Employee Benefits and Services in the Philippines PDF

EMPLOYEE BENEFITS AND SERVICES EMPLOYEE EMPLOYEE BENEFITS BENEFITS AND SERVICES AND SERVICES COMPENSATION “The purpose of the compensation is to attract, motivate and to maintain employees” DIRECT COMPENSATION e.g. Incentives & Profit Sharing...

EMPLOYEE BENEFITS AND SERVICES EMPLOYEE EMPLOYEE BENEFITS BENEFITS AND SERVICES AND SERVICES COMPENSATION “The purpose of the compensation is to attract, motivate and to maintain employees” DIRECT COMPENSATION e.g. Incentives & Profit Sharing (Pay for Performance) Compensation Management (Wages and Salaries) INDIRECT COMPENSATION Security, Safety and health (Legally mandated benefits) Benefits and Services (“Fringe” benefits) Benefits and Services are called indirect compensation and are also known as “fringe benefits” and “Perks”. Perks (services) are something in addition to the payment like car fuel and free parking, clothing, and educational supports. Whereas fringe benefit means something extra (such as vacation time) that is given by an employer to workers in addition to their regular pay. Such benefits and services are used to persuade, to motivate, and/or to retain employees and are not linked with the employees performance (e.g. stimulating them to greater effort and higher performance). inition of Benefits and Services Employee Benefits In general, indirect and non-cash (or sometimes in cash) compensation paid by an employer to employees in addition to their regular pay. Benefits tends to be necessities for many people. Some benefits are mandated by law (such as SSS, Pag-IBIG, and PhilHealth), others vary from firm to firm or industry to industry. inition of Benefits and Services Employee Services According to the Employee Services Management Association, employee services encompasses "recreation programs, community services, recognition programs, event planning, childcare/eldercare services, convenience services, and travel offerings.“ Employee services can include anything an employer deems necessary to provide as a perk for employees. No real limit exists as to what can be included as an employee service. Employee services are more of a convenience than a true benefit. Although employee services might be considered a benefit, they are usually optional and not necessarily what job seekers first look for when conducting a job hunt. Objectives of Benefit Programs The main objective is to attract (recruit) and to retain employees. To Improve Morale To Meet Health and Safety Needs To Attract Good Employees To Reduce Turnover To Maintain a Competitive Position To Enhance the Organization's Image Types of Benefits Insurance benefits Health benefits (and services) Security benefits Time-off benefits Work scheduling benefits Retirement benefits Disability benefits tory Government Benefits and Contributio Covered by the Philippine Labor Code 1. Social Security System (SSS) Contributions Republic Act No. 8282 or otherwise known as the Social Security Act of 1997 The social security system is aimed at providing protection for the SSS member against socially recognized hazard conditions such as sickness, disability, maternity, old age and death, or other such contingencies not stated but resulted in loss of income or results to financial burden. The employee and his/her employer(s) are to contribute for the social security benefits of the said employee in accordance to a given schedule by the Philippine Social Security System. cial Security System (SSS) Schedule of Contributions 2018 tory Government Benefits and Contributio Covered by the Philippine Labor Code 2. Contribution to National Health Insurance Program (NHIP) The employee and his/her employer(s) are to contribute to the medical insurance of the said employee in accordance to the Republic Act 7835 on Medicare Program which is administered by the Philippine Health Corporation (PhilHealth). Monthly employee contribution depends on the employee’s monthly salary. The monthly schedule is provided by Philhealth. PhilHealth Premium Contribution 2018 Monthly Basic Salary Monthly Premium Personal Share Employer Share X 2.75% ₱10,000 and below ₱275.00 ₱137.50 ₱137.50 ₱10,000 to ₱39,999.99 ₱275.02 to ₱1,099.99 ₱137.51 to ₱549.99 ₱137.51 to 549.99 ₱40,000 and above ₱1,100.00 ₱550.00 ₱550.00 tory Government Benefits and Contributio Covered by the Philippine Labor Code 3. Contribution to Home Development and Mutual Fund (HDMF/Pag-IBIG) Home Development Fund Law of 2009, employer(s) is required to contribute per month not