The Complete Guide to Employee Benefits in the Philippines

The good news: The employment rate in the Philippines in January 2022 has increased to 93.6% from 91.2% in the same period last year, according to a Philippine Statistics Authority (PSA) survey. This means a total of 43.02 million Filipinos have jobs at the start of the New Year, up by 1.77 million from 41.25 million in 2021. The unemployment rate, as expected, showed a corresponding decline from 3.96 million last year to 2.93 million this year.  

But now here’s the bad news: That’s still a whopping close to 3 million people without a job, and you can bet many of them have families and other relatives that depend on them for their daily living. Do the math and you’ll get the idea that there are likely more than 3 million Filipinos who are experiencing a low quality of life because of unemployment. 

Employment not only ensures a monthly income from a salary but also a host of perks that are either a company initiative, such as an HMO (more popularly known as a “health card”) or guaranteed by Philippine labor laws, or both. 

In this article, we will be discussing employee benefits as mandated by the government. 

The PSA’s Definition of Terms 

The PSA (formerly the National Statistics Office or NSO) regularly conducts a quarterly Labor Force Survey (LFS) as part of its mandate. The objective is to give the government a bird’s eye view of the labor landscape in the country to determine if it needs to produce more jobs for its citizens. More jobs mean more opportunities for Filipinos to earn a decent living and contribute to the economy of the country. 

The LFS clearly defines four concepts that are pertinent to the results it yields: 

  • Labor Force – is the total number of Filipinos 15 years old and above “who can contribute to the production of goods and services in the country.” The labor force constitutes both the employed and the unemployed. 
  • Employed – are those people who may have a regular job or a business. It also includes individuals who work part-time or as a freelancer. 
  • Unemployed – are those people who, at the time of the survey, have no work, available for work, looking for work, or not looking for work because 1) they think there’s none available; 2) they are just waiting for the result of a job application or to be rehired; 3) they are currently ill or disabled; or 4) there’s bad weather. 
  • Underemployed – are those people with a job and are looking for additional work hours in their current company or a second job in another office. 

Thus, we may infer that among the employed, there are those who think that their present salary is not enough for their needs so they would want to have another job or, if it’s possible, to have additional responsibilities in their present job that would allow them to earn more. 

What are the types of employees in the Philippines? 

The Labor Code of the Philippines gives the following types of employment: 

  1. Regular Employment – interestingly, the law defines “regular employment” as when an employee performs a certain task that is “necessary” and “desirable” with regard to the company’s overall business scheme. 
  2. Casual Employment – according to the Labor Code, a casual employee is also considered a regular employee when they have been employed by the company for no less than a year regardless if the employee’s engagement with the company is regular or seasonal. 
  3. Project Employment – as the term implies, this is on a per-project basis and the employment is automatically finished when the project is completed. 
  4. Seasonal Employment – employment is engaged for a specific season. The law specifies that seasonal employees can be considered regular employees, as in the case of farmers who may be engaged for the planting season. After that, they are laid off temporarily but then re-employed when a new planting season commences. 
  5.  Fixed-Term Employment – an interesting arrangement wherein “the employer and employee dealt with each other on more or less on equal terms with no moral dominance exercised by the former or the latter,” as the Labor Code defined this kind of employment. This is likely the case where one (employee) is paid for their expertise by another (employer) who needs such kind of service. Making such employment valid is the willful agreement by both parties on the fixed period of such an arrangement. 
  6. Probationary Employment – this is when an employee undergoes a trial period so that the employee may see if they are fit for the job based on set standards that are discussed at the onset of employment. If no such standards were discussed, the individual shall be considered a regular employee. They also automatically become regular employees if they are allowed to work for the company beyond the probationary period (normally a maximum of six months). 

What does the law say on eligibility for employee benefits? 

The Labor Code also makes it clear that no matter what type of employment, the person is entitled to these provisions and employee benefits: 

  1. Fixed hours of work 
  2. Mealtimes 
  3. Night shift premium pay 
  4. Overtime pay 
  5. Weekly rest period 
  6. Holidays 
  7. Service incentive leaves 
  8. Service charges 
  9. 13th-month pay (for rank-and-file employees who have been with the company for at least a month, computed on a prorated basis) 

There are, however, exceptions, according to Book 3 Title I of the Labor Code: 

  1. Government employees 
  2. Managerial employees 
  3. Officers and members of the managerial staff 
  4. Field personnel 
  5. Members of the family who are dependent on them for support 
  6. Domestic helpers 
  7. Persons in the personal service of another 
  8. Workers who are paid by result as determined by the secretary of the Dept. of Labor and Employment 

Three Types of Employee Benefits 

  1. Wage and compensation benefits – “the minimum amount of remuneration that an employer is required to pay wage earners for the work performed during a given period, which cannot be reduced by collective agreement or an individual contract,” as defined by the International Labor Organization, of which the Philippines has been an active member since 1948.  
  2. Leave benefits – these are an employee’s right to be absent from their regular work for vacation, holiday, severance, or sickness purposes. They are also entitled to meal or rest periods. Should they be made to work on weekends or holidays, they shall receive premium pay for it. 
  3. Mandatory government contributions – these are contributions that employees must make to the pertinent government agencies, sometimes with an equal share coming from their employers. This allows them to become eligible for certain employee benefits that the government provides such as health care, retirement funds, and others. Usually, the contribution is automatically deducted from the salary of the regular employees. 

