Philippine Senator proposes bill to protect workers from AI layoffs

Proposed protections for workers

Philippine Senator Erwin Tulfo has introduced Senate Bill No. 2563 to address the growing impact of artificial intelligence on the domestic workforce. The measure seeks to amend the Labor Code of the Philippines, specifically Article 298 of Presidential Decree No. 442. It aims to create specific legal hurdles that companies must clear before they can declare positions redundant due to technological adoption.

Under the current labor regulations, companies dismissing staff due to redundancy or labor-saving automation are only required to provide one month of notice. The new bill would significantly increase this requirement to six months of advance notice. It also mandates that employers provide mandatory reskilling opportunities to help displaced workers transition into new roles.

The bill is designed to ensure that technological progress does not come at the expense of the workers' livelihoods. Tulfo stated in the bill's explanatory note that workers should not be left behind or forced to bear the costs of automation alone. By creating these hurdles, the legislation seeks to provide a safety net for those whose jobs are threatened by software or AI systems.

Increased financial compensation

A major component of the proposed legislation involves doubling the financial support provided to employees who lose their jobs to AI. Currently, the law requires companies to pay a minimum of one month of pay or one month of pay per year of service for redundancy. The new bill would increase this to at least two months’ salary or two months’ salary for every year of service, whichever amount is higher.

This change would make it significantly more expensive for companies to choose automation over human labor. By doubling the separation pay, the bill intends to provide a larger financial cushion for families who lose their primary source of income. It shifts the economic burden of technological transition from the individual worker back to the corporation.

The goal of this financial adjustment is to provide a more meaningful period of transition for the displaced staff. While the current law provides a baseline, the proposed measure recognizes that AI-related job cuts may require a longer period of adjustment. It seeks to ensure that the transition to a more automated economy is handled with greater consideration for the human element.

The five legal conditions

To execute layoffs tied to automated software or AI systems, the bill requires employers to satisfy five specific legal conditions. First, the company must prove a bona fide installation or deployment of the technology. Second, they must demonstrate that the adoption of the technology was done in good faith rather than as a pretext for layoffs.

Third, the company is required to establish a valid economic justification for the move, such as a specific need for cost reduction or improved operational efficiency. Fourth, the employer must show that no reasonable alternative exists other than reducing the workforce. This means companies would need to explore other options before deciding to replace humans with AI.

Finally, the bill mandates that companies apply fair and reasonable criteria when selecting which specific personnel will be terminated. This is intended to prevent arbitrary decisions and ensure that the selection process is transparent. These conditions collectively create a rigorous framework that companies must navigate before they can proceed with AI-driven job cuts.

Consultation and notification

The bill also places new procedural requirements on companies regarding how they communicate with their staff and the government. Employers would be required to conduct advance consultations with their staff before any dismissals occur. This ensures that workers are informed of the upcoming changes and have a chance to be heard before the final decision is made.

In addition to internal consultations, the bill requires companies to formally notify the Department of Labor and Employment (DOLE) at least six months prior to the scheduled dismissals. This provides the government with a window to monitor the impact of automation on the labor market. It allows for a more organized oversight of how technology is reshaping the workforce.

By requiring both internal and external notifications, the bill aims to prevent sudden, disruptive layoffs. It forces a slower, more deliberate process for companies looking to integrate AI. This transparency is intended to protect the rights of the workers while allowing for the inevitable progress of technological adoption in the workplace.

The legislative path ahead

Senate Bill No. 2563 is currently pending at the committee level in the Philippine Senate. Because it is a new proposal, it must undergo a rigorous review process before it can be enacted into law. The bill must first clear committee scrutiny and then undergo three separate readings in the Senate chamber.

If it passes the Senate, the legislation must then find a counterpart bill in the House of Representatives. Both chambers must agree on the text of the bill before it can be sent for final approval. This process ensures that the measure is thoroughly debated by different legislative bodies to refine its language and scope.

The final step for the bill to become law is the approval of the President. Until then, the current labor laws regarding redundancy and automation remain in effect. The bill serves as a formal proposal to change how the Philippines handles the intersection of labor rights and artificial intelligence.