LABOR STANDARDS

 

The Labor Code of the Philippines (Labor Code) lays down the minimum terms, conditions and benefits of employment that employers must provide or comply with and to which the employees are entitled as a matter of right.

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COMPENSATION

The Philippines has a minimum wage law. The minimum wage rate varies from one region of the country to another and is set by the relevant Regional Tripartite Wages and Productivity Board. An employer may not pay lower than the minimum wage the Regional Tripartite Wages and Productivity Board has set for the region where its workers are working. Under the most recent wage order for the National Capital Region (i.e., Metro Manila), the minimum gross basic wage is PhP 502 per day plus cost of living allowance of PhP 10 per day.

Wages should be paid in legal tender (i.e., cash) at least once every two weeks or twice a month at intervals not exceeding 16 days.

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WORK HOURS AND OVERTIME

 

The normal hours of work should not exceed eight hours a day. Unless there is a valid compressed work week arrangement, an employee who renders work in excess of eight hours a day is entitled to overtime pay equivalent to the applicable wage rate plus at least 25% thereof. The overtime rate will vary if the overtime work is rendered on a rest day, regular holiday or special day or during the period between 10 p.m. and 6 a.m. of the following day. However, certain classes of employees (called exempt employees in this publication) are not entitled to such overtime pay, namely:

  1. government employees;

  2. managerial employees2 and officers or members of the managerial staff3;

  3. field personnel4;

  4. members of the family of the employer who are dependent on him for support;

  5. domestic helpers and persons in the personal service of another; and

  6. workers who are paid by results, as determined by the Secretary of the DOLE in appropriate regulations.

 

Non-exempt employees are the workers who do not fall in the above enumeration.

 

Entitlement of employees to overtime pay depends on the nature of their duties and responsibilities. If the employees’ duties and responsibilities do not qualify them as exempt employees, they are entitled to overtime pay. Conversely, should these employees’ duties and responsibilities qualify them as exempt employees, they are not entitled to overtime pay.

 

Furthermore, employers may not require employees to perform overtime work except in certain cases and provided appropriate compensation is paid. In practice, they ask employees to sign employment contracts where the employees agree to perform overtime work.

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NIGHT SHIFT DIFFERENTIAL

If a non-exempt employee performs work between 10 p.m. and 6 a.m., he or she must be paid a night shift differential equivalent to at least 10% of his or her regular wage for work done between these hours.

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REST DAYS

 

An employer may require its employees to work six days per week. Employees, except exempt employees, are entitled to a rest period without pay of not less than 24 consecutive hours for every six consecutive normal working days. For work done on rest days, the employer should pay compensation equivalent to the applicable wage rate plus at least 30% thereof. The rate for work on a rest day will vary if the rest day is also a regular holiday or a special day or the work is during the period between 10 p.m. and 6 a.m. of the following day.

 

Moreover, employers may not require employees to work during their scheduled rest day except in certain cases and provided appropriate compensation is paid. In practice, they ask employees to sign employment contracts where the employees agree to perform work outside their normal work schedule.

Regular Holidays

There are 12 regular holidays, namely:

  1. New Year’s Day (1 January),

  2. Maundy Thursday (movable date),

  3. Good Friday (movable date),

  4. Eidul Fitr (movable date),

  5. Eidul Adha (movable date),

  6. Araw ng Kagitingan (Monday nearest 9 April),

  7. Labor Day (Monday nearest 1 May),

  8. Independence Day (Monday nearest 12 June),

  9. National Heroes Day (Last Monday of August),

  10. Bonifacio Day (Monday nearest 30 November),

  11. Christmas Day (25 December), and

  12. Rizal Day (Monday nearest 30 December).

 

Except exempt employees and employees of retail and service establishments regularly employing fewer than 10 workers, employees are entitled to be paid their regular daily wage for any unworked regular holiday. When an employer asks a non-exempt employee to work during a regular holiday, the employee should receive at least 200% of his applicable wage rate on the regular holiday. The rate for work on a regular holiday will vary if the regular holiday work is rendered during the period between 12 midnight and 6 a.m. and 10 p.m. and 12 midnight of the regular holiday.

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Special Holidays

 

There are four special holidays, namely:

  1. Benigno S. Aquino Jr. Day (Monday nearest 21 August);

  2. All Saints Day (1 November);

  3. Feast of the Immaculate Conception of Mary (8 December); and

  4. the last day of the year (31 December).

The President may declare additional special holidays.

 

Employees who are not required to work on these special days are not, by law, entitled to compensation. Work performed on these days by non-exempt employees, however, merits compensation equivalent to the applicable wage rate plus at least 30% thereof. If the special day also happens to be the non-exempt employee’s scheduled rest day, the premium rate is increased to at least 50% of the applicable wage rate. The rate for work on a special holiday will vary if the special holiday work is rendered during the period between 12 midnight and 6 a.m. and 10 p.m. and 12 midnight of the special holiday.

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Service Incentive Leave

Except for exempt employees, every employee who has rendered at least one year of service is entitled to a yearly service incentive leave (which is commonly replaced by vacation leave) of five days with pay. The service incentive leave should be converted to its money equivalent and paid to the non-exempt employee by the employer if not used or exhausted by the said employee at the end of the year. As a general rule, an employer can regulate the schedule of the service incentive leave of its employees.

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Meal Period

An employer must give its non-exempt employees at least one hour non-compensable time-off for regular meals. However, an employer is allowed to give employees a meal break of less than one hour in certain cases. In any of these cases, the shorter meal period must be considered as compensable hours worked and must not, in any case, be less than 20 minutes.

