13th Month Pay Law

13th Month Pay Law
Employee Wages and Benefits 2010-02-21
Presidential Decree No. 851 (otherwise known as Thirteenth Month Pay Law), as
amended by Memorandum Order No. 28, requires all employers to pay their
employees a 13th month pay not later than December 24 of every year.
Historical Backdrop.
Originally, when PD 851, issued by Pres. Marcos, took effect on December 16, 1975,
only employees receiving a basic salary of not more than P1,000 a month were
entitled to 13th pay.
On August 13, 1986, Pres. Aquino, through Memorandum Order No. 28, removed the
salary ceiling of P1,000. With the removal of the salary ceiling, all rank and file
employees become entitled to a 13th month pay regardless of the amount of their
monthly basic salary (unless their employers are exempted from the application of
PD 851).
Employees Covered by 13th Month Pay Law.

All rank-and-file employees, regardless of their designation or employment status,
and irrespective of the method by which their wages are paid, who have worked at
least one month during the calendar year are entitled to 13th month pay.
Rank and File Employees Meaning.
As stated above, only rank-and-file employees are entitled to 13th month pay.
Managerial employees are excluded from the coverage of the law.
The Labor Code distinguishes a rank-and-file employee from a managerial
employee. It provides that a managerial employee is one who is vested with powers
of prerogatives to lay down and execute management policies and/or to hire,
transfer, suspend, lay-off, recall discharge, assign or discipline employees, or to
effectively recommend such managerial actions.
All employees not falling within this definition are considered rank-and-file
employees.
Amount of 13th Month Pay.

The 13th month pay shall be in the amount not less than 1/12 of the total basic
salary earned by the employee within the calendar year.
Computation
Only basic salary is included in the computation of 13th month pay. Allowances and
monetary benefits which are not considered or integrated as part of the regular or
basic salary, such as the cash equivalent of unused vacation and sick leave credits,
overtime, premium, night differential and holiday pay, and cost-of-living allowances,
shall be excluded from the computation.
However, these salary-related benefits should be included as part of the basic salary
in the computation of the 13th month pay if by individual or collective agreement,
company practice or policy, the same are treated as part of the basic salary of the
employees.
Time of Payment of 13th Month Pay.

The required 13th month pay shall be paid not later than December 24 of each year.
An employer, however, may give to his employees one half of the required 13th
month pay before the opening of the regular school year and the other half on
before the 24th of December of every year. The frequency of payment of this
monetary benefit may be the subject of agreement between the employer and the
recognized/collective bargaining agent of the employees.
Employees excluded from coverage of 13th month pay law.

1.
Managerial employees;
2.
Those covered under the civil service law;
3.
Those already receiving 13th month pay or its equivalent. Christmas bonus,
mid-year bonus, cash bonuses and other payments amounting to not less than 1/12
of the basic salary are treated as equivalent of 13th month pay;
4.
Household helpers and persons in the personal service of another; and
5.
Those paid on purely commission, boundary, or task basis, and those who are
paid fixed amount for performing specific work except those paid on a piece-rate
basis.
13th Month Pay of Certain Types of Employees

Employees paid on commission basis.
Employees paid on a purely commission basis are not entitled to 13th month pay.
They are expressly excluded from the coverage of PD 851. However, employees
paid on partly commission basis, i.e., those guaranteed with a fixed wage aside
from the commission, are entitled to 13th month pay.
Computation. In the computation of the basic salary of employees paid partly on
commission basis, we must distinguish between the two types of commission:
1.
Commission as an incentives or encouragement to ensure productivity, i.e.,

productivity bonus; and
2.
Commission as a direct remuneration for service rendered.
Commission that take the form of an incentives or encouragement to ensure

