Compliance Guide (PDF)

Reviewer for Handbook on Worker’s Statutory Monetary Benefits COMPLIANCE GUIDE Retail & Service Non- Establishments...

Reviewer for Handbook on Worker’s Statutory Monetary Benefits COMPLIANCE GUIDE Retail & Service Non- Establishments Ref. Agriculture/ Applicable Labor Standards Employing Employing Agriculture (Page 1 to 5 1 to 9 no.) workers workers Minimum Wage* ✓ ✓ ✓ 2 Holiday Pay N/A N/A ✓ 14 Premium Pay ✓ ✓ ✓ 18 Overtime Pay ✓ ✓ ✓ 21 Night Shift Differential N/A ✓ ✓ 23 Service Charges ✓ ✓ ✓ 26 Service Incentive Leave N/A N/A ✓ 27 Maternity Leave ✓ ✓ ✓ 29 Paternity Leave ✓ ✓ ✓ 31 Parental Leave ✓ ✓ ✓ 33 Leave for VAWC ✓ ✓ ✓ 36 Special Leave for Women ✓ ✓ ✓ 38 13th-Month Pay ✓ ✓ ✓ 40 Separation Pay ✓ ✓ ✓ 45 Retirement Pay N/A N/A*** ✓ 48 ECC Benefits** ✓ ✓ ✓ 52 PhilHealth Benefits** ✓ ✓ ✓ 57 SSS Benefits** ✓ ✓ ✓ 59 Pag-IBIG Benefits ** ✓ ✓ ✓ 61 Rates may vary per region Will be paid by the Government Employing not more than 10 workers  MINIMUM WAGE (RA No. 6727) Republic Act No. 6727 or the “Wage Rationalization Act” - fixing of the minimum wages applicable to different industrial sectors Non-agriculture, agriculture plantation, and non-plantation, cottage/handicraft, and retail/service Depending on the number of workers or capitalization or annual gross sales in some sectors Agriculture - refers to farming in all its branches Retail establishment - one principally engaged in the sale of goods to end-users for personal or household use. Service establishment - one principally engaged in the sale of service to individuals for their own or household use and is generally recognized as such. Regional Tripartite Wages and Productivity Boards (RTWPBs) - authorized to determine the daily minimum wage rates in the following different regions Regional Wage Orders - prescribe the daily minimum wage rates per industry per locality within the region. o In some instances: Depends on the number of workers and the capitalization of enterprises. The Wage Orders likewise provide the basis and procedure for application for exemption from compliance therefrom. A. Coverage The wage increases prescribed under Wage Orders apply to: o all private sector workers o employees receiving the daily minimum wage rates o those receiving up to a certain daily wage ceiling RULE: regardless of their position, designation, or status of employment, and irrespective of the method by which their wages are paid EXCEPT: workers of duly registered Barangay Micro Business Enterprises (BMBEs) with Certificate of Authority pursuant to Republic Act No. 10644. B. Minimum Wage Rates C. Rules in Determining Compensable Working Hours The basis of the minimum wage rates prescribed by law shall be the normal working hours of eight (8) hours a day. D. Monthly-Paid Employees and Daily-Paid Employees Monthly-paid employees - are those who are paid every day of the month, including unworked rest days, special days, and regular holidays. Daily-paid employees - are those who are paid on the days they actually worked and on unworked regular holidays. F. Subsidized Meals and Snacks Employer may provide subsidized meals and snacks to his employees, provided that the subsidy is not less than 30% of the fair and reasonable value of such facilities. In such case: the employer may deduct from the wages of the employees not more than 70% of the value of the meals and snacks enjoyed by the employees G. Wage of Kasambahay Batas Kasambahay Periodically adjusted by the RTWPBs H. Wage of Kasambahay who Works as Salesclerk A Kasambahay who works as a sales clerk should receive a wage in accordance with the prescribed minimum wage, which is applicable in retail and service establishments under existing Wage Orders. I. Effect of Reduction of Workdays on Wages In situations where the employer has to reduce the number of regular working days to prevent serious losses The employer may deduct the wages corresponding to the days taken off from the workweek, which is consistent with the principle of “no work, no pay.” This is without prejudice to an agreement or company policy that provides otherwise. J. Penalty and Double Indemnity for Violation of the Prescribed Increases or Adjustments in the Wage Rates (RA 8188) Any person, corporation, trust, firm, partnership, association, or entity that refuses or fails to pay any of the prescribed increases or adjustments in the wage rates made in accordance with RA 6727 shall be punished by: o Fine: not less than Twenty-five Thousand Pesos (P25,000.00) nor more than One Hundred Thousand Pesos (P100,000.00) or o Imprisonment: not less than two (2) years nor more than four (4) years, o or both such fine and imprisonment at the discretion of the court, provided that any person convicted hereof shall not be entitled to the benefits provided under the probation law.  