G/Budgeting: General Guidelines on the Grant of Collective Negotiation Agreement Incentive (CNAI)

Legal Bases for the Grant of CNAI

✅ Administrative Order (AO) No. 135, s. 2005, [Authorizing the Grant of Collective Negotiation Agreement (CNA) Incentive to Employees in Government Agencies], authorizes the grant of CNA Incentive to government employees and directs the Department of Budget and Management (DBM) to issue the necessary policy and procedural guidelines for its implementation.

✅ Item (4)(h)(ii)(aa) of the Congress Joint Resolution (JR) No. 4, s. 2009 [Joint Resolution Authorizing the President of the Philippines to Modify the Compensation and Position Classification System of Civilian Personnel and the Base Pay Schedule of Military and Uniformed Personnel in the Government, and for Other Purposes], institutionalizes the grant of the CNA Incentive as a form of reward to motivate employee efforts toward higher productivity, to wit:

“(aa) Collective Negotiation Agreement (CNA) Incentive – This may be granted to both management and rank-and-file employees of agencies with approved and successfully implemented CNAs in recognition of their efforts in accomplishing performance targets at lesser cost, in attaining more efficient and viable operations through cost-cutting measures and systems improvement xxx.”

✅ Section 73 of the General Provisions of the FY 2018 General Appropriations Act (GAA) authorizes the grant of CNA Incentive sourced from the allowable Maintenance and Other Operating Expenses (MOOE) allotments identified by the DBM as follows:

Sec. 73. Rules in the Grant of Collective Negotiation Agreement Incentive. Departments, bureaus, and offices of the National Government, including Constitutional Offices enjoying fiscal autonomy and SUCs may grant collective negotiation agreement (CNA) Incentive sourced from the allowable MOOE allotments identified by the DBM, subject to the following:

✴️ There is a valid CNA executed between the agency and the recognized employee organization which includes a provision on cost-cutting measures to be undertaken collectively by the agency and its personnel;

✴️ The one-time annual payment of CNA Incentive shall be made through a written resolution signed by agency representatives from both labor and management, and approved by the agency head;

✴️ The CNA Incentive that may be granted shall be limited to the amount identified by the DBM; and

✴️ The payment of CNA Incentive shall be subject to approval by the DBM and made only during the validity of appropriations. Any excess amounts therefrom after payment of the CNA Incentive shall revert to the General Fund.

GOCCs and LGUs may likewise grant CNA Incentive to their respective personnel, subject to the policies, rules and regulations issued by the DBM.

✅ Section 3 of AO No. 25 [ Creating an Inter-Agency Task Force on the Harmonization of National Government Performance Monitoring, Information and Reporting Systems] dated December 21, 2011 mandates that the harmonized Results-Based Performance Monitoring System shall be used as a basis for determining entitlement to performance-based allowances, incentives, or compensation of government personnel, which includes the CNA Incentive.

Who are entitled to the CNAI?

The following civilian personnel occupying regular, contractual, or casual positions rendering services on full-time or part-time basis in national government agencies (NGAs), including SUCs, GOCCs, GFIs, , LWDs, and LGUs, whether or not covered by Republic Act (RA) No. 6758, s. 1989, may be granted CNAI:

✅ Rank-and-file employees who are members of an employees’ organization accredited by the Civil Service Commission (CSC) as the sole and exclusive negotiating agent (hereinafter referred to as “negotiating agent”) in accordance with the rules and regulations issued by the Public Sector Labor Management Council (PSLMC);

✅ Rank-and-file employees who are non-members of the CSC-accredited sole and exclusive negotiating agent but want to enjoy or accept benefits under the CNA, subject to payment of agency fee to the negotiating agent in accordance with PSLMC Resolution No. 15, s. 1993; and

✅ Those who perform managerial functions.

Conditions for the Grant of the CNA Incentive

✅ Existence of a CNA

There should be a valid and subsisting CNA executed between the representatives of the management and the employees’ organization accredited by the CSC as the sole and exclusive negotiating agent for the purpose of collective negotiations with the management of a department, line bureau, attached agency, GOCC/GFI, LWD, or LGU.

The grant of the CNA Incentive must be stipulated in the CNA or in supplements thereto.

✅ Accomplishment of Targets

For FY 2018, the AO 25 IATF is yet to issue guidelines on this. We’ll update this article once the guidelines have been issued. Pls. standby.

