Senate Bill 2563 and AI Layoffs: What the Bill Proposes and What the Law Requires Now
Senate Bill No. 2563 would set tougher rules for jobs cut because of artificial intelligence, but it is a proposal, not a law. Here is what the bill says as filed, what Philippine law requires today, and what to do if your job is cut because of new technology.
Quick answer
Senate Bill No. 2563 is a pending bill, not a law. Sen. Erwin Tulfo filed it on 15 October 2026, and it is pending in the Senate’s labor committee.[1] As filed, it would add rules for jobs cut because of AI: six months’ notice to DOLE and the employees’ representatives, reskilling or a transition program, and separation pay of at least two months’ pay per year of service.[1] Until it becomes law, AI-related job cuts follow Article 298 of the Labor Code: the employer must prove a real authorized cause, give written notice to you and DOLE at least 30 days ahead, and pay at least one month’s pay or one month’s pay per year of service, whichever is higher.[2]
First step: if you received a notice that your job is redundant because of new technology, check its date, the ground it names, and whether DOLE was also notified. Then compare it with the checklist below.
| Point | Rule now | What it means for you |
|---|---|---|
| Rule | Art. 298 allows dismissal for labor-saving devices or redundancy | AI can be a valid reason only if it fits one of these causes |
| Exception | The cause must be real, in good faith and backed by proof | A bare claim of “AI” or “overstaffing” is not enough |
| Evidence | Staffing patterns, studies, job descriptions, approval of the restructuring | Ask for the basis; keep your own records |
| Timing | Written notice to you and DOLE at least 30 days before | Count from the date you received it |
| Next step | Check the notice, pay computation and criteria used | If something is missing, raise it with HR in writing, then with DOLE or the NLRC |
The sections below explain each point and the sources behind it.
Is SB 2563 already law?
No. A Senate bill becomes law only after both houses of Congress pass it and it is approved by the President or lapses into law. The Senate’s record lists SB 2563 as pending in the Committee on Labor, Employment and Human Resources Development as of 9 November 2026.[1] Nothing in it binds employers today. If it is enacted as filed, it takes effect 15 days after publication in the Official Gazette or a newspaper of general circulation.[1]
Does this apply to you?
This page applies when: you are a private-sector employee whose job is being cut because the company is bringing in AI, automation, software or machines, or you are the employer planning that change.
The answer changes when: the cut is for business losses (retrenchment) or closure, which carry different rules and lower separation pay; or the employer is really accusing you of poor performance, which is a just-cause case with its own procedure.
Confirm first: what ground the notice actually names, your start date and monthly pay, and whether you signed anything (a quitclaim or a release).
What the law says now
Article 298 (formerly Article 283) of the Labor Code lets an employer end employment “due to the installation of labor-saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation” by serving written notice on the workers and DOLE “at least one (1) month before the intended date thereof.” For labor-saving devices or redundancy, the worker is entitled to separation pay of “at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher,” with a fraction of at least six months counted as one whole year.[2] The text is as quoted by the Supreme Court in Yulo v. Concentrix Daksh Services Philippines, Inc. (G.R. No. 235873, 21 January 2019). The article was renumbered under RA 10151, as the Court noted in Yulo.[2][3]
An AI rollout can fall under one of two causes:
- Installation of labor-saving devices. DOLE’s rules define this as reducing the number of workers in a workplace because machinery or devices have been introduced (D.O. 147-15, Sec. 4(m)).[4] In Magnolia Dairy Products Corp. v. NLRC (G.R. No. 114952, 29 January 1996), the Court upheld the dismissal of a worker replaced by automated machines, but still required the 30-day notice to the worker and DOLE.[5]
- Redundancy. A position is redundant when it is “in excess of what is reasonably demanded by the actual requirements of the enterprise” (Wiltshire File Co. v. NLRC, G.R. No. 82249, 7 February 1991).[6]
The conditions the employer must meet today
For labor-saving devices, DOLE Department Order No. 147-15 (Sec. 5.4(a)) already requires that: machinery, equipment or devices are actually introduced; the introduction is in good faith; the purpose is valid, such as saving cost or improving efficiency; there is no other option than introducing it and terminating those affected; and fair and reasonable criteria are used to choose who goes.[4]