19 Employee Benefits and Provisions in the Philippines 

And so, here finally is the list of employee benefits and provisions that one can expect from their company. 

Wage and Compensation 

Minimum wage

the government has set a minimum wage that an employee is expected to receive from their employers no matter what happens to the company. Here’s what the minimum wages are in the different regions of the Philippines: 

  • NCR – P537 (since Nov. 22, 2018) 
  • CAR – P300-P320 
  • Region I – P256-P310 
  • Region II – P340 
  • Region III – P393-P400 (P339 in Aurora) 
  • Region IV-A – GCA: P325.50-P400; EGA: P317.50-P344; RBA: P317-P327 
  • Region IV-B – P290 (establishments with 10 workers or more); P247 (establishments with less than 10 workers) 
  • Region V – P305 (establishments with 10 workers or more); P295 (establishments with less than 10 workers) 
  • Region VI – P365 
  • Region VII – P366 
  • Region VIII – P305 
  • Region IX – P316 
  • Region X – P338 (WCI); P331 (WCII); P323 (WCIII); P304 (WCIV) 
  • Region XI – P370 
  • Region XII – P311 
  • Region XIII – P305 
  • ARMM – P280 

Overtime pay

When an employee works at least one hour beyond their regular work hours, they are entitled to an additional 25% of the per-hour rate. Here’s a sample computation: 

Salary per month: P30,000 

No. of days per month: 26 

Salary per day: P1,153.85 

Salary per hour (8-hour shift): P144.23 

Overtime rate per: P180.28 (144.23 x 0.25 = 36.05 + 144.23) 

No. of OT hours: 2.0 

Total OT pay: P360.56 (P180.28 x 2) 

For a more in-depth look at how overtime pay is computed in the Philippines, you can click here

13th-month pay

This is not to be mistaken for the Christmas bonus, which is subject to the discretion of the company. The 13th-month pay, on the other hand, is government-mandated. It is given to an employee of a private company with a fixed or regular salary and who has worked for the company for at least a month. If you quit before the 13th-month is released, you can still receive it but only if you go through the separation process. Those who are only on a commission basis are not entitled to this benefit. 

Take note that your 13th-month pay depends on the number of months in the year you have worked for the company. If it’s 12 months and you didn’t have any absences or unpaid leaves, then you get that extra month pay in full. Otherwise, it will be prorated:  

[BS – A/UL] / 12 x N = 13TH-MONTH PAY  

(Basic Salary minus Absences/Unpaid Leaves divided by 12 multiplied by the number of months you have worked for the company in that particular year.) 

Under the new Tax Reform for Acceleration and Inclusion (TRAIN) Law, if your 13th-month pay is P90,000 or less, it shall be exempted from tax. 

Separation pay

If you get terminated from your work not because of misconduct or involvement in any crime, you are entitled to separation pay, the amount of which depends on the reason for termination: 

  1. 50% of your monthly pay per year of service if termination is due to retrenchment to keep the company from closure or if it has gone bankrupt or if you have become seriously sick and are not expected to get well within six months and the sickness is contagious. 
  2. 100% of your monthly pay per year of service if termination is because of the following: new machines or devices are installed that will do your job instead; excess in manpower; redundancy; and if you have been promoted, there is no way for you to be reinstated to your previous position. 

Retirement pay

When you reach the age of 60, have been with the company for at least five years, and you decide to retire, you can receive a retirement pay of at least 50% of your current monthly salary multiplied by the number of years of service. Six months or more is considered as one whole year. 

Night-Shift differential

If your work schedule is from 10 p.m. to 6 a.m. you are eligible for a night shift differential, which gives a 10% premium for every hour at work. There are eight configurations of the NSD to take note of: 

  1. Ordinary Day NSD – hourly rate  x 10% x 8 hours 
  2. Rest Day NSD – hourly rate  x 130% x 10% x 8 hours  
  3. Regular Holiday NSD – hourly rate  x 200% x 10% x 8 hours 
  4. Special Holiday NSD – hourly rate  x 130% x 10% x 8 hours 
  5. Double Holiday NSD – hourly rate  x 330% x 10% x 8 hours 
  6. Regular Holiday + Rest Day NSD – hourly rate  x 260% x 10% x 8 hours 
  7. Special Holiday + Rest Day NSD – hourly rate  x 150% x 10% x 8 hours 
  8. Double Holiday + Rest Day NSD – hourly rate  x 390% x 10% x 8 hours 

