This Government Just Passed a Freelancers Protection Act to Ensure Fair Treatment of Freelancers

Stefan Palios January 27, 2021

A new bill just received approval in the Philippine House of Representatives that could set a global precedent for laws protecting freelancers. The Freelancers Protection Act covers taxation, compensation, and contract law for freelancers. Authored by child actor turned District Rep. Christopher De Venecia, the new bill affords multiple protections around freelance contracts, compensation, and retaliations from clients.

First reported by the Manila-based outlet Inquirer.net, the bill is a watershed as freelancers from Canada to Serbia fight for their rights.

Stuck in a legislative middle ground

Rep. Venecia gave an impassioned speech during a committee meeting in government. He said that freelancers “work without the benefit of having a written contract between them and their clients. This makes them very vulnerable to unscrupulous clients who will either change the terms of payment or evade payment altogether.”

Venecia further added that many freelancers have a hard time going after bad clients. Even when they can chase for late payment or other issues, litigation costs are often prohibitively expensive.

Rep. Joey Salceda, another author of the bill, said that the Philippine labor code currently doesn’t define “freelancers,” creating a legal and regulatory gap when it comes to worker protections for a growing part of the economy.

Included in the Freelancers Protection Act

The act has four key components to it, covering contracts, compensation, retaliation, and taxes.

Contracts: Perhaps the biggest change is that contracts will become mandatory between freelancers and clients under the Freelancers Protection Act. This measure aims to give freelancers more of an opportunity to assert their rights. Previously, agreeing to a contract relied on both parties. However, some businesses refused and would only work with freelancers without a contract.

Compensation (a): The new bill makes it unlawful to pay a freelancer invoice more than 15 days late. This aims to combat companies that try to avoid paying freelancers by delaying for so long that the freelancer just calls it a loss and moves on.

Compensation (b): The new bill also changes how compensation can be negotiated. Once the price of a contract is agreed upon and a freelancer has started work, the company cannot try to negotiate the price after the fact. This is meant to stop companies that agree to a higher price but then hard-ball negotiate after work has been delivered.

Retaliation: The new bill provides additional circumstances that protect freelancers from client retaliation.

Taxation: Freelancers will have to register with the Bureau of Internal Revenue (BIR) and pay income taxes annually. Further, the bill seeks to establish a freelance-specific resource at the BIR to aid with freelance applications, registrations, and other inquiries. This puts freelancers on a more level playing field with other small businesses.

“A lifeline for millions”

Rep. Salceda said in a statement that freelancing “has become a lifeline for millions of Filipinos,” especially those who lost jobs during the pandemic. He added that as the Philippine economy becomes more digital, freelancing is going to become more popular. As a result, the bill is necessary to avoid further risks of exploitation.

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