The employer concerned shall be ordered to pay an amount equivalent to double the unpaid benefits owing to the employees, Provided that payment of indemnity shall not absolve the employer from the criminal liability imposable hereof. If the violation is committed by a corporation, trust, firm, partnership, association, or any other entity, the penalty of imprisonment shall be imposed upon the entity’s responsible officers, including, but not limited to, the president, vice president, chief executive officer, general manager, managing director or partner. K. Barangay Micro Business Enterprises (BMBEs) BMBEs or business enterprises - engaged in the production, processing, or manufacturing of products or commodities are not covered from the coverage of the Minimum Wage Law o Provided: that all employees shall still be entitled to the same benefits given to regular employees such as social security and health care benefits. L. Wage of Workers Paid by Results All workers paid by results, including homeworkers and those who are paid on piecework, takay, pakyaw, or task basis, shall receive not less than the prescribed minimum wage rates under the Regional Wage Orders for the normal working hours, which shall not exceed eight (8) hours a day, or a proportion thereof for work less than the normal working hours. M. Wage of Apprentices, Learners, and Persons with disability Wage of apprentices and learners shall in no case be less than seventy-five (75%) percent of the applicable minimum wage rates. Apprentices and learners are covered by apprenticeship and learnership agreements duly approved by the Technical Education and Skills Development Authority (TESDA). A qualified employee with a disability shall be subject to the same terms and conditions of employment and the same compensation, privileges, benefits, fringe benefits, or allowances as a qualified able-bodied person N. Annual Establishment Report on Wages (AERW) all private establishments are required to submit an annual report on “a verified itemized listing of their labor component, specifying the names of their workers and employees below the managerial level, including learners, apprentices and disabled/handicapped workers who were hired under the terms prescribed in the employment contracts, and their corresponding salaries and wages. O. Coverage from Income Tax The following income payments are exempted from the requirement of withholding tax on compensation: 1. Compensation income of Minimum Wage Earners (MWEs) who work in the private sector and are paid the Statutory Minimum Wage (SMW) 2. Compensation during the year not exceeding Two hundred fifty thousand pesos (₱250,000.00).  HOLIDAY PAY (Article 94, Labor Code) A. Definition Holiday pay - the payment of the regular daily wage for any unworked regular holiday. B. Coverage This benefit applies to all employees Except: Exempt Employees C. Regular Holidays 12 Regular Holidays 1. New Year’s Day January 1 7. Labor Day Monday nearest May 1 2. Maundy Thursday Movable date 8. Independence Day Monday nearest June 12 3. Good Friday Movable date 9. National Heroes Day Last Monday of August 4. Eidul Fitr Movable date 10. Bonifacio Day Monday nearest November 30 5. Eidul Adha Movable date 11. Christmas Day December 25 6. Araw ng Kagitingan Monday nearest April 8 12. Rizal Day Monday nearest December 30 D. Holiday Pay Rates Every employee is entitled to at least 100% of his/her minimum wage rate o Even if he/she did not report for work, o Provided: He/she is present or is on leave of absence with pay on the work day immediately preceding the holiday. Work performed on that day merits at least twice (200%) the daily wage of the employee. Where the holiday falls on the scheduled rest day of the employee, work performed on said day merits at least an additional 30% of the employee’s regular holiday rate of 200% or a total of at least 260%. When a regular holiday falls on a Sunday: the following Monday shall not be a holiday unless a proclamation is issued declaring it a special day E. Absences 1. All covered employees shall be entitled to holiday pay o IF: on leave of absence with pay on the workday immediately preceding the regular holiday. 