Republic Act No. 6971· Enacted 1990-11-22

Productivity Incentives Act of 1990 (RA 6971) — BatasKo ELI5

Ang RA 6971 ay nagbibigay ng karapatang makibahagi ang mga manggagawa sa tubo ng kanilang kumpanya. Alamin kung paano mo makuha ang productivity bonus mo.

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Ang Batas sa Madaling Salita— ELI5

Kung tumaas ang kita ng kumpanya dahil sa pagsisikap ng mga manggagawa, dapat makabahagi rin ang mga manggagawa sa tubo na iyon. Iyon ang pangunahing idea ng Productivity Incentives Act — isang voluntary na programa kung saan ang management at labor ay magkasamang napagkasunduan ang productivity bonuses na karagdag sa regular na sahod at 13th month.

Official text — Republic Act No. 6971

Jump to section ↓16 sections

Preamble — Eighth Congress
Section 1 — Short Title.
Section 2 — Declaration of Policy.
Section 3 — Coverage.
Section 4 — Definition of Terms.
Section 5 — Labor-Management Committee.
Section 6 — Productivity Incentives Program.
Section 7 — Benefits and Tax Incentives.
Section 8 — Notification.
Section 9 — Disputes and Grievances.
Section 10 — Rule Making Power.
Section 11 — Penalty.
Section 12 — Non-Diminution of Benefits.
Section 13 — Separability Clause.
Section 14 — Repealing Clause.
Section 15 — Effectivity Clause.

Preamble

Eighth Congress

REPUBLIC ACT No. 6971 November 22, 1990

AN ACT TO ENCOURAGE PRODUCTIVITY AND MAINTAIN INDUSTRIAL PEACE BY PROVIDING INCENTIVES TO BOTH LABOR AND CAPITAL

Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

Section 1

Section 1.

Short Title.

- This Act shall be known as the "

Productivity Incentives Act of 1990

Section 2

Section 2.

Declaration of Policy.

- It is the declared policy of the State to encourage higher levels of productivity, maintain industrial peace and harmony and promote the principle of shared responsibility in the relations between workers and employers, recognizing the right of labor to its just share in the fruits of production and the right of business enterprises to reasonable returns on investments and to expansion and growth, and accordingly to provide corresponding incentives to both labor and capital for undertaking voluntary programs to ensure greater sharing by the workers in the fruits of their labor.

Section 3 — Coverage.→

Section 3.

Coverage.

- This Act shall apply to all business enterprises with or without existing and duly recognized or certified labor organizations, including government-owned and controlled corporations performing proprietary functions. It shall cover all employees and workers including casual, regular, supervisory and managerial employees.

Section 4 — Definition of Terms.→

Section 4.

Definition of Terms.

- As used in this Act:

a) "

Business Enterprise

" refers to industrial, agricultural, or agro-industrial establishments engaged in the production manufacturing, processing, repacking, or assembly of goods, including service-oriented enterprises, duly certified as such by appropriate government agencies.

b) "

Labor-Management Committee

" refers to a negotiating body in a business enterprise composed of the representatives of labor and management created to establish a productivity incentives program, and to settle disputes arising therefrom in accordance with Section 9 hereof.

c) "

Productivity Incentives Program

" refers to a formal agreement established by the labor-management committee containing a process that will promote gainful employment, improve working conditions and result in increased productivity, including cost savings, whereby the employees are granted salary bonuses proportionate to increases in current productivity over the average for the preceding three (3) consecutive years. The agreement shall be ratified by at least a majority of the employees who have rendered at least six (6) months of continuous service.

Section 5 — Labor-Management Committee.→

Section 5.

Labor-Management Committee.

- a) A business enterprise or its employees, through their authorized representatives, may initiate the formation of a labor-management committee that shall be composed of an equal number of representatives from the management and from the rank-and-file employees: Provided, That both management and labor shall have equal voting rights: Provided, further, That at the request of any party to the negotiation, the National Wages and Productivity Commission of the Department of Labor and Employment shall provide the necessary studies, technical information and assistance, and expert advice to enable the parties to conclude productivity agreements.

b) In business enterprises with duly recognized or certified labor organizations, the representatives of labor shall be those designated by the collective bargaining agent(s) of the bargaining unit(s).

c) In business enterprises without duly recognized or certified labor organizations, the representatives of labor shall be elected by at least a majority of all rank-and-file employees who have rendered at least six (6) months of continuous service.

