Employee Benefits Administration Chapter 5 PDF

EMPLOYEE BENEFITS ADMINISTRATION Chapter 5 Prof. Florence M. Mallillin Human Resource Management College of Commerce & Administration At the end of this chapter, the students will be able to: ✓ Identify the objectiv...

EMPLOYEE BENEFITS ADMINISTRATION Chapter 5 Prof. Florence M. Mallillin Human Resource Management College of Commerce & Administration At the end of this chapter, the students will be able to: ✓ Identify the objectives and justification of employee benefits; ✓Classify and discuss government-mandated employee benefits; and ✓Discuss voluntary employee benefits.  This Chapter 5 is a run-through of the primary reasons of providing benefits to complete the compensation package given to employees. There are two types of employee benefits: oMandated by Law oVoluntary Benefits  The MANDATED BY LAW BENEFITS aim to uplift the work life of employees. Because these are mandatory, organizations are obliged to comply. o Specific policies related to minimum wage o Benefits that are specifically attached to salaries and are monetized such as: Holiday Pay, Premium Pay, Overtime Pay, Night Differential, Service Charges, 13th month pay, Separation Pay and Retirement Pay. o The government has specific provisions for leave benefits such as: Service Incentive Leave, Maternity Leave, Paternity Leave, Parental Leave for Solo Parents, Leave for Victims of Violence, and Special Leave for Women. o There are also programs related to work-related injuries and sickness under Employee Compensation and a roster of benefits provided by Social Security System, PhilHealth, and Pag-IBIG Fund.  On the other hand, VOLUNTARY BENEFITS depend on the financial capacity and willingness of organizations to provide them. Organizations may go all the way of adding more than what is required by law to stay competitive and be more attractive to prospective job seekers. OBJECTIVES & JUSTIFICATION OF EMPLOYEE BENEFITS ❑ Employee benefits are perquisites or perks which are given to employees on top of their salaries or wages. ❑ Aside from those mandated by law, organizations have various benefits packages to retain high performers, induce productivity, and attract highly qualified and competent people. OBJECTIVES & JUSTIFICATION OF EMPLOYEE BENEFITS ❑ Employees are more likely to be loyal to the organization if they feel that it takes care of them in many aspects of their life. ❑ A competitive set of benefits package enables employees to become more productive on the job. They are also motivated to always do their best, knowing that they can bank on their organization to always look after their welfare. GOVERNMENT-MANDATED COMPENSATION & BENEFITS ❑ The government through the Department of Labor and Employment(DOLE) has listed down the monetary benefits for Filipino employees working in the Philippines. ❑ The Wage Rationalization Act or Republic Act No.6727 fixes the minimum wage to the different industrial sectors such as: Non-Agriculture, Agriculture plantation and Non-plantation, cottage/handicraft, and retail/service which depends on the annual gross sales, number of workers, and capitalization. GOVERNMENT-MANDATED COMPENSATION & BENEFITS ❑ The Wage Orders are applicable to all employees in the private sector and those who are paid with the daily minimum wage or at least in the minimum wage ceiling. ❑ The Handbook on Workers’ Statutory Monetary Benefits has provided sample computations on how organizations can compute for salaries and wages for monthly and daily paid employees. For Monthly Paid Scheme oWherein employees receive them in half, usually semi-monthly, the salary received includes unworked rest days, special days, and regular holidays. For Daily Paid Scheme o#1: Those who work every day including Sundays, or rest days, special days, and holidays. For Daily Paid Scheme o#2: Those who do not work and are not considered paid on Sundays or rest days. (6 day work per week) For Daily Paid Scheme o#3: Those who do not work and are not considered paid on Saturdays and Sundays or rest days. ( 5-day work per week) oThose who are paid by results like those engage in a per-piece basis, or pakyaw in carpentry or construction work, must receive not less than the mandated minimum wage under the Wage Orders for normal work hours not exceeding eight hours. Is the payment of daily wage for an unworked regular holiday. This means that an employee is considered paid for a day even though there is no work rendered on a regular holiday. Employees must receive 100% of their daily wage even though they do not report for work provided that they are not on leave or absent with pay on the day preceding the holiday. If they work on a regular holiday, they are entitled to 200% of their daily rate. However, field personnel who have no regular work hours or on a commission basis, government employees, and those officers or members of management are not entitled to holiday pay. Retail/service establishment with less than 10 employees are not covered by this rule. At least 15 employees in order to be covered by this rule. Sample computation for an 8-hour work on Regular Holiday Non-Agriculture Sector 645 x 200% = 1,290.00 Retail/Service Establishment 608 x 200% = 1,216.00 If Araw ng Kagitingan falls also on Maundy Thursday or Good Friday, employees are entitled to 200% of their daily rate if unworked. However, if there is an order to work on that day, employees should get an additional 100% of their daily rate. When the holiday also happens to be the rest day of the employee, 30% is added to the holiday rate.  