Special non-working holiday pay

Also known as Special Holidays, these are days declared as such by the president or the local government unit (LGU) in a specific region or enacted by Congress. Some examples of a special holiday are the EDSA People Power Revolution anniversary every Feb. 25 and the Chinese New Year. Working during a special holiday will earn you a 130% premium on your hourly rate, the same if you work on your rest day: 

Hourly Rate x 130% x 8 Hours 

However, if you work on a special holiday that also falls on your rest day: 

Hourly Rate x 150% x 8 Hours 

Regular holiday pay

Regular holidays are official holidays normally with fixed dates such as Christmas Day, New Year’s Day, and Independence Day. National Heroes Day, Maundy Thursday, and Good Friday are also considered regular holidays even though they fall on different dates. If you work on a regular holiday, here’s how your pay for the day should compute: 

Hourly Rate x 200% x 8 Hours 

Now, if you work on a regular holiday which happens to be your rest day too: 

Hourly Rate x 260% x 8 Hours 

Double holiday pay

Double holidays are rare but they do occur from time to time such as in 2018 when President Rodrigo Duterte declared Aug. 21 as a special non-working holiday on top of it being a Ninoy Aquino Day (a regular holiday). If you had worked on that day, here’s the computation for your pay: 

Hourly Rate x 300% x 8 Hours 

Incidentally, the computation above also applies should that day also happen to be your rest day. 

Leave Benefits 

Employee benefits also include a number of different leaves.

Service incentive leave

An employee who has been with the same company for a year is eligible for 5 service incentive leaves that may be used as vacation leave or sick leave. Many companies, however, offer 15 days of sick leave and 15 days of vacation leave, all paid. Sometimes, these leaves, if not used, can even be converted to their monetary equivalent that is paid out usually before the end of the year. 

Maternity leave

Women who have worked for at least six months in a company shall have at least two weeks of leave before their delivery date and four weeks thereafter and still receive their full regular salary. The Expanded Maternity Bill (EML), which took effect last Feb. 21, 2019, allows for women to take 105 days off as maternity leave and even an additional 30 days of unpaid leave. 

Paternity leave

Married fathers are granted seven days of fully paid leave after the delivery of their child. This applies to up to the first four births of their legitimate wives. The EML also allows the wife to transfer seven days of their maternity leave to their husband so that the paternity leave can be extended to up to 14 days. 

Parental leave for solo parents

On top of the other leave privileges, a solo mother or father also gets an additional seven days leave with pay for each year of service to their company. The EML is also applicable to solo mothers so they can avail of 105 days of paid maternity leave credits. Moreover, they can extend it to another 15 days that are also paid. 

Special leaves for women 

  1. Women and children victims of violence – The Anti-Violence Against Women and Their Children Act of 2004 (Republic Act 9262) allows women victims of violence a paid 10-day leave. 
  2. Magna Carta for Women – also known as R.A. 9710, this law grants a leave of two months with pay to women who have had surgery for gynecological disorders. It applies to those who have been with the same company for at least six months. 

Bereavement leave

An employee can avail of three days off due to the death of an immediate family member. This leave, though, is unpaid. 

De Minimis benefits

Totally dependent on a company’s capability, these employee benefits can be small financial help or leave credits. They include rice subsidy, internet/electricity subsidy (arising from the work-from-home setup of companies as a result of the pandemic), meal allowance, transportation allowance, and calamity leave. 

Mandatory Government Contributions 

SSS contribution

The government’s insurance program for employees of private companies. Its counterpart for government employees is the GSIS. A specific amount is deducted from the employee based on their salary bracket and is remitted to the SSS together with a corresponding amount from the employer.

The amount the SSS collects from all its members is used to fund various benefits to cover sickness, disability, death, funeral, maternity, retirement, and salary and housing loans. 

PhilHealth contribution

The government’s health insurance program for employees of private companies, granting financial assistance and even service for health care. Monthly contributions, just like with the SSS, are shared by both employee and employer. 

Pag-IBIG contribution 

Similar to the SSS contribution, this one is also a national savings program with a special focus on providing affordable homes to Filipinos. The employee and employer shoulder the regular contribution to Pag-IBIG. In return, members can avail of a housing loan, calamity loan, or multi-purpose loan.

Kasambahay Wage Benefits 

Kasambahays or house helpers also have employee benefits as they are covered by a more specific law called the Domestic Workers Act (R.A. 10361). It also sets the minimum wage for such workers: 

NCR – P2,500 

Chartered cities and first-class municipalities – P2,000 

Other municipalities – P1,500 

The law also mandates that they be entitled to rest days, a 13th-month pay, and 5 service incentive leaves per year. The family or household they work for is also required to remit their contributions to SSS, PhilHealth, and Pag-IBIG with their corresponding shares. 

Final Thoughts 

These employee benefits, whether they are mandated by law or given at the discretion of their employers, make an employee’s time in any Philippine company worth it not only from a financial standpoint but also when it comes to having peace of mind. It’s because you know that your loyalty to the company will reward you with a lot of assistance for your health, work-life balance, and even after retirement. 

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