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Lactation Period

 

Nursing employees are entitled to paid break intervals (i.e., lactation periods) in addition to the unpaid regular one-hour meal period, to breastfeed or express milk. There may be several lactation periods of short duration during the work day; and, each lactation period should include the time it takes a nursing employee to go to and from the workplace lactation station. The employer and nursing employee may agree on the duration and frequency of the lactation periods, provided the total length of all the lactation periods is not less than 40 minutes for every eight-hour working period.

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Private Retirement Benefit

An employee is entitled to receive such retirement benefits as he or she may have earned under existing laws and any collective bargaining agreement and other agreements. However, an employee’s retirement benefits under any collective bargaining and other agreements should not be less than those provided by the Labor Code.

 

In the absence of any provision on optional retirement in a collective bargaining agreement, employer’s retirement plan or any other agreement, an employee (except an underground mining employee) has the option to retire and receive retirement pay upon reaching the age of 60 years or more, provided he or she has served at least five years with his or her employer. When the employee (who is not an underground mining employee) reaches the compulsory retirement age of 65 years, his or her employer may retire him or her and pay him or her retirement pay. In the case of underground mining employees, they may retire and receive retirement pay upon reaching 50 years of age and completing five years of service to their employer, and their employer may retire them and pay them retirement pay when they reach 60 years (which is the compulsory retirement age for underground mining worker). An eligible retiring employee is entitled to retirement pay equivalent to at least his or her half-month salary for every year of service, a fraction of at least six months of service being considered as one whole year.

 

The term “half-month salary” for retirement pay purposes generally includes the 15-day salary of the employee based on his or her latest salary date, cash equivalent of five days of service incentive leave, 1/12 of the 13th month pay due the employee, and all other benefits that the employer and employee may agree upon to be included in computing the retirement pay.

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Maternity Leave

A qualified pregnant woman is entitled to maternity leave of 60 days in case of normal delivery, abortion or miscarriage, or 78 days in case of caesarean delivery. During such leave, the pregnant woman shall receive daily maternity benefit equivalent to 100% of her average salary credit, computed based on the formula of the Social Security System (SSS), for 60 or 78 days, as the case may be. The maternity benefits shall be paid only for the first four deliveries or miscarriages. The employer is required to advance to the pregnant female employee the full maternity benefit within 30 days from the filing of the maternity leave application. The SSS shall immediately reimburse the employer 100% of the amount of maternity benefits advanced to the employee upon receipt of satisfactory proof of such payment and legality thereof.

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Paternity Leave

All married male employees, regardless of employment status, are entitled to paternity leave. It applies to the first four deliveries of the employee’s lawful wife with whom he is cohabiting. The leave shall be for seven days, with full pay, consisting of his basic salary, provided that his pay shall not be less than the mandated minimum wage. In the event the paternity leave benefit is not availed of, said leave is not convertible to cash.

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Parental Leave

In addition to other leave privileges under existing laws, a solo parent employee as defined in the law who has rendered service of at least one year is entitled to parental leave of not more than seven working days every year. A change in the status or circumstance of the parent claiming the parental leave benefit, such that he or she is no longer left alone with the responsibility of parenthood, shall terminate his or her eligibility for this benefit.

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Leave due to Domestic Violence

An employee who is a victim under Republic Act No. 9262 (also known as Anti-Violence against Women and Their Children) is entitled to paid leaves of up to 10 days in addition to paid leaves under other laws, extendible when the necessity arises as specified in a protection order issued by an appropriate authority. The availment of the 10-day leave is at the option of the female employee, and such leave shall cover the days that the employee has to attend to medical and legal concerns. Unused leaves are not cumulative and not convertible to cash.

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Leave due to Gynecological Disorders

Women employees who have rendered continuous aggregate employment service of at least six months for the last 12 months are entitled to the special leave benefit of up to two months with full pay following surgery caused by gynecological disorders.

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13TH MONTH PAY

 

All “rank-and-file” employees of employers covered by the Revised Guidelines on the Implementation of the 13th Month Pay Law are entitled to a bonus called “13th month pay,” regardless of the amount of their monthly basic salary, their designation or employment status, and the method by which their salary is paid, provided they have worked for at least one month during a calendar year. The 13th month pay of a rank-and-file employee should be equivalent to at least 1/12 of the total basic salary that the employee earned within a calendar year. The required 13th month pay should be paid not later than 24 December of each year. Nonetheless, an employer may give its rank-and-file employees half of the required 13th month pay before the opening of the regular school year in June and the other half on or before 24 December. The frequency of payment of the 13th month pay may also be the subject of an agreement between the employer and the collective bargaining agent of its rank-and-file employees.

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RULE ON NON-DIMINUTION OF EMPLOYMENT BENEFITS

 

If an employer grants employee benefits that are not required by law or are more than that required by law, the benefit may become part of the terms and conditions of employment and cannot be unilaterally withdrawn or discontinued by the employer, despite the absence of a legal or contractual requirement to grant the said benefit, if the grant of the benefit has become an employer practice or policy.

 

The following criteria may be used to ascertain the existence of a binding and enforceable employer practice or policy under Philippine law:

  1. The act of the employer has been done for a long period or is consistently repeated.

  2. The act is done deliberately, knowingly and consistently.

  3. The act is not a product of erroneous interpretation or construction of a doubtful or difficult question of law.

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