less than ₱100.00 to the employees Home Development and Mutual Fund. In accordance to the periodic remittance schedule provided by HDMF, employers will remit this contribution, in addition to that of the employees, which is to be deducted from his/her payroll. Percentage of Monthly Compensation Monthly Compensation Employee Share Employer Share ₱1,500 and below 1% 2% Over ₱1,500 2% 2% tory Government Benefits and Contributio Covered by the Philippine Labor Code 4. The 13th Month Pay As mandated by the Presidential Decree No. 851, the employee shall receive a bonus salary equivalent to one (1) month, regardless the nature of his/her employment, not later December 24 of every year. 5. Service Incentive Leave Book III, Chapter III of the Labor Code of the Philippines covers the employee benefits for Incentive Leaves. According to Article 95, an employee who has rendered atleast one year of service is entitled to a yearly five days service incentive leave with pay. tory Government Benefits and Contributio Covered by the Philippine Labor Code 6. Meal and Rest periods Under Article 83, the employee is provided one-hour employee benefit for regular meals, when working on an eight-hour (8-hours) stretch. Employees are also provided adequate rest periods in the morning and afternoon which shall be counted as hours worked. All these provisions apply in addition to every new employee benefits furnished that are in excess of what is stipulated by the Philippine Labor Code. There are other Philippine employee benefits furnished by the employer(s) and are also covered by the Philippine Labor Code. It will be discussed in the Compensability of Illness or Injury Under Employee’s Compensation Program (ECP) Employee’s Compensation Program (ECP) - is a government program designed to provide a compensation package to public and private employees or their dependents in the event of work- related sickness, injury, or death. 1.Occupational Diseases - For an occupational disease and the resulting disability or death to be compensable, all of the following conditions must be satisfied: 1. the employee’s work and/or the working conditions must involve risk/s that caused the development of the illness; 2. the disease was contracted as a result of the employee’s exposure to described risks; 3. the disease was contracted within a period of exposure and under such factors necessary to contract it; and 4. there was no deliberate act on the part of the employee to disregard the safety measures or ignore established warning or precaution. Compensability of Illness or Injury Under Employee’s Compensation Program (ECP) The Increased Risk Theory There is an increased risk if the illness is caused or precipitated by factors inherent in the employees’ nature of work and working conditions. It does not include aggravation of a pre-existing illness. To establish compensability of the claim under the Increased Risk Theory, the claimant must show proof of work-connection. The degree of proof required varies on a case to case basis. Compensability of Illness or Injury Under Employee’s Compensation Program (ECP) 2. Work-related Injuries For the injury and the resulting disability or death to be compensable, the injury must be the result of an accident arising out of and in the course of employment.  Injuries resulting from an accident which happened at the workplace.  Injuries resulting from an accident which happened while the employee is performing his official function.  Injuries resulting from an accident which happened while going to or coming from the place of work.  Injuries resulting from an accident which happened while ministering to personal comfort  Injuries resulting from an accident while the employee is inside the company shuttle bus  Injuries resulting from an accident which occurred during a company-sponsored activity.  Death of an Employee Due to Assault Compensability of Illness or Injury Under Employee’s Compensation Program (ECP) Excepting Circumstances No compensation shall be allowed to the employee or his/her dependents in cases when the sickness, injury, disability, or death was occasioned by any of the following: 1. Intoxication - Intoxication refers to a person’s condition in being under the influence of liquor or prohibited drugs to the extent that his acts, words, or conduct is impaired visibly, as to prevent him from physically and mentally engaging in the duties of his employment. 