House to enact Freelance Workers Protection Act

By Rhaydz B. Barcia

LEGAZPI CITY --- Albay 2nd District Rep. Joey Salceda lauded the House of Representatives for the passage of the Freelance Workers Protection Act (HB 6718) that provides and ensures protection to over 1.5 million freelance workers in the country.

Salceda, the principal author of the Freelance Workers Protection Act who also chairs the House Ways and Means Committee, said that the freelance workers in the country will now be protected and provided with legal and contractual protection including the ease of doing business.

“The measure seeks to require a written contract between the employer and the freelance worker that shall state the terms and conditions of employment, including services to be provided by the freelance worker, details of compensation and benefits, employment period, grounds for breach of contract, and other conditions as may be directed by the Department of Labor and Employment,” he said.

Salceda said that the consolidated version of HB 6718 aims to promote the safety and well-being of freelance workers, specifically by mandating the provision of mandatory hazard pay and night shift differential pay.

Salceda said the HB 6718 provided ample protection for freelance workers. Salceda said the Labor Code presently, has no definition for freelancing and provides no formal contractual framework for Filipinos working under this category, who already number more than 1.5 million prior to the Covid-19 pandemic.

“If this law is enacted, freelancers will have contractual protections and tax amnesty for their own sector to help them register legally,” the Albay lawmaker said.

HB 6718 defines a freelance worker as any person working for a firm, whether incorporated under the Securities and Exchange Commission or registered as a sole proprietorship under the Department of Trade and Industry, or as self-employed registered with the Bureau of Internal Revenue, and 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 for the results of his work.

Under the measure, any hiring party obtaining or retaining the services of a freelance worker shall execute a written contract with such freelance worker before services are rendered.

“The hiring party and the freelance worker shall each retain a signed copy of the contract, written in plain language and understood by both parties. It will itemize the services to be rendered; the details of compensation and other benefits; the period of employment; the grounds for breach of contract; the TIN; and any condition, term or clause the DOLE may direct.

Under HB 6718, freelancers who are required to be physically present in the workplace or those on field assignments shall be paid a night shift differential of not less than 10 percent of one’s regular compensation for each hour of work performed between 10 p.m. and 6 a.m., unless there is a more favorable fee stipulated in the contract.

While freelance workers deployed in dangerous areas such as strife torn or embattled locations, distressed or isolated stations, areas under state of calamities or emergencies, contagions, radiations and the likes will also be granted hazard pay equivalent to not less than 25 percent of the total payment stated in the contract.

Salceda’s bill also provides a civil penalty of P50,000 to P500,000 for unlawful practices which include paying the compensation due to freelance worker later than 15 days after the date of payment of compensation stated in the written contract; or requiring as a condition of payment of compensation that a freelance worker accepts less than the specified contract price.

The measure was passed unanimously by the Lower House in the 18th Congress in March 2021, but failed to be enacted. On Monday, the House of Representatives approved on third and final reading a measure that provides protection and relief to over 1.5 million Filipino freelance workers who may fall prey to abusive employers due to a lack of a grievance system in the digital economy.

With an overwhelming 250 votes, the chamber passed House Bill (HB) No. 6718 or the “Freelance Workers Protection Act,” which also mandates the institutionalization of benefits such as night differential and hazard pay for freelance workers whenever they are applicable.

“As the digital economy expands, the number of Filipino freelance workers also increases. And if no laws are in place to protect our gig economy freelancers or to establish a formal grievance system to enforce their rights, they will be susceptible to all kinds of abuse,” Speaker Ferdinand Martin G. Romualdez said in a statement.

“This is the reason a majority of lawmakers in the House threw their support behind this measure. As a sector with an exploding growth spurt in the coming years, they need protective cover under our laws to ensure their transition as a significant driver of our economy,” Romualdez added.

Freelance workers in the Philippines account for over 1.5 million people working in the gig economy.

This person must be “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.”

The measure mandates that a written contract be executed by any hiring party with the freelance worker that contains the extent of the services retained or obtained and important details such as the amount of compensation and the schedule of payment.

“No modification of the terms of the contract shall be enforceable unless signed by both the hiring party and the freelance worker,” the bill reads. Also, the measure listed down unlawful practices such as engaging a freelance worker without a contract or payment of compensation later than 15 days after the date stipulated by both parties.

“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,” HB 6718 read.

“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 into, the DoLE shall embody such agreement in an order and serve a copy thereof upon all parties to the conciliation agreement,” it added.

Also, Sec. 19 of the bill mandates that freelancers 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 as the “Barangay Micro Business Enterprises (BMBEs) Act of 2002.”

The BIR is also mandated to designate a special lane or assistance desk to assist freelancers on their inquiries and in complying with the processing of documents, including the registration requirement under the bill.

An education and information campaign is also decreed under HB 6718 to be spearheaded by DoLE in coordination with DTI, BIR and LGUs to educate freelancers about their rights and obligations under the measure, the proper procedure for registration as a taxpayer, and the modes of legal redress afforded to them.