✅ Submission of Accountability Reports

In previous years, the condition on this was that the NGAs and SUCs should have submitted to DBM their respective accountability reports as of October 31 of the current year pursuant to Commission on Audit (COA)-DBM Joint Circular No. 2014-19dated July 2, 2014.

For FY 2018, the condition on the submission of accountability reports may still be the same.

How much CNAI may be given?

The rate of CNA Incentive shall not be pre-determined in the CNA since it is subject to compliance with certain conditions as identified above and the availability of the allowable allotments.

The CNA Incentive may be given equally to all qualified employees or at varying rates in consideration of the employee’s or his/her office’s contribution to the accomplishment of performance targets, efficiency, productivity, or profitability, as determined by the agency head upon recommendation of the Employees’ Organization-Management Consultative Committee.

In all cases, however, the CNA Incentive shall not exceed P25,000 per qualified employee.

Fund Sources of the CNA Incentive

For NGAs — The CNA Incentive shall be sourced solely from the allowable MOOE allotments, provided the same have become available as a result of cost-cutting and systems improvement measures undertaken by the agencies, which are identified in their respective CNA and supplements thereof.

Such fund sources shall be limited to the following MOOE items:

✅ Traveling Expenses;

✅ Communication Expenses;

✅ Repair and Maintenance;

✅ Transportation and Delivery Expenses;

✅ Supplies and Materials; and

✅ Utility Expenses.

Unauthorized Sources of Funds for the CNAI

The following shall, in no case, be used as fund source of the CNA Incentive:

🚫 Balances of allotment for programs/activities/projects which were later discontinued or deferred; and

🚫 Released allotments intended for acquisition of goods and services to be distributed/delivered to, or to be used by agency clients.

Can Agencies Modify their Allotment to Increase the Source of Funds for CNAI?

The modification of any available MOOE allotments for the payment of the CNA Incentive shall, pursuant to Section 72 of the General Provisions of the FY 2018 GAA, be subject to the approval of the Secretary of DBM.

Note: For GOCCs, GFIs, LWDs, and LGUs — The CNA Incentive shall be sourced from their respective budgets subject to conditions set by the DBM for FY 2018. Pls. standby for the details on this.

Payment of the CNA Incentive

In previous years, the CNA Incentive was granted not earlier than December 15. This may still be the same this year. It must be noted that the CNAI is a one-time benefit that must be given to qualified employees on the date specified.

Moreover, the CNAI cannot be given immediately upon signing and ratification of the CNA as this will transform the CNA Incentive into a CNA Signing Bonus which the Supreme Court, in the case of Social Security System vs. COA, has prohibited for not being a truly reasonable compensation.

Instead, the CNA Incentive shall be granted only during the validity of appropriations from which the available MOOE allotments shall be sourced.

Accounting and Budgeting Treatment of CNAI in the Books of Accounts

The amount paid as CNA Incentive shall be recorded in the agency books under the account code “Collective Negotiation Agreement Incentive-Civilian,” “Other Benefits,” and “Collective Negotiation Agreement Incentive” for NGAs, LGUs, and GOCCs/GFIs, respectively.

Procedural Guidelines in Conducting Collective Negotiation Agreement between the EOMCC and the Management

An Employees’ Organization-Management Consultative Committee (Committee, for brevity) or a similar body composed of representatives from management and the negotiating agent shall determine if the agency is qualified for the grant of CNA Incentive based on compliance with the requirements set under the pertinent Circular issued by the DBM.

If qualified, the Committee shall review the agency’s financial records and submit recommendations on the following, for approval of the agency head:

✅ The total amount of allowable MOOE allotments which has become available as a result of cost-cutting and systems improvement measures identified in the CNAs and supplements thereto, and which was the result of the joint efforts of management and employees;

✅ The internal guidelines to be followed in the grant of the CNA Incentive, such as: (i) the specific criteria for determining who are entitled; and (ii) the distribution of the amount available and the rate of the CNA Incentive .

As provided in Section 73(d) of the General Provisions of the FY 2018 GAA, any excess amount from the allowable MOOE allotments after payment of the CNA Incentive shall revert to the General Fund.

In large departments wherein regional offices have been accredited by the CSC as the negotiating agent, the Department Secretary or his duly authorized representative should provide internal guidelines to ensure uniformity and equity in the negotiation process, monitor the progress of simultaneous negotiations, and ensure compliance with the provisions of this Circular.

Source: Department of Budget and Management | Budget Circular No. 2017-3 dated November 16, 2016