NextGen Day

On second reading, the House of Representatives on Wednesday adopted a bill giving independent contractors incentives and protections.

House Bill 6718, the proposed Freelance Workers Protection Act, was approved during the plenary session by voice vote. Its goal is to protect the safety and welfare of independent contractors by requiring the payment of mandatory hazard pay and night shift differential pay.

The legislation also mandates that the freelancer and the hiring party enter into a formal agreement outlining the services to be rendered.

The written contract must also include information about wages and benefits, the length of the working relationship, grounds for termination, and any other terms that the Department of Labor and Employment may specify (DOLE).

The bill’s sponsor and author, Pangasinan Representative Christopher De Venecia, cited PayPal’s 2018 Global Freelancer Insights Report as evidence that the Philippines has one of the highest per capita rates of freelancers, at about 2 percent of the population, or an estimated 1.5 million freelancers.

By giving independent contractors legal protection and, of course, encouraging their welfare, this move, according to De Venecia, “acknowledges the changing landscape of how occupations are conducted.”

He mentioned that at his first State of the Nation Address (SONA) in July of last year, President Ferdinand R. Marcos Jr. made a commitment to defend the creative industry.

The well-being of our cherished freelancers, who were left unprotected during the height of the pandemic, workplace conditions, working hours, and intellectual property rights are just a few of the difficulties the creative business faces, according to Marcos.

“We need an institutionalized creative sector that advances the interests of its stakeholders — this is what we mean by’sila na nagbibigay ng kaluluwa at [pagkakilanlan] sa ating pagka-Pilipino. They are the ones protecting our soul and national identity as Filipinos, or protektahan natin sila. Let’s defend them),” Marcos continued.

De Venecia asserted that it is “high time” for legislation protecting the freelance community—the critical mass of the creative industries—to be passed.

The bill defines a freelance worker as any individual who has been “hired or retained to provide services in exchange for compensation” as an independent contractor to carry out work in accordance with one’s own methods and without being subject to the control of the hiring party,” whether that individual is incorporated under the Securities and Exchange Commission (SEC), registered as a sole proprietor under the Department of Trade and Industry (DTI), or registered as self-employed with the Bureau of Internal Revenue.

The proposed law stipulates that down payment for the freelancer’s services, which must equal at least 30% of the total cost of the contract, must be made at the time of engagement.

The proposed law stipulates that certain actions are illegal, including hiring a freelancer without a written contract, paying the freelancer’s compensation more than 15 days after the date specified in the written contract, and requiring the freelancer to accept less money than the agreed-upon contract price as a condition of receiving payment. The bill also stipulates civil penalties ranging from PHP50,000 to PHP500,000 for these actions.

Tax reductions for independent contractors will be provided up to the amount allowed by Republic Act No. 10963 (Tax Reform for Acceleration and Inclusion Act) and Republic Act No. 9178. (Barangay Micro Business Enterprises Act).

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