For redundancy, the Supreme Court lists four requisites: written notice to the employees and DOLE at least one month before; separation pay of at least one month or one month per year of service, whichever is higher; good faith in abolishing the positions; and fair and reasonable criteria in choosing which positions go (Asian Alcohol Corp. v. NLRC, G.R. No. 131108, 25 March 1999).[7] Criteria may include less preferred status, efficiency and seniority (Golden Thread Knitting Industries v. NLRC, G.R. No. 119157, 11 March 1999).[8]
The employer carries the burden of proof
“It is not enough for a company to merely declare that it has become overmanned.” It must produce adequate proof, such as the new staffing pattern, feasibility studies on the new positions, job descriptions and management’s approval of the restructuring (Yulo, citing earlier rulings; AMA Computer College v. Garcia, G.R. No. 166703, 14 April 2008).[2][9] In Yulo, a BPO agent was declared redundant after a client wanted to reduce headcount, and the Court held the dismissal illegal for lack of that proof.[2]
What SB 2563 would change, as filed
This comparison follows the bill as filed in the Senate (six pages, received 15 October 2026).[1] Bills are often amended in committee, so the final law may differ.
| Point | Law now (in force) | SB 2563 as filed (not law) |
|---|---|---|
| Where the rule sits | Article 298, DOLE D.O. 147-15 and case law | New Articles 298-A, 298-B and 298-C; Article 298 itself is unchanged |
| When it applies | Any labor-saving device or redundancy | Termination or layoff because AI technologies or systems are installed or implemented |
| Notice | Written notice to the worker and DOLE at least 30 days before | Notice to DOLE and the employees’ representatives at least six months before, plus consultation with the employees on ways to avoid or reduce the cuts |
| Conditions | Good faith, valid purpose, no other option and fair criteria, in DOLE rules and case law | Five conditions in the Labor Code itself: a bona fide AI rollout, good faith, a valid purpose such as cost or efficiency, no other option, and fair selection criteria |
| Separation pay | At least one month’s pay or one month’s pay per year of service, whichever is higher | At least two months’ pay or two months’ pay per year of service, whichever is higher |
| Reskilling | No general duty in the Labor Code text | Reskilling programs, other jobs in the company where possible, or a transition program with DOLE |
| Status | In force | Filed 15 October 2026; pending in the Senate labor committee |
The biggest practical changes would be the six-month notice, the doubled separation pay floor and the reskilling or transition duty. The five conditions are close to what D.O. 147-15 already requires for labor-saving devices; the bill would put them in the statute, where they are harder to change.[1][4] The bill has no penalty clause of its own, and DOLE would have 30 days after it takes effect to issue implementing rules.[1]
Your options and what to do next
If you are the employee
- Check the notice. Confirm it names a ground, is dated at least 30 days before your last day, and that DOLE was notified. Missing notice can entitle you to damages even if the cause is valid.[10] Ask HR in writing for a copy of the DOLE notice.
- Ask for the basis. Request in writing the criteria used and how your position was chosen, because the employer must prove good faith and fair criteria. Keep your job description and any announcement about the AI tool.
- Check your separation pay. Multiply your monthly pay by your years of service, counting six months or more as a full year, and compare with one month’s pay; you should get the higher amount. See how to compute separation pay.
- Don’t sign a quitclaim you don’t understand. A quitclaim can be set aside in some cases, but it makes a claim harder. See what a quitclaim is.
- If the cause looks false or the pay is short. You can file a complaint for illegal dismissal with the NLRC; our guide on how to file an illegal dismissal case walks through the steps. An illegal dismissal action must be filed within four years, and money claims within three years from when they accrued (Callanta v. Carnation Philippines, G.R. No. L-70615, 28 October 1986).[11]
If you are the employer
- Document the business case before any notice. Prepare the old and new staffing patterns, the study showing the AI or automation saves cost or improves efficiency, and the job descriptions of positions abolished and created.