Movable date Movable date According to Executive Order No. 292 as amended by Republic Movable date Act. No. 9849 the following are the 12 regular holidays in the Philippines. Movable date Last Monday of August  SPECIAL HOLIDAYS DATE Ninoy Aquino Day August 21 Under Executive Order No. 292 as amended by Republic Act. No. 9849 the following are the 4 Special All Saints’ Day November 1 Days in the Philippines. Feast of the December 8 Every year, the Office of the President Immaculate declares certain days as Special Days or Special non-working holidays, such as EDSA Conception of Mary People Power Day, Chinese New Year, All Souls’ Day, Christmas Eve, or Election. Last Day of the Year December 31 These occasions are declared upon the discretion of the president. The same rule applies for the payment of premium pay for employees under special days. When employees work on special days or rest days, an additional compensation of 30% is given and 50% if the special day also falls on their rest day. For work performed on a special day and at the same time a rest day, the daily rate is multiplied by 150%. For work performed on a regular holiday and at the same time a rest day, the daily rate is multiplied by 260%. Retail/service establishment with less than 10 employees are not covered by this rule. At least 15 employees in order to be covered by this rule. Sample computation for an 8-hour work on special day or rest day. Non-Agriculture Sector 645 x130% = (193.50) 838.50 Retail/Service Establishment 608 x130% = (182.40) 790.40 OVERTIME It is the additional pay given to employees who render work beyond eight (8) hours. The hourly overtime rate is 25%. Sample computation for OVERTIME PAY One Hour Overtime For Overtime work rendered on a rest day, the rate is 130% Daily rate/8 hours=hourly rate x 125% Hourly rate x 130% X 130% 645/8 hours = 80.63 x 125% (20.16) 645/8 hours = 80.63 x 130% x 130% = 136.25 = 100.79 OVERTIME Sample computation for OVERTIME PAY For overtime work rendered on a For Overtime work rendered on a special day which also happens to be regular holiday a rest day Hourly rate x 150% X 130% Hourly rate x 200% X 130% 645/8 hours = 80.63 x 150% x 130% 645/8 hours = 80.63 x 200% x 130% =157.22 = 209.63 OVERTIME Sample computation for OVERTIME PAY For overtime work rendered on regular holiday which also happens to be a rest day Hourly rate x 260% X 130% 645/8 hours = 80.63 x 260% x 130% =272.51 NIGHT SHIFT DIFFERENTIAL Is an additional compensation of 10% per hourly wage of work rendered between 10:00 pm to 6:00am. Sample computation for Night Differential One Hour Overtime One hour night differential, on overtime Daily rate/8 hours x110% x number of hours worked Hourly rate x 110% X 125%x number of hours worked 645/8 hours = 80.63 x 110% x 1 hour 645/8 hours = 80.63 x 110% x 125%x 1 hour = 88.69 = 110.86 NIGHT SHIFT DIFFERENTIAL The following computation shall be applied based on the regular rate in consideration to day the work is performed: Rest day (130% x 110%) 143% Special Day ( 130% x 110%) 143% Special day falling on rest day (150% x 110%) 165% Regular holiday (200% x 110%) 220% Regular holiday falling on rest day (260% x 110%) 286% Double holiday (300% x 110%) 330% Double holiday falling on rest day (390% x 110%) 429% Rest day, night shift, overtime ( 130% x 110% x 130%) 185.90% Special day, night shift, overtime (130% 110%x 130%) 185.90% NIGHT SHIFT DIFFERENTIAL The following computation shall be applied based on the regular rate in consideration to day the work is performed: Special day, rest day, night shift, OT ( 150% x 110 % x 130%) 214.50% Regular holiday, night shift, OT (200% x 110% x 130%) 286% Regular holiday, rest day, night shift, OT ( 260% x 110% x 130%) 371.80% Double holiday, night shift, OT (300% x 110% x 130%) 429% Double holiday, rest day, night shift, OT ( 390% x 110% x 130%) 557.70%  Rank and file employees who work in Service- oriented establishments such as restaurants, hotels, and the like that collect service charges are entitled to equal sharing of the 85% of the total. The remaining 15% is allotted by the establishment as allowance for losses and breakages and for distribution to managerial employees upon decision of top management.  