AI Layoffs Bill 2026 — Senate Bill 2563 Wants Reskilling First, 6-Month DOLE Notice and Bigger Separation Pay for Workers Replaced by AI
AI LAYOFFS BILL – If you are worried that your job could one day be handed over to artificial intelligence (AI), a new measure in the Senate wants to make sure employers cannot simply let you go without retraining, ample notice and a bigger separation pay.
Sen. Erwin Tulfo, chairman of the Senate Committee on Social Justice, Welfare and Rural Development, has filed Senate Bill (SB) No. 2563, which seeks to amend Article 298 of the Labor Code of the Philippines to set clear rules for terminations caused by AI automation, GMA News reported. The senator announced the measure in a statement on Sunday, November 8, 2026.
“As companies adopt AI, employees whose jobs become redundant risk losing not only their employment but also their means of supporting their families,” Tulfo said in the bill’s explanatory note, as quoted by ABS-CBN News. “Technological progress is inevitable, but Filipino workers should not be left behind or made to bear its costs alone.”
When Can an Employer Lay Off Workers Because of AI?
Under SB 2563, a termination due to AI automation would only be allowed if all of the following conditions are met:
- The AI technology or system is actually being introduced or implemented (bona fide);
- The AI implementation is done in good faith;
- The purpose is valid, such as cutting costs, improving efficiency or other justifiable economic reasons;
- The employer has no other option but to adopt AI and terminate the affected employee; and
- Fair and reasonable criteria are used in choosing which employees will be let go.
Reskilling Before Layoffs
The bill also requires companies to first exhaust efforts to reskill and redeploy their existing workforce before resorting to job cuts.
“There must be a proactive effort to keep workers away from termination just because AI comes in. We are not only talking about careers here, we are concerned with livelihood and lives of the employees’ families,” Tulfo said.
6-Month DOLE Notice and Bigger Separation Pay
If layoffs can no longer be avoided, the employer must submit a written notice to the Department of Labor and Employment (DOLE) at least six months before the intended date of termination, according to ABS-CBN News. The measure also calls for mandatory consultations with affected workers.
Workers displaced by AI would be entitled to separation pay equal to at least two months’ pay, or at least two months’ pay for every year of service, whichever is higher, as reported by The Philippine Star.
How Does This Compare With the Current Rules?
Under the existing Article 298 of the Labor Code, as reflected in DOLE’s implementing rules (Department Order No. 147-15), an employer may end employment due to the installation of labor-saving devices, redundancy, retrenchment or closure by serving a written notice to the worker and DOLE at least one month before the termination takes effect.
Here is a quick comparison of the separation pay:
| Ground for Termination | Minimum Separation Pay | Notice to DOLE |
|---|---|---|
| Labor-saving devices / redundancy (current law) | 1 month pay or 1 month pay per year of service, whichever is higher | At least 1 month |
| Retrenchment / closure not due to serious losses (current law) | 1 month pay or 1/2 month pay per year of service, whichever is higher | At least 1 month |
| AI automation (proposed under SB 2563) | 2 months pay or 2 months pay per year of service, whichever is higher | At least 6 months |
Under the current rules, a fraction of at least six months of service is counted as one whole year in computing separation pay.
For example, under the proposed formula, a worker earning ₱20,000 a month with five years of service would be entitled to at least ₱200,000 (₱40,000 × 5 years), compared with ₱100,000 under the present one-month-per-year rule for redundancy or labor-saving devices.
What Happens Next?
SB 2563 is still a proposal. It has to go through committee hearings and approval by both the Senate and the House of Representatives, and be signed by the President, before it can take effect. Until then, the current Labor Code rules on authorized causes for termination still apply.
GMA News also noted that Malacañang on Friday admitted that AI may displace workers, though the technology could also open new opportunities for Filipinos.
Have you heard about the DOLE Sagip-Trabaho Program that helps small businesses keep their workers?