productivity, e.g., productivity bonus, does not form part of the basic salary. As
such, it may be excluded from the computation of 13th month pay. Only the fixed or
guaranteed wage is required to be included in the computation (see Boie Takeka
case, 1993.)
Basic salary = Fixed wage (commission is excluded)
On the other hand, commission that takes the form of a direct remuneration for
services rendered should be included in the computation of the basic salary. That is,
it should be added to the guaranteed wage of the employee in computing his basic
salary (see Philippine Duplicators v. NLRC, 1993.)
Basic salary = Fixed wage + Commission
13th Month Pay of Employees with Multiple Employers.
Employees with multiple employers are entitled to 13th month pay from all their
private employers.
Thus, if an employee works in two or more private firms, he is entitled to the pay
from both or all of them. If he is a government employee, but works part time in a
private enterprise, he is entitled to 13th month pay from the private enterprise.
13th Month Pay of Private School Teachers.
Private school teachers are entitled to 13th month pay regardless of the numbers of
months they work in a year, provided it is at least one month.
Payment of 13th Month Pay to Resigned or Separated Employees.
Employees who resigned or were separated during the calendar year shall be
entitled to 13th month pay in proportion to the length of time he worked during the
year, provided it is at least one month.
The payment may be demanded by the employee upon the cessation of
employment.
Example
1.
Assuming an employee earning a basic salary of P12,000.00 per month had

worked for at least 9 months at the time of his separation, how much is his 13th
month pay? Answer: P9,000.00.
Computation: (P12,000.00 x 9 months) 12 = P9,000.00
Cases
1.
For 2 to 3 years, Sevilla Trading, allegedly by mistake, added the night

premium, maternity leave pay, etc., in the computation 13th month pay. The court
ruled that the inclusion may no longer be withdrawn if it has already ripened into a
company practice. Nota bene: There is no specific rule as to how many years are
necessary to constitute company practice. (Sevilla Trading v. AVA Tomas, GR No.
152456.)
2.
Employees paid according to boundary system are not entitled to 13th mo

pay. Boundary system is where the employees do not receive fixed wages, but
retain only those sums in excess of the boundary or fee they pay to the owners or
operators of their vehicles. They are akin to employees paid on purely commission
basis. (R&E Transport v. Latag, G.R. No. 155214.)
3.
Drivers who are paid on commission basis, but with guaranteed minimum
wage in case their commission be less than their basic minimum, are entitled to
13th month pay. (PACIWU v. NLRC, GR No 107994.)
References
1.
Presidential Decree No. 851, effective December 16, 1975.
2.
Revised Rules and Regulations Implementing Presidential Decree No. 851

Last Edited: Sunday, December 18, 2011
Caveat: Subsequent court and administrative rulings, or changes to, or repeal of,
laws, rules and regulations may have rendered the whole or part of this article
inaccurate or obsolete.
Determining compensable hours worked

Employee Wages and Benefits, Labor Fundamentals 2009-09-05
Normal Hours of Work

The normal hours of work under the Labor Code is 8 hours in one work day. Work
day is understood to mean one 24-hour cycle which starts from the time the
employee is engaged to work and ends on the same time the following day. For
example, if the employee is engaged to work from 8:00am to 5:00pm, his work day
is the 24-hour cycle that starts from 8:00am and ends at 8:00am of the following
day.
The employer is free to adopt what time in a day the work shall start as long as the
total number of hours worked will not exceed 8 hours. If the number of hours
worked exceed 8 hours, the employee must be paidovertime pay for the excess.
How to compute overtime pay?
Hours worked definition

Hours worked refers to all compensable period of work. Hours work includes:
1.
All the time during which an employee is required to be on duty or to be at a

prescribed workplace; and
2.
All the time during which an employee is suffered or permitted to work.
Meal periods
The employer must give his employees not less than 60 minutes or one hour timeoff for their meals. This period in noncompensable, which means that it is not to be
included in the computation of hours worked. For example, if an employees work is
from 8:00am to 5:00 with one hour meal break from 12:00nn to 1:00pm, the total
compensable hours of the employee is 8 hours, i.e., from 8:00am 12:00nn and
1:00pm 5:pm. The period from 12:00nn to 1:00pm is noncompensable.
Shortened meal periods