2. Employers shall grant the same percentage of the holiday pay as the benefit granted by a competent authority in the form of employee’s compensation or social security payment, o RULE: whichever is higher if the employees are not reporting for work while on such leave benefits  3. Where the day immediately preceding the holiday is a non-work day in the establishment or the scheduled rest day of the employee, o RULE: he/she shall not be deemed to be on leave of absence on that day, in which case he/she shall be entitled to the holiday pay o IF: he/she worked on the day immediately preceding the nonwork day or rest day. F. Successive Regular Holidays Where there are two (2) successive regular holidays, like Maundy Thursday and Good Friday, an employee may not be paid for both holidays IF: he/she absences himself/herself from work on the day immediately preceding the first holiday, UNLESS: he/she works on the first holiday, in which case he/she is entitled to his/her holiday pay on the second holiday. G. Temporary or Periodic Shutdown/Cessation of Work In cases of temporary or periodic shutdown and temporary cessation of work of an establishment The regular holidays falling within the period shall be compensated in accordance with the Rules Implementing the Labor Code, as amended. H. Holiday Pay of Certain Employees 1. Employee is paid on a piece-rate basis: o IF: his/her holiday pay shall not be less than his/her average daily earnings for the last seven (7) actual work days preceding the regular holiday; o PROVIDED: that in no case shall the holiday pay be less than the applicable statutory minimum wage rate. 2. Seasonal workers o may not be paid the required holiday pay during the off-season when they are not at work 3. Workers who do not have regular working days (e.g. stevedores) o shall be entitled to this benefit.  PREMIUM PAY (Articles 91-93, Labor Code) A. Definition Premium pay - the additional compensation for work performed within eight (8) hours on rest days and special days B. Coverage This benefit applies to all employees EXCEPT: Exempt employees C. Special Days Pursuant to Proclamation No. 42 s. 2022, as amended by Proclamation No. 90 s. 2022 Three (3) Special Days 1. Benigno S. Aquino Jr. Day Monday nearest August 21 2. All Saints Day November 1 3. Last Day of the Year December 31 For work performed on a declared Special (Working) Day, an employee is entitled only to his/her daily wage. No premium pay is required since work performed on said day is considered work on an ordinary workday. D. Premium Pay Rates The “No work, no pay” principle applies during special days and on such other special days Workers who are not required or permitted to work on special days are not entitled to any compensation. RULE: Work performed on special days merits additional compensation of at least thirty percent (30%) of the basic wage or a total of one hundred thirty percent (130%). RULE: Where the employee works on a special day falling on his rest day, he/she shall be entitled to an additional compensation of at least fifty percent (50%) of his/her basic wage or a total of one hundred fifty percent (150%).  OVERTIME PAY (Article 87, Labor Code) A. Definition Overtime pay refers to the additional compensation for work performed beyond eight (8) hours a day. B. Coverage This benefit applies to all employees EXCEPT: Exempt employees C. Overtime Pay Rates Where N is the salary of the worker On Ordinary Working Days: N x 125% x number of hours OT work On a scheduled rest day or a special day: N x 130% x 130% x number of hours OT work On a special day that falls on a scheduled rest day: N x 150% x 130% x number of hours OT work On a regular holiday: N x 200% x 130% x number of hours OT work On a regular holiday that falls on a scheduled rest day: N x 260% x 130% x number of hours OT work D. Stipulated Overtime Rates Premium pay for work performed on rest days, special days, or regular holidays is included as part of the regular rate of the employee in the computation of overtime pay for overtime work rendered on said days, especially if the employer pays only the minimum overtime rates prescribed by law. HOWEVER: The employees and employer may stipulate in their collective agreement the payment for overtime work at rates higher than those provided by law.  NIGHT SHIFT DIFFERENTIAL (Article 86, Labor Code) A. Definition Night Shift Differential (NSD) - the additional compensation of ten percent (10%) of an employee’s regular wage for each hour of work performed between 10 p.m. and 6 a.m. B. Coverage This benefit applies to all employees EXCEPT: Exempt employees C. Night Shift Differential Rate Additional compensation of ten percent (10%) of an employee’s regular wage for each hour of work. N x 110% x number of hours work Summary for Holiday Pay, Premium Pay, Overtime Pay, and Night Shift Differential Holiday Pay If did not work during holidays: Every employee is entitled to at least 100% of his/her minimum wage rate Regular Holiday: at least twice (200%) the daily wage of the employee If Holiday falls on a rest day: at least an additional 30% of the employee’s regular holiday rate of 200% or a total of at least 260%. Premium Pay Special Days: at least thirty percent (30%) of the basic wage or a total of one hundred thirty percent (130%). If Special Day falls on a rest day: at least fifty percent (50%) of his/her basic wage or a total of one hundred fifty percent (150%). Overtime Pay Ordinary Working Days: N x 125% x number of hours OT work Scheduled rest day or a special day: N x 130% x 130% x number of hours OT work Special day that falls on a scheduled rest day: N x 150% x 130% x number of hours OT work Regular holiday: N x 200% x 130% x number of hours OT work Regular holiday that falls on a scheduled rest day: N x 260% x 130% x number of hours OT work Night Shift Differential Additional compensation of ten percent (10%) of an employee’s regular wage for each hour of work.  