- Get the restructuring approved and recorded. Courts look for management’s approval of the restructuring. For a corporation, keep the approval in the board file: see CorporateCode.ph’s guide on what belongs in a board decision file.
- Consider alternatives and record them. DOLE’s rules for labor-saving devices require that there is no other option. Redeployment or retraining you considered or offered is evidence of good faith.
- Set written, fair selection criteria such as status, efficiency and seniority, and apply them consistently.
- Serve written notice on each affected employee and the DOLE Regional Office at least 30 days before the termination date.[4]
- Pay separation pay of at least one month or one month per year of service, whichever is higher, with final pay. On tax treatment, see TaxCode.ph’s guide to income excluded before tax is computed.
- Watch SB 2563. If it becomes law as filed, plan for six months’ notice to DOLE and your employees’ representatives, a reskilling or transition offer, and double the separation pay floor for AI-related cuts.
What to prepare
- Required for employers: notices to each employee and DOLE, proof of the restructuring, written criteria, separation pay computation.
- Helpful for employees: the notice, payslips, contract and job description, org charts or emails about the AI rollout, and the names or roles of who was kept.
- Facts to confirm: your hire date, monthly pay and what it includes, and whether your position was really abolished or just renamed.
- If a record is missing: write to HR asking for it, and keep a copy of your request.
Fictional example
Invented for illustration. Lea has worked 6 years and 7 months as a claims processor at a Pasig insurance service company, earning ₱25,000 a month. The company installs an AI claims tool and gives her a notice of redundancy 30 days ahead, with a copy to DOLE. Under current law her separation pay is at least ₱25,000 × 7 years = ₱175,000, because the 7-month fraction counts as a full year. If SB 2563 became law as filed, the floor would be two months per year, or ₱350,000, and DOLE and the employees’ representatives would need six months’ notice.
What could change the answer: if the company kept hiring for the same role under a new title, the redundancy may not be in good faith. “Kung pareho lang pala ang trabaho, iba lang ang pangalan, dapat itanong ‘yan.” Her next step: ask HR in writing for the criteria and the new staffing pattern.
Where to get help
- Your HR or management: ask in writing for the notice, the criteria and the basis for the restructuring, and keep a copy.
- DOLE Regional Office for the area where you work: it receives the employer’s termination notice under DOLE’s rules.[4] Find your office through the DOLE website.
- NLRC: the forum for illegal dismissal complaints. Our illegal dismissal filing guide explains where and how to file.
- Your union or a labor lawyer: if you are covered by a collective bargaining agreement, it may add steps or benefits on top of the law.
Related guides
FAQs
Is Senate Bill 2563 already a law?
No. It was filed in the Senate on 15 October 2026 and is pending in the Committee on Labor, Employment and Human Resources Development. It must pass both houses and be approved before it binds anyone.
Can my employer replace me with AI today?
Yes, if the change is a real labor-saving device or makes your position redundant, and the employer gives 30 days’ written notice to you and DOLE, uses fair criteria, acts in good faith and pays separation pay.
How much separation pay do I get if AI replaces my job now?
At least one month’s pay, or one month’s pay for every year of service, whichever is higher. A fraction of six months or more counts as a full year.
What if my employer didn’t notify DOLE?
If the cause is valid but notice was not given, the dismissal can stand, but the Supreme Court has ordered ₱50,000 nominal damages for an employer-initiated authorized cause without proper notice (JAKA Food Processing Corp. v. Pacot, G.R. No. 151378, 28 March 2005).
What proof must my employer have?
Adequate proof of the redundancy, such as the new staffing pattern, feasibility studies, job descriptions and management’s approval of the restructuring. A bare statement that the company is overstaffed is not enough.
Does my employer have to retrain me before cutting my job?
