers in terms of recruitment and training as employees are less likely to quit or change jobs. He said employees would deliver better results as they will be happier with their work/life balance.
Senator Villanueva also believes that by adopting this new arrangement, it will lead to a reduction in the level of traffic congestion, and consequently pollution, in the Philippines.
Flexiwork may also result in a decrease in operating costs as less employees in the office for extended periods of time can result in less requirements for lights, air conditioning, water, etc.
So what now?
The Bill has not yet passed into law so it is not necessary for employers to make any drastic changes or preparations just yet.
Even if the Bill does pass into law, remember – it is not compulsory. There is unlikely to be any automatic requirement for an employer to make changes – unless the employer wishes to of course.
When is the Bill likely to pass into law?
There is no confirmed date at present.
However, a Press Release from the Senate states that Senator Villanueva is optimistic that the bill can be sent to President Duterte for his approval shortly before Congress closes its current session on 5 June 2019.
CloudCfo will be sure to keep you updated!
CloudCfo offers income tax, withholding tax and payroll services
CloudCfo is happy to assist with the development and implementation of new processes in order to align with any changes to your employee structure or payroll functions. Our team of experts has extensive expertise in optimising payroll processes for our clients and ensuring that the correct income/withholding tax filings are made to the Bureau of Internal Revenue (BIR) on-time and in full compliance.