ENTREP_PREFINAL11_Handout PDF

BM2313 ENTREPRENEURSHIP AND THE PHILIPPINE LABOR LAW The Philippine Labor Code was established to govern employment practices and labor relations. Labor laws state the rights and benefits of employees. Moreover, it also sets certain conditions, such as the required weekly rest, gover...

BM2313 ENTREPRENEURSHIP AND THE PHILIPPINE LABOR LAW The Philippine Labor Code was established to govern employment practices and labor relations. Labor laws state the rights and benefits of employees. Moreover, it also sets certain conditions, such as the required weekly rest, government contributions, etc. Compliance with the law protects the business from empty threats and lawsuits (Yap, Kung, Ching & Associates Law Office, 2023). Pre-Employment The Labor Secretary has the power and authority to develop and organize a program that facilitates occupational, industrial, and geographical labor mobility and assists in relocating workers from one (1) area to another. The Bureau of Employment Services, on the other hand, is responsible for developing and monitoring a comprehensive employment program (DOLE, 2023). The following are the key terms related to pre-employment (DOLE, 2023): Worker. It pertains to any member of the labor force, whether employed or unemployed. Recruitment and placement. It involves canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring workers. Private fee-charging employment agency. It means any person or entity engaged in the recruitment and placement of workers for a fee that is charged, directly or indirectly, from the workers or employers or both. License. It is a document the Department of Labor issued authorizing a person or entity to operate a private employment agency. Private recruitment entity. It means any person or association engaged in the recruitment and placement of workers, locally or overseas, without charging, directly or indirectly, any fee from the workers or employers. Authority. It is a document the Department of Labor issued authorizing a person or association to engage in recruitment and placement activities as a private recruitment entity. Seaman. It means any person employed in a vessel engaged in maritime navigation. Overseas employment. It pertains to employment outside the Philippines. Emigrant. It pertains to an individual or a worker who relocates to a foreign country under an immigrant visa, resident permit, or equivalent in the destination country. The Philippines recognizes six (6) different types of employment (Knapp, 2023): 1. Regular employment. Workers who perform full-time labor for a business indefinitely. 2. Probationary employment. Workers are under a trial period before an employer assessment to appoint the employee to a full-time position. The probationary period generally lasts about six (6) months. 3. Fixed-term employment. Workers who contractually agree to finish a task within a finite period. 4. Seasonal employment. Workers in the agricultural sector temporarily laid off in the off-season can expect reinstatement when their services are needed again in the next cycle. 5. Project employment. Workers who work on a one-off task. Their contract ends as soon as the specific project is completed. 6. Casual employment. Workers who engage in a task that is not considered crucial to the central tenets of the business. Once a casual employee works for a year, they can transition into a regular employee. 11 Handout 1 *Property of STI  [email protected] Page 1 of 7  BM2313 Employees' Compensation and Benefits (DOLE, 2023) Compensation is a way to provide monetary value to employees in exchange for their work/service performed. It is usually presented on the payroll. Payroll is the total amount required to pay workers and employees during a week, month, or another period. It is also the entire sum paid to employees at a given time. Gross pay (or gross earnings) is the total amount of an employee's earnings before the employer has made deductions. It may be in the form of salary or wage, on either a time rate or a piece rate, and other forms of remuneration. Conversely, the wage is the monetary remuneration computed hourly, daily, weekly, or piecework. A fixed weekly or monthly wage is usually called a salary. Salary can be calculated in a prorating annual or time basis pay or by piecework. The following are the essential employment provisions regarding compensation and benefits: Dependent. It means the legitimate or legally adopted natural child who is unmarried, not employed, and not over 21 years of age or over 21 years of age (provided he is incapacitated and incapable of self-support due to a physical or mental defect which is congenital or acquired during minority). Beneficiaries. The dependent spouse and dependent children are the primary beneficiaries. In their absence, the dependent parents are subject to the restrictions imposed on secondary beneficiaries (dependent children, illegitimate children, and legitimate descendants). The dependent acknowledged as a natural child shall be considered a primary beneficiary when no other dependent children are qualified and eligible for monthly