Congress recently approved on third and final reading a landmark bill that will provide protection to an estimated 1.5 million adult Filipinos who are part of the gig economy.
House Bill (HB) No. 6718 or the “Freelance Workers Protection Act,” will provide legal relief to freelance workers who may fall prey to abusive employers due to a lack of a grievance system in the digital economy. The bill also mandates the institutionalization of benefits such as night differential and hazard pay for freelance workers whenever they are applicable.
This should be welcome news not only to the 1.5 million but to many others who at one time worked as a freelancer (me included) and to those that are always looking for freelance work (raising my hand again) for reasons such as to supplement their income or grow their network and experience.
It’s not easy being an employee. And it’s also not easy to be a freelancer. Having been both, I could say the latter is much tougher because many times, you find yourself at a disadvantage or being taken advantage.
How can the Freelance Workers Protection Act help ease the burdens of the members of the gig economy? Here are key points to remember:
#1 Who is a freelance worker?
HB 6718 defines a freelance worker as any natural person or entity composed of no more than one natural person, whether incorporated under the Securities and Exchange Commission, registered as a sole proprietorship under the Department of Trade and Industry or registered as self-employed with the Bureau of Internal Revenue. That’s the legal speak, anyway.
To put it more simply, a freelance worker is someone “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.” If you meet these criteria, keep on reading for more useful information.
#2 No contract, no work
One of the reasons many freelance workers are exploited is that their engagement terns are not covered by a written contract. The lack of documentation is mistakenly seen to “protect” the one needing the service and the one providing the service. But verbal agreements can harm you both: the one who needs the service cannot really impose penalties on the worker for non-delivery of service, or poor quality work; while the one who rendered the service have no recourse in case the fee is changed, or the deadline, or the payment terms are extended and delayed.
HB 6718 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.
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. These unlawful practices carry a fine of P50,000 to P500,000.
#3 Amended contracts require mutual agreement
Having a contract in place protects you, the freelance worker, from any surprises down the road. These could include a change in fees, or change in payment terms. Regretfully, many freelance workers have suffered from these abuses, where the one who hired you will suddenly advise that they can only pay you this much, or can only pay you after they have been paid.
HB 6718 also includes a provision that “no modification of the terms of the contract shall be enforceable unless signed by both the hiring party and the freelance worker.” This means if you signed a contract for a certain fee and it details when you get paid, the other party must abide by this or face sanctions.
#4 Where to file complaints
In the past, most of the disagreements are resolved with “pakiusap” or entreaties. But more often than not, the freelance worker will find himself or herself at the losing end. With HB 6718, you may file a complaint with the Department of Labor and Employment (DoLE), through the Undersecretary for Workers with Special Concerns. Even better, you can do so and still have the option to file a civil lawsuit later.
After receiving your complaint, DoLE may attempt to resolve it through mediation and conciliation. That’s actually a better option for both parties, and here’s hoping that the aggrieved freelance worker will get what he or she rightfully deserves because the involvement of DoLE will put the hiring party on best behavior.
#5 Finally (and maybe most importantly), there is tax relief
Sec. 19 of the bill also 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 Act of 2002.”
So for those freelance workers who shy away from written contracts to avoid paying taxes, the tax relief should eliminate that concern. 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.
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Even better, n 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.
Let’s hope the Senate will also prioritize their version of this bill, and freelance workers can soon reap the benefits of the proposed law.
Disclaimer: The views in this blog are those of the blogger and do not necessarily reflect the views of ABS-CBN Corp.