2. Notorious Negligence - Notorious negligence is something more than mere or simple negligence. It signifies a deliberate act of the employee to disregard his own safety or ignore established warning or precaution. 3. Willful Intent to Injure Oneself or Another - This contemplates a deliberate intent on the part of the employee to inflict injuries on himself or another.  Benefits under ECP Under Employee’s Compensation Program (ECP) 1.Loss of Income Benefit Under the ECP, it is the disability, or the incapacity to work, which is being compensated and not the illness or the injury. 3 Types 1. Temporary Total Disability (TTD) For a disability that prevents an employee from performing his work for a continuous period not exceeding 120 days. The amount of daily income benefit shall be ninety percent (90%) of the employee’s average daily salary credit as determined by the Systems. 2. Permanent Total Disability (PTD) A monthly income benefit granted for disabilities, such as, but not limited to, complete loss of sight of both eyes, loss and function loss of both limbs, and brain injury resulting to imbecility or insanity. The amount of monthly income benefit for PTD shall be determined by the Systems based on the average monthly salary credit or average monthly compensation (AMSC/AMC).  Benefits under ECP Under Employee’s Compensation Program (ECP) 1.Loss of Income Benefit Under the ECP, it is the disability, or the incapacity to work, which is being compensated and not the illness or the injury. 3 Types 3. Permanent Partial Disability (PPD) A monthly income benefit is granted for disabilities that result in physical loss (amputation) or functional loss of a body part. The number of monthly pensions is based on the corresponding body part loss or functional loss, as provided under Article 193 of PD No. 626, as amended, and EC schedule of Compensation.  Benefits under ECP Under Employee’s Compensation Program (ECP) 2.Medical Services It includes reimbursement of the cost of medicines for the illness or injury, payment to providers of medical care, hospital care, surgical expenses, and the costs of rehabilitation appliances and supplies. The medical services are limited to ward services of hospitals duly accredited by the Department of Health (DOH). A. Hospital Confinement The benefit in case of sickness and injury shall not exceed the actual cost of ward services in accredited hospital equipped with facilities necessary for the treatment of the disease and injury. B. The subsequent attendance by an accredited physician C. Medicines Medicine reimbursements shall be in accordance with the amount prescribed under Republic Act No. 9502, otherwise known as “Universally Accessible Cheaper Quality Medicine Act No. 2008”.  Benefits under ECP Under Employee’s Compensation Program (ECP) 3.Carer’s Allowance A supplemental pension of P575/month is provided to pensioners under the ECP who suffer from work-connected PPD and PTD. 4. Rehabilitation Services/KaGabay Program (Katulong at Gabay sa Manggagawang May Kapansanan) Persons with work-related disabilities (PWRD) with an approved EC TTD, PPD or PTD are qualified to avail of the benefits and services under the Katulong at Gabay sa Manggagawang May Kapansanan, or KaGabay Program.  KaGabay Program Under this program, qualified beneficiaries are entitled to: A.Physical Restoration Provision of physical or occupational therapy services to PWRDs including assistive devices, subject to funding limitations. B.Skills Training for Re-employment PWRDs can acquire new competencies, subject to his/her potential and residual functional capacity. C.Entrepreneurship Training PWRDs who want to set up their own livelihood undertaking are given the chance to take part in entrepreneurship training. All these benefits and services are provided to qualified PWRDs for free. Incentives for Employers Hiring Persons with Disabilities (PWD) Section 8 of Republic Act No. 7277, otherwise known as the Magna Carta for Disabled Persons  Private entities are entitled to an additional deduction, from their gross income, equivalent to twenty-five (25%) of the total amount paid as salaries and wages to disabled persons who meet the required skills or qualifications, either as regular employee, apprentice, or learner.  Benefits under ECP Under Employee’s Compensation Program (ECP) 5.Death Benefits The beneficiaries of the deceased employee are entitled to an income benefit if the employee died as a result of a work-related injury or sickness. The surviving legitimate spouse is entitled to receive income benefit until he or she remarries. Each dependent child, not exceeding five, counted from the youngest and without substitution, shall receive ten percent (10%) more as dependent’s pension.  