Philippines bill: six months' notice before AI layoffs
The short answer
Philippine senator Erwin Tulfo filed Senate Bill No. 2563 on 8 November 2026 to write AI-driven dismissal into the country's Labor Code. Under the bill, an employer that wants to cut jobs because of AI or automation would have to show the system is genuinely being installed, that cutting jobs is the last resort after reskilling and redeployment, that the workers were chosen on fair criteria, and that the Department of Labor and Employment was notified at least six months in advance. Displaced workers would get separation pay of at least two months' salary, or two months' salary for every year of service, whichever is higher.
What the bill actually requires
SB 2563 does not ban AI. It adds an article to the Labor Code that sets out the conditions under which a dismissal caused by AI can be lawful. Read together, the conditions are stricter than the redundancy rules that exist today.
- The AI has to be real. The technology must actually be introduced or implemented. A plan, a pilot or a consultancy slide deck is not enough.
- Good faith and a valid purpose. The employer has to be acting in good faith, and the purpose has to be justifiable, such as cost reduction or higher efficiency. Retaliation or cleaning out a department is not a purpose.
- Last resort. Layoffs must come after reskilling and redeployment options have been exhausted. The bill puts the burden on the employer to show it tried.
- Fair selection. The criteria used to choose who goes must be fair and reasonable, and the bill also requires consultations with affected workers.
- Six months' notice to DOLE. An employer planning an AI implementation that could reduce the workforce must notify the Department of Labor and Employment at least six months before terminations.
- Higher separation pay. At least two months' salary, or two months' salary for every year of service, whichever is higher.
The two numbers that matter
Six months and two months. The first is the notice period to the labour department, and it is the part employers will feel most. The second is the floor for separation pay.
Under the existing Labor Code, an authorised cause such as redundancy requires notice to DOLE and to the employee one month before the effectivity date, and separation pay of at least one month's salary for every year of service. The bill doubles the pay floor and multiplies the notice period by six, and it adds requirements that have no equivalent in the current redundancy rules: proof of reskilling, proof that AI is genuinely being installed, and a consultation obligation.
Why this bill, why now
Tulfo chairs the Senate committee on social justice, welfare and rural development. His stated reason for filing is the wave of announcements in which large employers attribute job cuts to AI and automation, and the gap between those announcements and any law that governs them. Philippine labour law has detailed rules for redundancy, retrenchment and closure, but none of them were written with a system that can absorb a task as its central fact. The bill tries to close that gap by squeezing AI into the authorised-causes framework and then tightening the conditions around it.
The timing also matters outside the Philippines. The country is one of the largest suppliers of outsourced business services in the world, including customer support, back office and transcription work. Those are exactly the tasks that AI tooling has been aimed at. A law that raises the cost of AI-driven dismissal in the Philippines does not stop automation in Ohio or Manchester, but it changes the arithmetic for the companies that moved work there.
What it changes for an employer
Three practical shifts, if the bill becomes law in anything like this form.
Planning moves earlier. Six months' notice to DOLE means the decision to deploy AI and the decision to cut headcount cannot be the same meeting. Companies will have to model workforce effects before the procurement decision, or carry the cost of the notice period.
Reskilling becomes evidence. "We trained them" is no longer a statement, it is a document. Employers will need records of who was offered what training, who declined, and which roles were considered for redeployment.
Payroll cost goes up at the exit. Two months' pay for every year of service is a serious number for a long-tenured workforce. For a worker with ten years in the role, the floor is 20 months' salary, which is usually enough to make a company think twice before cutting and hiring a software licence instead.
The comparison, in one table
| Item | Existing Labor Code redundancy rules | Proposed under SB 2563 (AI) |
|---|---|---|
| Notice to DOLE | One month before effectivity | At least six months before termination |
| Separation pay | At least one month's pay per year of service | At least two months' pay, or two months' pay per year of service, whichever is higher |
| Reskilling first | Not required | Required, with redeployment considered |
| Consultation | Limited | Mandatory for affected workers |
| Proof the AI is real | Not applicable | Required, plus good faith and a valid purpose |
What the bill does not do
It does not stop a company from using AI, and it does not create a right to keep a job that has genuinely disappeared. It does not cover contractors in the same way as employees, and it says nothing about the quality or transparency of the AI system itself. It also is not law. A filed Senate bill has to survive committee, plenary and the House before it reaches the president, and Philippine bills routinely change shape in that process.
What it does do is put a number on the trade-off. Six months of notice and two months per year of service is a price list for replacing people with software, and it is the first time a national legislature has published one.
If you work in the industries this covers
The bill's practical value to a worker is documentation. If an employer announces an AI rollout that touches your team, the six-month clock is the thing to watch: it runs from the notice to DOLE, not from the day the email lands in your inbox. Ask whether that notice was filed, and ask for the reskilling offer in writing, because the bill makes both of them conditions rather than gestures.
For anyone in outsourced support, transcription or back-office processing, the honest reading is that this bill protects the exit rather than the job. It raises the price of cutting, which slows the cut, but it does not make the role permanent. The people who benefit most are the ones with tenure, because two months per year of service turns a long career into a genuine number.
Questions people ask
Is SB 2563 already law?
No. It was filed on 8 November 2026 by Senator Erwin Tulfo and has to pass both chambers of Congress before it can become law.
How much notice would employers have to give?
At least six months' advance notice to the Department of Labor and Employment before terminations caused by AI or automation.
How much separation pay?
At least two months' salary, or at least two months' salary for every year of service, whichever is higher.
Does the bill ban replacing workers with AI?
No. It sets conditions for a lawful dismissal: the AI must actually be implemented, the purpose must be valid, reskilling and redeployment must come first, selection must be fair, and DOLE must be notified early.
Does this affect companies outside the Philippines?
Only their Philippine operations, if the bill becomes law. But the country is a large outsourcing market, so the cost of AI-driven cuts there feeds into decisions made in the US, UK and Australia.