The distribution of the service charge is done every two weeks or twice a month, not exceeding 16 days. In case the said establishment decided to collect service charges, the average share previously given to employee must added as part of their basic salary. Where a restaurant or similar establishment does not collect service charges but has a practice or policy of monitoring and pooling tips given voluntarily by its customers to its employees, the pooled tips should be monitored, accounted, and distributed in the same manner as the service charges. MANDATORY BENEFITS SERVICE INCENTIVE LEAVE All employees who have rendered at least one year of service are entitled to five (5) days of Service Incentive Leave With Pay. The term one year of service of the employee means service within twelve (12) months, whether continuous or broken, reckoned from the date the employee started working. The five(5) days service incentive leave can be used for sick and vacation leaves. Unused service incentive leave is convertible to cash based on the current pay rate of the employee. SERVICE INCENTIVE LEAVE However, this benefit applies to all employees EXCEPT: ✓ Government employees, whether employed by the National Government ✓ House helpers and persons in the personal service of another ✓ Managerial employees and officer level ✓ Field personnel and those whose time and performance is unsupervised by the employer ✓ Those already enjoying this benefit ✓ Those enjoying vacation leave with pay of at lease five (5) days ✓ Those employed in establishments regularly employing less than ten (10) employees MATERNITY LEAVE This benefit is enjoyed by all female employees in the private sector regardless if they are married or not. Entitlement of this benefit includes memberships in the Social Security System (SSS) during the time of delivery or miscarriage. Employers of female SSS members should have paid at least three monthly contributions to the SSS within 12 months before the date of delivery or miscarriage. The Implementing Rules and Regulations of the Expanded Maternity Leave Law ( RA # 11210) was approved on May 1, 2019, by the President Rodrigo Duterte. Paid Maternity Leaves for normal delivery and cesarean delivery have increased to 105 days ( from 60 days for normal & 78 days for caesarian). The new law also removes the cap for the first four pregnancies. It now benefits women with 105 days of maternity leaves regardless of the frequency of pregnancy and mode of delivery. Also, Solo Parent-workers who qualify under the Solo Parent’s Welfare Act of 2000 are entitled to additional 15 days of maternity leave or a total of 120 days. Those who avail the maternity leave have the option to allocate seven(7) days of their maternity leave to the fathers of their children even outside of marriage. In the absence of a father, they can allocate to the alternate caregiver.  PARENTAL LEAVE FOR SOLO PARENTS Under RA # 8972, Parental Leave of seven (7) days is granted to Solo Parents to perform their duties wherein they need to be physically present. Solo Parents can be those who are left alone and carry the responsibility of being parents due to any of the following circumstances: o A victim of rape or other crimes against chastity o Death of a spouse o Spouse is convicted of a crime and is in jail for at least one year o Spouse is mentally and/or physically incapacitated as attested by a public medical practitioner o Legally separated from spouse for at least one year o Marriage is annulled by a court or church and entrusted with child’s custody o Abandonment of spouse for at least one year o Unmarried father or mother (licensed as foster parents by the DSWD ; family member who assumes the responsibility of the head of the family.  PARENTAL LEAVE FOR SOLO PARENTS “Child” refers to a person living with and dependent on the solo parent for support. “ He/she is unmarried, unemployed, and below 18 years of age, or even 18 years old and above but is incapable of self- support because he/she is mentally and/or physically- challenged. LEAVE for VICTIMS OF VIOLENCE AGAINST WOMEN & THEIR CHILDREN RA# 9262 or the Anti-Violence Against Women & Their Children Act of 2004 provides female employees in the private sector who are victim of physical, sexual, and psychological harm and other abuses an entitlement to a leave up to 10 days paid leaves to attend to medical and legal concerns. The victim-employee to present to her employer a certification from the barangay chairman/councilor or prosecutor or the clerk of court, as the case may be, that an action relative to the matter is pending. The said leave shall be extended as the need arises.  SPECIAL LEAVE FOR WOMEN This benefit entitles female employees regardless of age or status to two (2) months leave with pay for GYNECOLOGICAL DISORDERS that require surgery. GYNECOLOGICAL DISORDERS are diseases involving female reproductive organs, such as the vagina, cervix, uterus, breast, fallopian tubes and the like. It also includes hysterectomy, ovariectomy, and mastectomy.  