SERVICE CHARGES (Article 96, Labor Code, as amended by RA No. 11360) A. Definition Service charges – the amount collected by establishments, such as hotels, restaurants, and other similar establishments that is added to the bills for work or services rendered. B. Coverage This applies to all employees, EXCEPT: managerial employees as defined by law, under the direct employ of the establishment, regardless of their positions, designations, or employment status, and irrespective of the method by which their wages are paid. C. Distribution of Service Charges All service charges actually collected shall be distributed completely and equally, based on actual hours or days of work or service rendered, among the covered employees, including those already receiving the benefit of sharing in the service charges D. Frequency of Distribution The service charges collected shall be distributed and paid to the covered employees Once every two (2) weeks or twice a month at intervals not exceeding sixteen (16) days. E. Increase in Minimum Wage In the event that the minimum wage is increased by law or wage order, the service charges paid to the employees shall not be considered in determining the establishment’s compliance with the increased minimum wage.  SERVICE INCENTIVE LEAVE (Article 95) A. Definition Service incentive leave - the paid leave of five (5) days granted to an employee who has rendered at least one (1) year of service that may be used for sick, vacation, and other leave purposes. B. Coverage This benefit applies to every employee who has rendered at least one (1) year of service EXCEPT: Exempt Employees C. Meaning of “one year of service” “One year of service” - means service within twelve (12) months WHETHER continuous or broken, Reckoned from the date the employee started working. The period includes authorized absences, unworked weekly rest days, and paid regular holidays. IF through individual or collective agreement, company practice, or policy, the period of the working days is less than twelve (12) months, said period shall be considered as one year for the purpose of determining the entitlement to the service incentive leave D. Conversion The employee may choose to either use his/her leave credits or commute it to its monetary equivalent if not exhausted at the end of the year. IF the employee does not use or commute the service incentive leave, he/she is entitled to commutation upon his/her resignation or separation from work. The basis shall be the salary rate at the date of conversion.  MATERNITY LEAVE (RA 8282, as amended by RA 11210) A. Definition Maternity leave - the paid leave granted to a female employee for every instance of pregnancy, miscarriage, and emergency termination of pregnancy Regardless of frequency B. Coverage This benefit applies to female employees, regardless of civil status, employment status, and the legitimacy of her child. C. Duration One hundred five (105) days with full pay IF the female employee qualifies as a solo parent: Additional fifteen (15) days with full pay IF in cases of live childbirth: an additional maternity leave of thirty (30) days without pay can be availed of, at the option of the female employee, PROVIDED that the employer shall be given due notice This leave benefit may also be credited as a combination of prenatal and postnatal o PROVIDED it does not exceed one hundred five (105) days o PROVIDED that compulsory postnatal leave shall not be less than sixty (60) days. IF In case of miscarriage or emergency termination of pregnancy, the maternity leave shall be for sixty (60) days with full pay. D. Conditions for Entitlement To qualify for the maternity leave, the female employee must have: o at least three (3) monthly contributions to the SSS in the twelve-month period immediately preceding the semester of childbirth, miscarriage, or emergency termination of pregnancy o Shall have notified her employer of her pregnancy and the probable date of her childbirth, which notice shall be transmitted to SSS in accordance with its rules and regulations. E. Frequency of Availment Maternity leave shall be granted to a qualified female worker in every instance of pregnancy, miscarriage, or emergency termination of pregnancy, regardless of frequency.  