Section 6 — Productivity Incentives Program.→

Section 6.

Productivity Incentives Program.

a) The productivity incentives program shall contain provisions for the manner of sharing and the factors in determining productivity bonuses: Provided, That the productivity bonuses granted to labor under this program shall not be less than half of the percentage increase in the productivity of the business enterprise.

b) Productivity agreements reached by the parties as provided in this Act supplement existing collective bargaining agreements.

c) If, during the existence of the productivity incentives program or agreement, the employees will join or form a union, such program or agreement may, in addition to the terms and conditions agreed upon by labor and management, be integrated in the collective bargaining agreement that may be entered into between them.

Show 9 more sections +→

Section 7 — Benefits and Tax Incentives.→

Section 7.

Benefits and Tax Incentives.

- (a) Subject to the provisions of Section 6 hereof, a business enterprise which adopts a productivity incentives program, duly and mutually agreed upon by parties to the labor-management committee, shall be granted a special deduction from gross income equivalent to fifty percent (50%) of the total productivity bonuses given to employees under the program over and above the total allowable ordinary and necessary business deductions for said bonuses under the National Internal Revenue Code, as amended.

b) Grants for manpower training and special studies given to rank-and-file employees pursuant to a program prepared by the labor-management committee for the development of skills identified as necessary by the appropriate government agencies shall also entitle the business enterprise to a special deduction from gross income equivalent to fifty per cent (50%) of the total grants over and above the allowable ordinary and necessary business deductions for said grants under the National Internal Revenue Code, as amended.

c) Any strike or lockout arising from any violation of the productivity incentives program shall suspend the effectivity thereof pending settlement of such strike or lockout: Provided, That the business enterprise shall not be deemed to have forfeited any tax incentives accrued prior to the date of occurrence of such strike or lockout, and the workers shall not be required to reimburse the productivity bonuses already granted to them under the productivity incentives program. Likewise, bonuses which have already accrued before the strike or lockout shall be paid the workers within six (6) months from their accrual.

d) Bonuses provided for under the productivity incentives program shall be given to the employees not later than every six (6) months from the start of such program over and above existing bonuses granted by the business enterprise and by law: Provided, That the said bonuses shall not be deemed as salary increases due the employees and workers.

e) The special deductions from gross income provided for herein shall be allowed starting the next taxable year after the effectivity of this Act.

Section 8 — Notification.→

Section 8.

Notification.

- A business enterprise which adopts a productivity incentives program shall submit copies of the same to the National Wages and Productivity Commission and to the Bureau of Internal Revenue for their information and record.

Section 9 — Disputes and Grievances.→

Section 9.

Disputes and Grievances.

- Whenever disputes, grievances, or other matters arise from the interpretation or implementation of the productivity incentives program, the labor-management committee shall meet to resolve the dispute, and may seek the assistance of the National Conciliation and Mediation Board of the Department of Labor and Employment for such purpose. Any dispute which remains unresolved within twenty (20) days from the time of its submission to the labor-management committee shall be submitted for voluntary arbitration in line with the pertinent of the Labor Code, as amended.

The productivity incentives program shall include the name(s) of the voluntary arbitrator or panel of voluntary arbitrators previously chosen and agreed upon by the labor-management committee.

Section 10 — Rule Making Power.→

Section 10.

Rule Making Power.

- The Secretary of Labor and Employment and the Secretary of Finance, after due notice and hearing, shall jointly promulgate and issue within six (6) months from the effectivity of this Act such rules and regulations as are necessary to carry out the provisions hereof.

Section 11 — Penalty.→

Section 11.

Penalty.

- Any person who shall make any fraudulent claim under this Act, regardless of whether or not a tax benefit has been granted, shall upon conviction be punished with imprisonment of not less than six (6) months but not more than one (1) year or a fine of not less than two thousand pesos (P2,000.00) but not more than six thousand pesos (P6,000.00), or both, at the discretion of the Court, without prejudice to prosecution for any other acts punishable under existing laws.

In case of partnerships or corporations, the penalty shall be imposed upon the officer(s) or employee(s) who knowingly approved, authorized or ratified the filing of the fraudulent claim, and other persons responsible therefor.

