Productivity Incentives Programs Concept

Productivity Incentives Program is a formal agreement established by the Labor-Management Committee (LMC) containing a process that will promote gainful employment, improve working conditions and result in increased productivity, including cost savings.

Under this agreement, the employees are granted salary bonuses proportionate to increases in current productivity over the average for the preceding three consecutive years.

The agreement shall be ratified by at least a majority of the employees who have rendered at least six months of continuous service.

The agreement reached by the parties act as a supplement to existing collective bargaining agreement. If there is yet no CBA, and should there be one in the future, the terms of the agreement may be incorporated therein.

Labor Management Committee (LMC)

Labor-management Committee is 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.

Composition of LMC

LMC shall be composed of an equal number of representatives from the management and from the rank-and-file employees, with both management and labor having equal voting rights.

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).

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 months of continuous service.

Productivity Bonus

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

The payment of productivity bonus shall be over and above existing bonuses granted by the business enterprise and by law.

Productivity bonus shall not be deemed as salary increases due the employees and workers.

Time of Payment of Productivity Bonus

Bonuses provided for under the productivity incentives program shall be given to the employees not later than every six months from the start of such program.

Benefits and Tax Incentives

A business enterprise which adopts a productivity incentives program shall be granted a special deduction from gross income equivalent to 50% of the total productivity bonuses given to employees under the program.

Disputes and Grievances

Disputes, grievances, or other matters arising from the interpretation or implementation of the productivity incentives program, shall be resolved by the LMC. They may seek assistance of the NCMB for such purpose.

Any dispute which remains unresolved within 20 days from the time of its submission to LMC shall be submitted for voluntary arbitration. 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.

Reference

  1. Productivity Incentives Act of 1990, Republic Act No. 6791.
Caveat: Subsequent court and administrative rulings, or changes to, or repeal of, laws, rules and regulations may have rendered the whole or part of this article inaccurate or obsolete.