Budget Circular No. 2026-1

ANNEX D Illustrative Examples As part of the terms of the collective negotiation agreement (CNA), the management and union agreed to grant each employee an incentive amounting to P3,000 immediately upon the signing and ratification of the agreement. There is no legal basis for the grant of such incentive immediately after ratification of the CNA, as clarified under Item 4.4.2 of the Circular. Granting the incentive immediately upon ratification effectively transforms the nature of the benefit into a CNA Signing Bonus, which is prohibited, as declared by the Supreme Court, for not being a truly reasonable compensation. To reiterate, the CNA Incentive is granted to both management and rank-and-file employees of agencies with approved and successfully implemented CNA in recognition of their efforts in accomplishing performance targets at lesser costs, in attaining more efficient and viable operations through cost-cutting measures and systems improvement. It bears noting that while the agency may have satisfied one of the conditions for the grant of the CNA Incentive, i.e., the existence of a valid and subsisting CNA, all other applicable conditions and requirements should be complied with. The CNA between a government agency and an employee's organization was signed and ratified on January 1, 2026, but was not registered with the Civil Service Commission (CSC). The grant of the CNA Incentive was part of the terms of the agreement. In accordance with Item 4.1.1 of the Circular, the registration of the CNA with the CSC is a condition precedent for the grant of CNA Incentive, as evidenced by a Certificate of Registration from the CSC. Thus, in the absence of the Certificate of Registration from the CSC, there is no basis for the grant of the CNA Incentive. Under the internal guidelines prescribed by the Employees' Organization-Management Consultative Committee (EOMCC), an employee must have rendered at least six (6) months of service in the agency by September 30, 2026 to be eligible for the full amount of the CNA Incentive. Mr. A was previously employed in a local government unit before transferring to a national government agency on May 4, 2026. Accordingly, as of September 30, 2026, Mr. A had rendered almost five (5) months of service in his new agency. Since he did not meet the minimum six-month service requirement prescribed under the agency's internal guidelines, he is not entitled to the full amount of the CNA Incentive. Page 19 of 21