income benefits. Injury. It means any harmful change in the human organism from any accident arising during employment. Sickness. It is an illness accepted as an occupational disease or infection caused by employment (subject to proof that working conditions increase the risk of contracting it). Death. It means loss of life resulting from injury or sickness. Disability. It means loss or impairment of a physical or mental function resulting from injury or sickness. Compensation. It covers all payments made for income and medical or related benefits. Medical benefit. It covers all payments to medical providers, rehabilitation services, and hospital care. Monthly salary credit. It covers the wage or salary base for government-mandated contributions. Wages The minimum wage rates for agricultural and non-agricultural employees and workers in every region of the country shall be those prescribed by the Regional Tripartite Wages and Productivity Boards. No employer shall pay an employee's wages using promissory notes, vouchers, coupons, tokens, tickets, chits, or any object other than legal tender, even when expressly requested by the employee. The following are the key terms in understanding the concept of wages: 1. Person. It means an individual, partnership, association, corporation, business trust, legal representative, or organized group. 2. Employer. It includes any person acting directly or indirectly in an employee's interest. It shall consist of the government and all its branches, subdivisions, instrumentalities, all government- 11 Handout 1 *Property of STI  [email protected] Page 2 of 7  BM2313 owned or controlled corporations and institutions, and non-profit private institutions or organizations. 3. Agriculture. It includes farming that covers soil cultivation, dairying, growing, and harvesting any agricultural and horticultural commodities, raising livestock or poultry, and any farmer's practices. It excludes the manufacturing or processing of sugar, coconuts, abaca, tobacco, pineapples, or other farm products. 4. Wage. It is paid to an employee in the form of remuneration or earnings. It is expressed in terms of money, whether fixed or ascertained on a time, task, piece, or commission basis, which is payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done, or for services rendered or to be rendered and includes the fair and reasonable value. Time of Payment. Wages shall be paid at least once every two (2) weeks or twice a month at intervals not exceeding 16 days. If, on account of force majeure (circumstances beyond the employer's control), wages on or within the time herein provided cannot be paid, the employer shall pay the wages immediately after such force majeure or circumstances have ceased. No employer shall make payment with less frequency than once a month. Standard Payroll Deductions The following are the types of standard payroll deductions: Social Security System (SSS) – A social security protection for workers in private institutions. Government Social Insurance Security (GSIS) – A social protection for government employees. PhilHealth – A program focused on prioritizing the health of government and private employees. Pag-IBIG – An affordable savings for shelter/ housing financing for government and private employees. It is also known as the Home Development Mutual Fund (HDMF). Conditions of Employment (DOLE, 2023) The following are the essential employment provisions regarding work hours: Normal hours of work. Any employee's regular work hours shall not exceed eight (8) hours daily. Hours worked. Hours worked shall include (a) all the time an employee is required to be on duty or at a prescribed workplace and (b) all the time an employee is permitted to work. Rest periods of short duration during working hours shall be counted as hours worked. Meal periods. Employers shall give employees no less than 60 minutes off for their regular meals. Night shift differential. Every employee shall be paid a night shift differential of not less than 10 percent of their regular wage for each hour of work between 10 o'clock and six (6) o'clock in the morning. Overtime work. Work may be performed beyond eight (8) hours a day provided the employee is paid for the overtime (an additional compensation equivalent to his regular wage plus at least 25 percent). Work performed beyond eight (8) hours on a holiday or rest day shall be paid an additional salary equal to the rate of the first eight (8) hours on a holiday or rest day plus at least 30 percent. Undertime not offset by overtime. Undertime work on any particular day shall not be offset by overtime work on any other day. 11 Handout 1 *Property of STI  [email protected] Page 3 of 7  BM2313 Emergency overtime work. The employer may require any employee to perform overtime work in any of the following cases: o When the country is at war or when the National Assembly or the Chief Executive has declared any other national or local emergency; o When it is necessary to prevent loss of life or property or in case of imminent danger to public safety due to an actual or impending emergency in the locality caused by serious