Benefits under ECP Under Employee’s Compensation Program (ECP) 5.Funeral Benefits  An amount of P20,000 may be granted for the Private Sector upon the death of an employee who died as a result of a work-related accident or disease.  Simultaneous Granting of EC Disability Benefits and Sick Leave Benefits for Private Sector.  Simultaneous Granting of EC Disability Benefits and Special Leave Benefits for Women in the Private and Public Sector.  In the event that an employee’s gynecological disorders were found to be work-connected, all qualified women employees in the private and in the public sector can still avail of EC disability benefits in addition to Special Leave Benefits under Republic Act No. 9710, otherwise known as “Magna Carta for Women”. Philippines Benefits Summary Under the Philippine Labor Code (Presidential Decree No. 442) Terms and Conditions of Employment 1.Minimum Wage The Wage Rationalization Act, Republic Act No. 6727, sets the minimum wage rates applicable per region, province and industry sector. Workers that render services for a total of 40 hours per week (8 hours per day, 5 days per week) are entitled to receive at least the daily minimum wage. National Capital Region - the minimum gross basic wage is ₱512.00 per day (as of October 2017). 2. Night Shift Differential This refers to additional compensation of at least 10 percent of an employee’s applicable wage rate, payable to employees (except exempt employees) who perform work between 10 p.m. to 6 a.m. of the following day.  “Exempt Employees” government employees; managerial employees and officers or members of the managerial staff; field personnel; members of the family of the employer who are dependent on him for support; domestic helpers and persons in the personal service of another; employees who are paid by results, as determined by the Secretary of the Philippine Department of Labor and Employment (DOLE) in appropriate regulations; and Househelpers and persons in the personal service of another. Philippines Benefits Summary Under the Philippine Labor Code (Presidential Decree No. 442) Terms and Conditions of Employment 3.Overtime pay The normal working hours is 8 hours per day. 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 percent thereof. The overtime rate will vary if the overtime work is rendered on a rest day, regular holiday or special day. Under Rest day: regular/special holiday – plus 30% of the regular daily salary. “exempt employees” are not entitled to such overtime pay. Philippines Benefits Summary Under the Philippine Labor Code (Presidential Decree No. 442) Terms and Conditions of Employment 4.Rest Days 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 (i.e. Sunday). Work done on rest days = plus 30% of the regular daily compensation 5.Holidays Unworked regular holiday (except exempt employees) = regular daily wage Work on regular holiday = 200% or Double pay Work on Special Holiday = regular daily pay + 30% Rest day + Work on Special holiday = regular daily pay + 50% Philippines Benefits Summary Under the Philippine Labor Code (Presidential Decree No. 442) Terms and Conditions of Employment Special Holidays: Regular Holidays: New Year’s Day (1 January) Benigno S. Aquino Jr. Day (Monday nearest 21 August) Maundy Thursday (movable date) Good Friday (movable date) All Saints Day (1 November) Eidul Fitr (movable date) Last day of the year (31 Eidul Adha (movable date) December) Araw ng Kagitingan (Monday nearest 9 April) Labor Day (Monday nearest 1 May) Independence Day (Monday nearest 12 June), National Heroes Day (Last Monday of August) Bonifacio Day (Monday nearest 30 November) Christmas Day (25 December) Rizal Day (Monday nearest 30 December) Philippines Benefits Summary Under the Philippine Labor Code (Presidential Decree No. 442) Terms and Conditions of Employment 6. LEAVES  Maternity Leave 60 days leave in case of normal delivery, abortion or miscarriage 78 days for caesarean delivery maternity benefit = 100% of her average salary credit  Paternity Leave Paternity leave benefit is granted to all married male employees first 4 deliveries of lawful wife 7 days leave = full pay (consisting of his basic salary) Philippines Benefits Summary Under the Philippine Labor Code (Presidential Decree No. 442) Terms and Conditions of Employment 6. LEAVES  Solo-parent Leave Solo Parents Welfare, Republic Act No. 8972 Employee must have been working for atleast 1 year 7 working days of leave in a year (with pay)  Leave due to Domestic Violence Leave for women and their children who are victims of violence paid leave for up to 10 days (extendible when the necessity arises as specified in the protection order) Philippines Benefits Summary Under the Philippine Labor Code (Presidential Decree No. 442) Terms and Conditions of Employment 6. LEAVES  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. 