Section 12 — Non-Diminution of Benefits.→

Section 12.

Non-Diminution of Benefits.

- Nothing in this Act shall be construed to diminish or reduced any benefits and other privileges enjoyed by the workers under existing laws, decrees, executive orders, company policy or practice, or any agreement or contract between the employer and employees.

Section 13 — Separability Clause.→

Section 13.

Separability Clause.

- If any provision of this Act is held invalid, any other provision not so affected shall continue to be valid and effective.

Section 14 — Repealing Clause.→

Section 14.

Repealing Clause.

- Any law, presidential decree, executive order, and letter of instruction, or any part thereof, which is inconsistent with any of the provisions of this Act is hereby repealed or amended accordingly.

Section 15 — Effectivity Clause.→

Section 15.

Effectivity Clause.

- This Act shall take effect fifteen (15) days after its publication in the Official Gazette or in at least two (2) national newspapers of general circulation.

Approved:

November 22, 1990

The Lawphil Project - Arellano Law Foundation

Full text on BatasKo. Original source: Official Gazette / Lawphil.

Pumunta ka sa opisina isang Lunes ng umaga. Nakita mo sa company bulletin board ang balita: record profits ang kumpanya sa nakaraang taon — 40% na pagtaas.

Nag-cheer ang lahat sa meeting room. Nagpadala ng catered lunch ang HR.

Pero pagkatapos ng lahat ng "congratulations" — walang bonus. Bawat isa ay umuwing walang karagdag sa sahod.

Patas ba iyon? At may batas ba na nagsasabi na dapat kang lumahok sa tubo ng kumpanya na ikaw mismo ang nagtayo?

Oo — at iyan ang layunin ng Productivity Incentives Act of 1990.

ELI5: Kung ang kumpanya ay kumikita dahil sa pagsisikap mo, ang batas ay nagtatakda ng mekanismo para magkaroon ka ng productivity bonus — on top ng iyong regular na sahod at 13th month pay. Hindi ito automatic, pero may karapatan kang lumahok sa pagtatayo ng programa.

Real Filipino Scenario: Si Jojo at ang Record Year na Walang Share

Si Jojo, isang 28-taong-gulang na production line worker sa isang garments factory sa Caloocan, ay nagtrabaho ng overtime nang maraming buwan para matupad ang malaking order mula sa isang kumpanyang American.

Ang resulta? Ang factory ay nag-post ng pinakamataas na kita sa loob ng 10 taon — halos ₱50 milyong net profit.

Pero nang mag-usap-usap ang mga manggagawa tungkol sa posibleng bonus, sinabi ng HR manager: "Walang ganyan sa labor code." At "ito ay discretion ng management."

Mali ang HR manager ni Jojo — hindi completo ang kanyang alam. Ayon sa RA 6971, may karapatang magsimulang mag-organisa ng Labor-Management Committee si Jojo at ang kanyang mga katrabaho para sa isang productivity incentives program.

What the Law Actually Says / Ano Talaga ang Sabi ng Batas

Ang Republic Act No. 6971, na pinagtibay noong Nobyembre 22, 1990, ay kilala bilang ang Productivity Incentives Act of 1990.

Sino ang sakop? (Section 3)

Ang batas ay sumasaklaw sa:

Lahat ng business enterprises — industrial, agricultural, service-oriented
Kasama ang GOCCs na gumaganap ng proprietary functions
Lahat ng empleyado — casual, regular, supervisory, at managerial

Kung ikaw ay empleyado ng isang negosyo, kasama ka.

Paano gumagana ang programa? (Section 4-6)

Ang proseso ay ganito:

Ang kumpanya o ang mga manggagawa ay maaaring magsimulang magtatag ng Labor-Management Committee (LMC) — kalahati mula sa management, kalahati mula sa rank-and-file employees.
Ang LMC ay magkakasama na magtatayo ng Productivity Incentives Program — isang pormal na kasunduan kung paano ibibigay ang mga productivity bonuses.
Kailangan itong iraatipika ng mayorya ng mga empleyado na nagtatrabaho nang hindi bababa sa 6 na buwan.

Gaano kalaki ang bonus? (Section 6a)

Ang productivity bonuses na ibibigay sa labor ay hindi bababa sa kalahati ng porsyentong pagtaas ng productivity ng negosyo.