SPECIAL LEAVE FOR WOMEN The female employee is entitled to special leave benefit of two(2) months with full pay based on her gross monthly compensation. The female employee has rendered at least six(6) months continuous aggregate employment service for the last twelve(12) months prior to surgery. The special leave shall be granted after she undergone surgery without prejudice to an employer allowing to receive pay before or during the surgery. The special leave shall be non-cumulative and non-convertible to cash. All rank & file employees must receive their 13th Month Pay regardless of how they are paid not later than December 24 of every year provided that they have rendered work for at least one month in a calendar year. This includes all earnings for all work rendered except allowances and monetary benefits which are not part of the basic salary. 13th MONTH PAY FOR CERTAIN TYPES OF EMPLOYEES ✓ Employees who are paid on piecework basis ✓ Employees who are paid a fixed or guaranteed wage plus commission ✓ Employees with multiple employers (ie. Part-timers) 13th MONTH PAY OF RESIGNED OR SEPARATED EMPLOYEE An employee who has resigned or whose services are terminated at any time before the time of payment of the 13th month pay is entitled to this monetary benefit in proportion to the length of time he or she has worked during the year, reckoned from the time he or she has started working during the calendar year up to the tie of his/her resignation or termination from the service. SEPARATION PAY is given to employees who are terminated for authorized causes- Retrenchment, Redundancy, Installation of Labor Saving Devices, suffering from an incurable disease) and not separated for just causes ( habitual neglect of duty, fraud, crime, and other grave offenses). The employers can terminate the services of these employees provided they notify the affected employees and the Department of Labor and Employment at lease one month before the intended date of separation.  RETIREMENT PAY The RETIREMENT AGE for employees is 60 or until 65 years old and must have served the establishment for at leave 5 years. This benefit applies to all employees except those in the government and those employing not more than 10 workers in retail, service, and agricultural establishments.  FORMULA FOR RETIREMENT PAY Retirement Pay= Current Daily Rate x 22.5 days x number of years of service EMPLOYEES’ COMPENSATION The EMPLOYEES’ COMPENSATION PROGRAM is a government program designed to provide a compensation package to public and private sector employees or their dependents in the event of work related sickness, injury, disability, or death. It is mandatory for employers to pay employee compensation contribution for all their SSS member- employees. EMPLOYEES’ COMPENSATION The BENEFITS ✓ Loss of income benefit or cash benefit given to a worker to compensate for lost income due to his or inability to work. ✓Medical benefits which include the reimbursement of the cost medicine for the illness or injury, payments to providers of medical care, hospital care, surgical expenses, and the costs of appliances and supplies where necessary. The medical services are limited to ward services of an accredited hospital. ✓Rehabilitation services which include physical therapy, vocational training, and special assistance provided to employees. PHILHEALTH BENEFITS This is the health insurance program provided to SSS members and their dependents. The program covers the following: ✓ Employed Members ✓Individually Paying Members ✓Non- paying Members – lifetime coverage – retirees and pensioners of the GSIS and SSS ✓Indigent Members  SOCIAL SECURITY SYSTEM BENEFITS It provides benefits to its members in case of death, sickness, disability, maternity, and old age. It gives lost income benefits due to these events. 8 SALARY LOAN  PAG-IBIG BENEFITS The Home Development Mutual Fund is better know as Pag-IBIG (Pagtutulungan sa Kinabukasan: Ikaw, Bangko, Industriya, Gobyerno) The following benefits for Pag-IBIG members: savings, short-term loans, and housing programs. There is mandatory membership for employees who are covered by the SSS as long as being an SSS member is not a condition precedent to the mandatory coverage.  PAG-IBIG BENEFITS Individuals who are at least 18 years old but not more than 65 years old can be a member under voluntary membership subject to the rules and regulations for Pag- IBIG members. The following benefits for Pag-IBIG members: savings, short-term loans, and housing programs. There is mandatory membership for employees who are covered by the SSS as long as being an SSS member is not a condition precedent to the mandatory coverage. VOLUNTARY BENEFITS ❑Employers can provide additional benefits to make them more competitive in the industry and more attractive to applicants. ❑ These benefits can also instill loyalty among employees. ❑ Organizations also feel socially responsible to go beyond what is required by law through the benefits they can voluntarily provide to their employees. Vacation and sick Loyalty Incentives Retirement Plan leaves for dedicated which is 100% service funded by the (5 years onward) company Rice Allowance Cash Comprehensive Assistance for health care coverage death of for employees and immediate eligible dependents Bereavement leaves family and in times of calamity Tuition Educational Subsidy Assistance Program Calamity leaves Midyear Bonus Reference: Zarate, C. (2021). Compensation Administration (1st Ed.). Rex Bookstore.