7.13th Month pay ( Presidential Decree No. 851) all “rank and file” employees 13th month pay = 1/12 (or 1 month) of the total basic salary Regardless the nature of his/her employment, he/she will be paid not later December 24 of every year. Philippines Benefits Summary Under the Philippine Labor Code (Presidential Decree No. 442) Terms and Conditions of Employment 8.Retirement Benefits Section 1. Article 287 of Presidential Decree No. 442 60 years of age (but not beyond 65) and served for at least 5 years Benefits = 15 days salary + service incentive leave (cash equivalent) + 13th month pay 9.Separation Pay Basis of separation pay: 1. Introduction of labor-saving devices 2. Redundancy 3. Retrenchment 4. Closure or Cessation of business 5. Disease the employee found to be suffering and whose continued employment is prohibited by law or is prejudicial to his health as well as the health of his co- employees. Philippines Benefits Summary Under the Philippine Labor Code (Presidential Decree No. 442) Terms and Conditions of Employment 9.Separation Pay Article 283 and 284 of the Labor Code of the Philippines 1. Introduction of labor-saving devices = 1 month pay or 1 month pay every year of service 2. Redundancy = 1 month pay or 1 month pay every year of service 3. Retrenchment = 1 month pay or ½ month pay every year of service 4. Closure or Cessation of business = 1 month pay or ½ month pay every year of service 5. Disease the employee… = 1 month pay or ½ month pay every year of service *a fraction of at least six months is considered 1 whole year Philippines Benefits Summary Under the Philippine Labor Code (Presidential Decree No. 442) Terms and Conditions of Employment 10.Service Charges All service charges collected by hotels, restaurants and similar establishments shall be distributed at the rate of eighty-five percent (85%) for all covered employees and fifteen percent (15%) for management. The share of the employees shall be equally distributed among them. In case the service charge is abolished, the share of the covered employees shall be considered integrated in their wages. Philippines Benefits Summary Under the Philippine Labor Code (Presidential Decree No. 442) Terms and Conditions of Employment 11.DISABILITY BENEFITS  Temporary Total Disability ( TTD ) income benefit = 90% of his average daily salary coverage = continuous benefit pay must not exceed 129 working days  Permanent Total Disability ( PTD ) income benefit = equivalent to his monthly income benefit + 10% for each dependent child (not exceeding 5 dependents). guaranteed monthly benefit = five years Philippines Benefits Summary Under the Philippine Labor Code (Presidential Decree No. 442) Terms and Conditions of Employment 11.DISABILITY BENEFITS (continued)  Permanent Total Disability ( PTD ) The following disabilities shall be deemed total and permanent: (1) Temporary total disability lasting continuously for more than one hundred twenty days, except as otherwise provided for in the Rules; (2) Complete loss of sight of both eyes; (3) Loss of two limbs at or above the ankle or wrist; (4) Permanent complete paralysis of two limbs; (5) Brain injury resulting in incurable imbecility or insanity; and (6) Such cases as determined by the Medical Director of the System and approved by the Commission. Philippines Benefits Summary Under the Philippine Labor Code (Presidential Decree No. 442) Terms and Conditions of Employment 11.DISABILITY BENEFITS (continued)  Permanent Partial Disability ( PPD ) The benefit shall be paid for not more than the period designated in the following schedules: Complete and Number of months Complete and Number of months Permanent loss of: Permanent loss of: One thumb 10 One arm 50 One index finger 8 One hand 39 One middle finger 6 One foot 31 One ring finger 5 One leg 46 One small finger 3 One ear 10 One big toe 6 Both ears 20 One toe 3 Sight of one eye 25 Philippines Benefits Summary Under the Philippine Labor Code (Presidential Decree No. 442) Terms and Conditions of Employment 12.Mid-year Bonus ( 14th month pay ) Shall apply to