accidents, fire, flood, typhoon, earthquake, epidemic, or other disaster or calamity; o When there is urgent work to be performed on machines, installations, or equipment to avoid severe loss or damage to the employer or some other cause of a similar nature; o When the work is necessary to prevent loss or damage to perishable goods and o Where the completion or continuation of the work started before the eighth (8th) hour is necessary to prevent severe obstruction or prejudice to the business or operations of the employer. Weekly rest periods. The employer must provide employees with a rest day of 24 consecutive hours after every six (6) consecutive normal workdays. The employer may require employees to work on any day in the following cases: o In case of a serious accident, fire, flood, typhoon, earthquake, epidemic, etc. o Urgent work to be performed on the machinery, equipment, or installation to avoid serious financial losses. o Abnormal pressure of work due to special circumstances. Holiday pay. Every worker shall be paid his regular daily wage during regular holidays, except in retail and service establishments regularly employing less than 10 workers. Service incentive leave. Every employee who has rendered at least one (1) year of service shall be entitled to a yearly service incentive leave of five (5) days with pay. Service charges. All service charges collected by hotels, restaurants, and similar establishments shall be distributed at the rate of 85% for all covered employees and 15% for management. The share of the employees shall be equally distributed among them. Handicapped Workers Handicapped workers are those whose earning capacity is impaired by age, physical or mental deficiency, or injury. Handicapped workers may be employed when it does not create unfair competition in labor costs or lower working standards. Any employer who employs handicapped workers shall enter into an employment agreement which constitutes the following: 1. The basic information of the handicapped workers. 2. The salary rate of the handicapped workers shall not be less than 75% of the applicable legal minimum wage. 3. The duration of the employment period. 4. The work is to be performed by handicapped workers. The employment agreement shall be subject to inspection by the Secretary of Labor or his duly authorized representative. 11 Handout 1 *Property of STI  [email protected] Page 4 of 7  BM2313 Occupational Health and Safety The Secretary of Labor and Employment shall set and enforce mandatory occupational safety and health standards to eliminate or reduce hazards in all workplaces. The Department of Labor and Employment is responsible for conducting research on developing innovative methods, techniques, and approaches for dealing with occupational safety and health problems (i.e., diseases in work environment conditions that impair health, functional capacity, or life expectancy). The Secretary of Labor and Employment may collect reasonable fees for the inspection of workplace facilities and equipment (i.e., steam boilers, piping, electrical installations, etc.). The collected fee shall be deposited in the national treasury to the credit of the occupational safety and health fund and shall be spent exclusively for the administration and enforcement of safety and other labor laws administered by the Department of Labor and Employment. Medical and Dental Services Every employer must provide employees with free medical and dental attendance and facilities consisting of: The services of a full-time registered nurse when the number of employees exceeds 50 but not more than 200 except when the employer does not maintain hazardous workplaces, in which case, the services of a graduate first-aider shall be provided for the protection of workers, where no registered nurse is available. The services of a full-time registered nurse, a part-time physician and dentist, and an emergency clinic when the number of employees exceeds 200 but not more than 300. The services of a full-time physician, dentist, and full-time registered nurse, as well as a dental clinic and an infirmary or emergency hospital with a one-bed capacity for every 100 employees when the number of employees exceeds 300. Disability and Death Benefits Employees who sustain an injury or contract sickness shall be entitled to the following disability benefits: 1. Temporary total disability. The employee must receive an income benefit from the Social Security System (SSS) equivalent to 90% of his average daily salary credit, provided that the daily income benefit shall not be less than 10 pesos nor more than 90 pesos, nor paid for a continuous period longer than 120 days. 2. Permanent total disability. The employee must receive an income benefit from the Social Security System (SSS), or each month until his death, an amount equivalent to the monthly income benefit, plus 10% for each dependent child, but not exceeding five (5), beginning with the youngest and without substitution. The monthly income benefit shall be guaranteed for five (5) years and shall be suspended if the employee is gainfully employed, recovers from his permanent total disability or fails to present himself for examination at least once a year upon notice by the System. 