Halimbawa: kung tumaas ng 10% ang productivity ng kumpanya, ang mga manggagawa ay dapat makatanggap ng bonus na katumbas ng hindi bababa sa 5% na pagtaas.

Kailan ibibigay ang bonus? (Section 7d)

Ang mga bonuses ay kailangang ibigay hindi lalampas sa bawat 6 na buwan mula sa simula ng programa. At ito ay on top ng lahat ng existing bonuses at ng 13th month pay — hindi maaaring gamitin bilang kapalit nito.

Tax incentive para sa employer (Section 7a)

Para hikayatin ang mga negosyo na sumali, ang mga kumpanyang nagbibigay ng productivity bonuses ay makakakuha ng karagdagang 50% deduction sa gross income para sa kabuuang halaga ng bonuses na ibinigay. Ibig sabihin, ang nagbibigay ng bonus ay nakakatipid din sa buwis.

What This Means for You / Ano ang Ibig Sabihin Nito Para sa Iyo

Bilang empleyado, ang RA 6971 ay nagbibigay sa iyo ng:

1. Karapatang mag-organisa ng LMC. Ikaw at ang iyong mga katrabaho ay maaaring kunin ang inisyatiba na magtatag ng Labor-Management Committee. Hindi mo kailangang hintayin na ang management ang magsimula.

2. Equal na tinig sa mesa. Sa LMC, ang management at labor ay may pantay na bilang ng representante at pantay na voting rights. Hindi maaaring ma-outvote ng management ang lahat ng desisyon.

3. Proteksyon ng iyong bonus. Kahit may welga o lockout, ang mga bonuses na naaccrued na bago ang insidente ay kailangang ibayad sa mga manggagawa sa loob ng 6 na buwan (Section 7c). Hindi maaaring bawiin ng employer ang bonuses na dapat mo nang matanggap.

4. Non-diminution ng existing benefits. Ayon sa Section 12, ang walang RA 6971 ay hindi magbabago sa anumang existing benefit mo. Ang productivity bonus ay karagdag — hindi kapalit.

5. Mekanismo para sa mga hindi pagkakaunawaan. Kung may dispute tungkol sa programa, ang LMC ay magtatagpo para resolbahin ito. Kung hindi naresulba sa loob ng 20 araw, ito ay mapupunta sa voluntary arbitration (Section 9).

What Most Filipinos Get Wrong / Mga Maling Akala

Maling-mali #1: "Ang productivity incentives ay discretion ng employer — maaari nilang bawiin o di ibigay."

Sa labas ng RA 6971, totoo iyon. Pero kapag may nagtayo na ng LMC at may productivity incentives program — ang management ay may obligasyong sundin ang mga tuntunin ng programa. Hindi na ito pure discretion.

Maling-mali #2: "Ang RA 6971 bonus ay parehong batas na 13th month pay."

Hindi. Ang 13th month pay (Presidential Decree 851) ay mandatory para sa lahat. Ang productivity bonus sa ilalim ng RA 6971 ay karagdagang benepisyo — "over and above existing bonuses granted by the business enterprise and by law" (Section 7d). Dalawang hiwalay na karapatan.

Maling-mali #3: "Kailangan ng union para sa productivity incentives program."

Hindi. Ang batas ay espesipikong nagsasabi na ito ay sumasaklaw sa mga negosyo "with or without existing and duly recognized or certified labor organizations" (Section 3). Kahit walang union, maaaring magtatag ng LMC.

Maling-mali #4: "Pag-ayaw ng management, wala na tayong magagawa."

Maaaring simulan ng mga manggagawa mismo ang proseso ng pagtatayo ng LMC — hindi lamang ng management. Kung ang employer ay tinatanggihan ng walang dahilan, maaari kang humingi ng tulong sa National Wages and Productivity Commission (NWPC) ng DOLE.

For OFWs / Para sa mga OFW

Kung ikaw ay OFW na nagtatrabaho sa ibang bansa, ang RA 6971 ay direktang hindi applicable sa iyong trabaho sa abroad — ang iyong employment contract ay sakop ng batas ng iyong host country.