PATERNITY LEAVE (RA 8187) A. Definition Paternity leave - the paid leave granted to a married male employee allowing him to lend support to his lawful wife during her period of recovery and/or in nursing of their newborn child, including miscarriage. B. Coverage This benefit applies to all married male employees, regardless of their employment status (e.g., probationary, regular, contractual, project basis). C. Duration The paternity leave grants male employees their full pay for the seven (7) days during which he is allowed not to report for work. This is granted to an employee after the delivery by his wife, without prejudice to an employer allowing an employee to avail of the benefit before or during the delivery, PROVIDED that the total number of days shall not exceed seven (7) days for each delivery. In the event that paternity leave is not available, said leave shall not be convertible to cash. D. Conditions for Entitlement 1. He is a married male employee 2. He is an employee at the time of delivery of his child 3. He is cohabiting with his spouse at the time that she gives birth or suffers a miscarriage 4. He has applied for paternity leave with his employer within a reasonable period of time 5. His wife has given birth or suffered a miscarriage E. Frequency of Availment Paternity leave benefit shall apply to the first four (4) deliveries of the employee’s lawful wife with whom he is cohabiting.  PARENTAL LEAVE FOR SOLO PARENTS (RA 8972, as amended by RA 11861) A. Definition Parental leave - the paid leave granted to a qualified solo parent to enable the performance of parental duties and responsibilities where physical presence is required or beneficial to the child. B. Coverage This benefit applies to all employees who belong to the following categories of solo parents: 1. A parent who provides sole parental care and support of the child or children 2. Spouse or any family member of an Overseas Filipino Worker (OFW), or the guardian of the child or children of an OFW 3. Unmarried mother or father who keeps and rears the child or children 4. Any legal guardian, adoptive or foster parent who solely provides parental care and support to a child or children 5. Any relative within the fourth (4th) civil degree of consanguinity or affinity of the parent or legal guardian who assumes parental care and support of the child or children C. Duration a forfeitable and noncumulative parental leave of not more than seven (7) working days with pay every year shall be granted to any solo parent employee who has rendered service of at least six (6) months. REGARDLESS of employment status Moreover, the absence of a valid and legal marriage between the mother and father of a child or dependent does not automatically entitle either individual to the benefits under the law if the factual circumstances demonstrate that parental care and support are shared. In the event that the parental leave is not availed of, said leave shall not be convertible to cash unless specifically agreed upon previously by the employer and the employee D. Conditions for Entitlement A solo parent shall be entitled to the parental leave provided that: 1. They have rendered at least six (6) months of service, whether continuous or broken, at the time of the effectivity of RA 11861 2. They have notified their employer of the availment thereof within a reasonable time 3. They have presented a valid Solo Parent Identification Card (SPIC). E. Frequency of Availment The parental leave of seven (7) working days with pay shall be granted every year. When a solo parent ceases to be such by reason of a change of status and circumstances, the said solo parent shall be ineligible to avail of the solo parent benefits. LEAVE FOR VICTIMS OF VIOLENCE AGAINST WOMEN AND THEIR CHILDREN (VAWC) (RA 9262) A. Definition Leave for victims of violence against women and their children - the paid leave granted to a female employee who is a victim of violence against women and their children, allowing her to attend to medical and legal concerns at any time during the application of any protection order, investigation, prosecution and/or trial of the criminal case. B. Coverage This benefit applies to all female employees who are victims of VAWC. C. Duration Leave of up to ten (10) days with full pay, consisting of basic salary and mandatory allowances Shall be extended when the need arises, as specified in the protection order issued by the barangay or the court D. Conditions for Entitlement Certification from the barangay chairman (punong barangay), barangay councilor (barangay kagawad), prosecutor, or Clerk of Court E. Frequency of Availment The usage of the ten-day leave shall be at the option of the woman employee. IF in the event that the leave benefit is not availed of, it shall not be convertible into cash and shall not be cumulative.  