all personnel occupying regular, or contractual positions, rendering full- time basis, covered by the Compensation and Position Classification System (CPCS) under RA No. 6758, as amended by Congress Joint Resolution No.1, Series of 1994, and No.4, Series of 2009. Equivalent to 1 month basic pay = given not earlier than May 15 (of current year) Philippines Benefits Summary Under the Philippine Labor Code (Presidential Decree No. 442) Terms and Conditions of Employment 12.Mid-year Bonus ( 14th month pay ) continued… The following are excluded from the MC: o Government personnel that are exempted from RA No. 6758, as amended; o Those hired without employee-employer relationships and funded from non-Personal Services appropriations/budgets, as follows: 1. Consultants and experts hired for a limited period to perform specific services or activities with expected outputs; 2. Laborers hired through job contracts and those paid on piecework basis; 3. Students workers and apprentices; and 4. Individuals and groups of people whose services are engaged through job orders, contracts or service, or others similarly situated.  “De Minimis Benefits” Compensation of small value, or “De Minimis benefits”, are excluded from the computation of the gross income. De Minimis Benefits have the purpose to promote the well-being and efficiency of employees and are limited to facilities or privileges of relatively small size. De Minimis Benefits include: o Monetized unused vacation leave credits for private employees not exceeding 10 days o Monetized unused vacation and sick leave credits for government officials and employees; o Medical allowance for dependents of P750 per semester or P125 per month; o Rice subsidy of P1,500 or one sack of rice monthly; o Uniform allowance of P5,000; o Medical assistance not exceeding P10,000 annually; o Laundry allowance not exceeding P300 per month or P3,600 per year;  “De Minimis Benefits” Compensation of small value, or “De Minimis benefits”, are excluded from the computation of the gross income. De Minimis Benefits have the purpose to promote the well-being and efficiency of employees and are limited to facilities or privileges of relatively small size. De Minimis Benefits include: o Employees achievement awards not exceeding P10,000; o Gifts given during Christmas and major anniversary celebrations not exceeding PhP5,000 per employee per annum; o Daily meal allowance for overtime work and night shift not exceeding 25%of basic minimum wage; and o Collective bargaining agreements (CBA) and productivity incentives not exceeding PhP10,000. Employee Services Employee services can include anything an employer deems necessary to provide as a perk for employees. No real limit exists as to what can be included as an employee service. Common Types of Employee Services  Flexible Work Schedules These programs are arranged to meet an organization's goals while assisting employees with their personal lives. Example: Because of technological advances, some employers allow employees to work from home one or several days per week. This gives employees some flexibility to maintain a balanced personal life and continue to successfully complete their work responsibilities.  Common Types of Employee Services  Wellness Program In 2008, the Harvard School of Public Health noted a national study by Harris Interactive showing that 91% of employers "believed they could reduce their health care costs by influencing employees to adopt healthier lifestyles.“ Many employers offer wellness programs to improve employees' health. These programs can be applied in a variety of ways, including reimbursable gym membership costs, on-site fitness facilities, and events to promote healthy living and eating.  Child Care Services Working parents having access to a work-site child care center positively affects their ability to successfully concentrate on the job and be productive.  Common Types of Employee Services  Product/Service Discounts Most individuals clip coupons and shop for sales to save money. Some employers work with local and national retail product and service providers to offer employees discounts for their personal needs. These types of programs can include everything from discounts on groceries to purchasing a vehicle at a lower cost. Free or discounted on-site food and drink services such as lunch, snacks and coffee can also assist employees by saving them time and money. These types of services are often appreciated by employees and can be implemented at little or no cost.