3. Permanent partial disability. The employee must receive an income benefit from the Social Security System (SSS) for each month not exceeding the designated period, an income benefit for permanent total disability. The benefit shall be paid for not more than the period designated in the following schedules (complete and permanent number of months for the loss of the use of the indicated body parts below): a. One (1) thumb – 10 months c. One (1) middle finger – 6 months b. One (1) index finger – 8 months d. One (1) ring finger – 5 months 11 Handout 1 *Property of STI  [email protected] Page 5 of 7  BM2313 e. One (1) little finger – 3 months k. One (1) leg – 46 months f. One (1) big toe – 6 months l. One (1) ear – 10 months g. One (1) toe – 3 months m. Both ears – 20 months h. One (1) arm – 50 months n. Hearing of one (1) ear – 10 months i. One (1) hand – 39 months o. Hearing of both ears – 50 months j. One (1) foot – 31 months p. Sight of one (1) eye – 25 months In cases of death, the System shall pay to the primary beneficiaries upon the employee’s death an amount equivalent to his monthly income benefit, plus 10% for each dependent child, but not exceeding five (5), beginning with the youngest and without substitution. The monthly income benefit shall be guaranteed for five (5) years. If the employee has no primary beneficiary, the secondary beneficiaries shall receive the monthly income benefit not exceeding 60 months, provided that the minimum death benefit shall not be less than 15,000 pesos. Post-Employment (DOLE, 2023) In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and his entire back wages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. An employer may terminate an employment for any of the following causes: Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work; Gross and habitual neglect by the employee of his duties; Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative; Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representatives; and Other causes analogous to the preceding. The employer may also terminate the employment of any employee due to the installation of labor-saving devices (i.e., the introduction of modern machinery and equipment), redundancy, retrenchment to prevent losses, or the closing or cessation of operation of the establishment or undertaking by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date. Termination due to the installation of labor-saving devices or redundancy. The worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month of income or at least one (1) month of revenue for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to severe business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year. 11 Handout 1 *Property of STI  [email protected] Page 6 of 7  BM2313 Termination by Employee An employee may terminate without just cause the employee-employer relationship by serving a written notice on the employer at least one (1) month in advance. The employer upon whom no such information was served may hold the employee liable for damages. An employee may put an end to the relationship without serving any notice on the employer for any of the following causes: Grave insult by the employer or his representative on the honor and person of the employee The inhuman and unbearable treatment accorded the employee by the employer or his representative Commission of a crime or offense by the employer or his representative against the person of the employee or any of the immediate members of his family Other causes similar to any of the above mentioned. Retirement from Service Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract. In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have earned under existing laws and any collective bargaining agreement and other agreements, Provided, however, that an employee's retirement benefits under any collective bargaining and other agreements shall not be less than those provided therein. In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment, an employee, upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years, which is now declared the compulsory retirement age, who has served at least five (5) years in the said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one whole year. Retail, service, and agricultural establishments or operations employing not more than 10 employees or workers are exempted from the coverage of this provision. References: Department of Labor and Employment (DOLE). (2023). Labor Code of the Philippines. https://blr.dole.gov.ph/2014/12/11/labor-code-of-the-philippines/ Knapp, J. (2023). 7 things employers need to know about Philippine labor and employment laws. https://www.rippling.com/blog/labor-employment-law-in-philippines Yap, Kung, Ching & Associates Law Office. (2023). Why every entrepreneur must learn labor law before starting their own business? https://www.ykclaw.ph/why-every-entrepreneur-must-learn-labor- law-before-starting-their-own-business/ 11 Handout 1 *Property of STI  [email protected] Page 7 of 7