SPECIAL LEAVE FOR WOMEN (RA 9710) A. Definition Special leave for women - the paid leave granted to a female employee allowing her to recuperate following surgery caused by gynecological disorders for a period of up to two (2) months B. Coverage This benefit applies to all qualified female employees who have undergone surgery due to gynecological disorders. REGARDLESS of age and civil status C. Duration A female employee who has rendered continuous aggregate employment service of at least six (6) months for the last twelve (12) months Shall be entitled to a special leave benefit of two (2) months with full pay based on her gross monthly compensation following surgery caused by gynecological disorders Gynecological disorders - disorders that would require surgical procedures such as, but not limited to, dilatation and curettage and those involving female reproductive organs such as the vagina, cervix, uterus, fallopian tubes, ovaries, breast, adnexa, and pelvic floor, as certified by a competent physician. It shall also include hysterectomy, ovariectomy, and mastectomy. The special leave shall be non-cumulative and non-convertible to cash unless otherwise provided by a collective bargaining agreement (CBA). D. Conditions for Entitlement 1. Rendered at least six (6) months of continuous aggregate employment service for the last twelve (12) months prior to surgery 2. She has filed an application for special leave with her employer within a reasonable period of time from the expected date of surgery or within such period as may be provided by company rules and regulations or the collective bargaining agreement 3. She has undergone surgery due to gynecological disorders as certified by a competent physician. E. Frequency of Availment every instance of surgery due to gynecological disorder for a maximum total period of two (2) months or sixty (60) calendar days per year.  THIRTEENTH-MONTH PAY (PD 851) A. Definition Thirteenth-month pay - one-twelfth of the total basic salary earned by an employee within a calendar B. Coverage All employers are required to pay their rank-and-file employees thirteenth-month pay REGARDLESS of the nature of their employment IRRESPECTIVE of the methods by which their wages are paid PROVIDED they worked for at least one (1) month during a calendar year. Managerial employee - one who is vested with powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay, recall, discharge, assign, or discipline employees or to effectively recommend such managerial actions. Rank-and-file employees - All employees not falling within this definition are considered. The following employers are not covered by PD 851: o The government and any of its political subdivisions o Employers who are already paying their employees a thirteenth month pay o Employers of household helpers and persons in the personal service o Employers of those who are paid on purely commission, boundary, or task basis, and those who are paid a fixed amount for performing specific work C. Amount shall not be less than one-twelfth (1/12) of the total basic salary earned by an employee in a calendar year. The "basic salary" of an employee for the purpose of computing the thirteenth-month pay shall include all remunerations or earnings paid by his or her employer for services rendered. E. Time of Payment Not later than December 24 of every year HOWEVER: An employer may give to his or her employees one-half (1/2) of the thirteenth- month pay before the opening of the regular school year and the remaining half on or before December 24 of every year. F. Thirteenth-Month Pay for Certain Types of Employees 1. Employees who are paid on a piecework basis are entitled to the thirteenth-month pay. 2. Employees who are paid a fixed or guaranteed wage plus commission (i.e., on both their fixed or guaranteed wage and commission). 3. Employees with multiple employers (e.g. Government employees working part-time in a private enterprise, including private educational institutions) G. Thirteenth-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 thirteenth-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 started working during the calendar year up to the time of his or her resignation or termination from the service. H. Thirteenth-Month Pay of Female Employee who is on Maternity Leave The salary differential shall be included as part of the basic salary for purposes of computation of the 13th-month pay of the rank-and-file employee. I. Non-inclusion in Regular Wage The thirteenth-month pay is not part of the regular wage of employees K. No Exemption or Deferment No request or application for exemption from payment of 13th-month pay, or for deferment of the payment thereof shall be accepted and allowed.