Pero mahalaga ito sa iyo kung:

Ikaw ay OFW na magrereturn at magtatatrabaho sa Pilipinas — alamin ang karapatang ito bago ka pumirma ng bagong employment contract dito
Ikaw ay OFW na may pamilya sa Pilipinas na nagtatrabaho sa mga lokal na negosyo — ibahagi sa kanila ang impormasyon na ito tungkol sa kanilang karapatang makibahagi sa kita ng kumpanya
Ikaw ay OFW employer — kung mayroon kang negosyo sa Pilipinas at may lokal na empleyado, ang pagtatayo ng produktibidad na programa ay nagbibigay sa iyo ng tax incentive habang pinapahalagahan ang iyong mga manggagawa

Para sa mga reklamo tungkol sa labor rights ng OFWs abroad, makipag-ugnayan sa DOLE-OWWA o sa pinakamalapit na Philippine Overseas Labor Office (POLO).

What to Do If Your Rights Are Violated / Kung Ano ang Gagawin

5 Hakbang para Maipaglaban ang Productivity Incentives

Hakbang 1: Tiyakin kung may existing LMC o productivity program na sa iyong kumpanya. Tanungin ang HR o union (kung mayroon). Hanapin sa bulletin boards o company manual.

Hakbang 2: Kung wala pa, mag-organisa. Kailangan ng mayorya ng mga rank-and-file employees na nagtatrabaho nang hindi bababa sa 6 na buwan. Piliin ang inyong mga representante sa LMC.

Hakbang 3: Humingi ng technical assistance sa NWPC-DOLE. Ayon sa Section 5, ang National Wages and Productivity Commission ay dapat magbigay ng technical information at expert advice sa mga partido na nag-negotiate ng productivity agreements. Libre ito — tumawag sa DOLE hotline: (02) 8527-8000 o 1349.

Hakbang 4: Negosyahin ang programa. Ang LMC ay magtatayo ng Productivity Incentives Program — kasama ang paraan ng pagbabahagi, mga salik para sa pagtatakda ng bonus, at pamamaraan ng dispute resolution.

Hakbang 5: Kung may paglabag, humingi ng tulong sa DOLE. Kung ang employer ay tumatangging sumunod sa isang napagkasunduang programa, maaaring ilahad ang dispute sa National Conciliation and Mediation Board (NCMB) ng DOLE. Kung hindi maresulba sa 20 araw — voluntary arbitration.

Related Laws / Mga Kaugnay na Batas

13th Month Pay Law (PD 851) — Mandatory na karagdagang bayad para sa lahat ng empleyado
Labor Code of the Philippines — Pangunahing batas ng lahat ng karapatan ng manggagawa
RA 6727 — Wage Rationalization Act — Nagtatakda ng minimum wage sa bawat rehiyon

Frequently Asked Questions

Q: Kung ang kumpanya ay nagkaroon ng lugi, mababawasan ba ang aking regular na sahod base sa productivity program?

Hindi. Ayon sa Section 12 (Non-Diminution of Benefits), ang RA 6971 ay hindi maaaring gamitin para bawasan ang anumang existing na benepisyo. Ang productivity bonus ay karagdag lamang — hindi maaaring pagkukuhaan ng regular na sahod.

Q: Supervisory at managerial employees ba ay kasali rin?

Oo. Ang Section 3 ay malinaw na nagsasabi na saklaw ang "all employees and workers including casual, regular, supervisory and managerial employees." Lahat ng level ng empleyado ay maaaring makibahagi sa programa.

Q: Maaari bang gumawa ng productivity program ang kumpanya na walang pakialam ang mga manggagawa?

Ayon sa batas, ang programa ay kailangang mutually agreed upon ng LMC at kailangang iraatipika ng mayorya ng mga empleyado. Kung ang management ay gumawa ng programa na walang pakikisangkot ng mga manggagawa, maaaring hindi ito valid.

Sources / Mga Sanggunian

Republic Act No. 6971 — "Productivity Incentives Act of 1990," approved November 22, 1990. https://lawphil.net/statutes/repacts/ra1990/ra_6971_1990.html

General information only. Not legal advice. Consult PAO at 1-800-10-PAO-8888 or contact DOLE at 1349 for labor-related concerns.

By Irvin Abarca & Claude (AI Research Partner) Published May 2026 · 9 min read

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Legal disclaimer: BatasKo provides general legal information, not legal advice. For your specific situation, consult a licensed Filipino lawyer or the Public Attorney's Office (PAO).

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