The Labor Code text has no general retraining duty, but DOLE’s rules for labor-saving devices require that there was no other option. As filed, SB 2563 would require the employer to provide reskilling, offer other jobs in the company where possible, or run a transition program with DOLE.
Pwede ba akong tanggalin dahil sa AI kahit regular na ako?
Oo, pwede, basta totoo ang dahilan (labor-saving device o redundancy), may 30-day written notice sa’yo at sa DOLE, patas ang criteria, at bayad ang separation pay. Regular status doesn’t stop an authorized-cause termination.
Ano’ng gagawin ko kung nakatanggap ako ng notice of redundancy?
Tingnan ang petsa at kung may kopya ang DOLE, humingi ng criteria in writing, i-compute ang separation pay mo, at huwag munang pumirma ng quitclaim kung hindi mo naiintindihan.
May laban ba ako kung peke ang “redundancy”?
Meron. Ang employer ang kailangang magpatunay na totoo ang redundancy. Kung walang sapat na ebidensya, pwedeng ideklarang illegal ang dismissal, gaya sa Yulo v. Concentrix (2019).
Kanus-a ko kinahanglan mo-file og kaso kung ilegal ang pagtangtang nako?
Sa sulod sa upat (4) ka tuig gikan sa pagtangtang para sa illegal dismissal. Ang money claims, sama sa kulang nga separation pay, sa sulod sa tulo (3) ka tuig gikan sa dihang nahitabo kini.
Sources and legal citations
Bill
[1] Senate Bill No. 2563, 20th Congress: bill page and text as filed, Senate of the Philippines. Supports: filing date, author, committee referral, pending status, and the bill’s notice, conditions, separation pay, reskilling and effectivity provisions.
Statute and rules
[2] Yulo v. Concentrix Daksh Services Philippines, Inc., G.R. No. 235873, January 21, 2019, Lawphil. Supports: the text of Article 298 [283] as quoted by the Court, the renumbering, the burden of proof for redundancy and the outcome for the BPO agent.
[3] Republic Act No. 10151, Lawphil. Supports: the law under which the Labor Code articles were renumbered.
[4] DOLE Department Order No. 147-15, Secs. 4, 5.3, 5.4 and 5.5, Supreme Court E-Library. Supports: the definition of labor-saving devices, notice to the employee and the DOLE Regional Office, the conditions for labor-saving devices and redundancy, and separation pay.
Supreme Court decisions
[5] Magnolia Dairy Products Corp. v. NLRC, G.R. No. 114952, January 29, 1996, Lawphil. Supports: dismissal due to automation upheld, with the notice requirement.
[6] Wiltshire File Co. v. NLRC, G.R. No. 82249, February 7, 1991, Lawphil. Supports: the meaning of redundancy.
[7] Asian Alcohol Corp. v. NLRC, G.R. No. 131108, March 25, 1999, Lawphil. Supports: the four requisites of a valid redundancy.
[8] Golden Thread Knitting Industries v. NLRC, G.R. No. 119157, March 11, 1999, Lawphil. Supports: examples of fair selection criteria.
[9] AMA Computer College v. Garcia, G.R. No. 166703, April 14, 2008, Lawphil. Supports: the kinds of proof an employer must present for redundancy.
[10] JAKA Food Processing Corp. v. Pacot, G.R. No. 151378, March 28, 2005, Lawphil. Supports: ₱50,000 nominal damages where an authorized cause exists but notice was not given.
[11] Callanta v. Carnation Philippines, G.R. No. L-70615, October 28, 1986, Lawphil. Supports: four years to file for illegal dismissal and three years for money claims.
News context
News coverage of the filing, for context only: BitPinas report on the bill. Some news reports gave a different filing date; the Senate record says 15 October 2026.
Featured photo: Priscilla Du Preez on Unsplash. Infographic: LaborCode.ph.
This page gives general legal information about Philippine law, not legal advice on your situation. LaborCode.ph is not DOLE, the NLRC or a law firm.
Sources rechecked as of: November 12, 2026