Under exceptional circumstances, the employer may give the employee a meal
period of not less than 20 minutes, provided that such shorter meal period is
credited as compensable hours worked of the employee.
Shortened meal period may be allowed under the following cases:
1.
Where the work is non-manual work in nature or does not involve strenuous
physical exertion;
2.
Where the establishment regularly operates not less than 16 hours a day;
3.
In case of actual or impending emergencies or there is urgent work to be

performed on machineries, equipment or installations to avoid serious loss; and
4.
Where the work is necessary to prevent serious loss of perishable goods.
Rest periods
The employer may give their employees rest periods or coffee breaks during
working hours in order to beef them up or to make them more productive. Unlike
meal periods, rest periods running from 5 to 20 minutes is compensable as hours
worked. Rest period running for more that 20 minutes may or may not be
compensable depending on the situation. See letter (b) under Principles in
determining hours worked.
The giving of rest period, however, is not required under the Labor Code, and is
largely a management prerogative.
Principles in determining hours worked
The following general principles may be used to determine whether the time spent
by an employee is considered hours worked or not:
1.
All hours are hours worked which the employee is required to give his
employer, regardless of whether or not such hours are spent in productive labor or
involve physical or mental exertion.
2.
An employee need not leave the premises of the work place in order that his
rest period shall not be counted, it being enough that he stops working, may rest
completely and may leave his work place, to go elsewhere, whether within or
outside the premises of his work place.
3.
If the work performed was necessary, or it benefited the employer, or the

employee could not abandon his work at the end of his normal working hours
because he had no replacement, all time spent for such work shall be considered as
hours worked, if the work was with the knowledge of his employer or immediate
supervisor.
4.
The time during which an employee is inactive by reason of interruptions in

his work beyond his control shall be considered working time either if the
imminence of the resumption of work requires the employees presence at the place
of work or if the interval is too brief to be utilized effectively and gainfully in the
employees own interest.
Waiting time
Waiting time spent by an employee shall be considered as working time if waiting is
an integral part of his work or the employee is required or engaged by the employer
to wait.
On call duty
An employee who is required to remain on call in the employers premises or so
close thereto that he cannot use the time effectively and gainfully for his own
purpose shall be considered as working while on call. The employee must be
required to leave a word where he may be reached. An employee who is not
required to leave word at his home or with company officials where he may be
reached is not working while on call.
Lectures, meetings, training programs

Attendance at lectures, meetings, training programs, and other similar activities
shall not be counted as working time if all of the following conditions are met:
1.
Attendance is outside of the employees regular working hours;
2.
Attendance is in fact voluntary; and
3.
The employee does not perform any productive work during such attendance.
References
1.
Chapter 1, Title I, Book Three, Labor Code of the Philippines (Article 82 to 85)
2.
Rule I, Book Three, Omnibus Rules Implementing the Labor Code.

Last Edited: Friday, August 19, 2011


day.

1.

2.
Meal periods

1.
physical exertion;
2.
3.

4.
Rest periods

1.
2.
3.

supervisor.
4.

Waiting time
to wait.
On call duty

1.
2.
3.
References
1.
2.


day.

1.

2.
Meal periods

1.
physical exertion;
2.
3.

4.
Rest periods

1.
2.
3.

supervisor.
4.

Waiting time
to wait.
On call duty


1.
2.
3.
References
1.
2.

Premium Pay
Premium Pay Meaning

Premium pay refers to the additional compensation required by law to be paid to
employees for work performed on non-working days, such as rest days and special
days.
No Work, No Pay Rule

During rest and special days, the principle of no work, no pay applies. Workers
who were not required or permitted to work on those days are not by law entitled to
any compensation.
This is consistent with the definition above that premium pay is to be paid for
work performed.
Performance of work is necessary for entitlement to premium pay.
Premium Pay For Rest Days

As a general rule, where an employee is made or permitted to work on his
scheduled rest day, whether it is a regular day or a holiday, he shall be paid an
additional compensation of at least 30% of his regular wage for that day. The rule is
different for work performed on a rest day which is also a special day, in which case,
50% of the regulary daily rate is added, instead of 30% of the daily rate for special
day.
In sum, the premium pay rates for rest days are as follows:
1.
For work performed on rest days, an additional 30% of the daily rate or a total
of 130%;
2.
For work performed on a rest day which is also a special day, an additional of
50% of the daily rate or a total of 150%; and
3.
For work performed on a regular holiday which is also the employees rest
day, an additional 30% of the regular holiday rate of 200% or a total of 260%.
Computation
For work performed on rest day, using P250.00 as Basic pay, the rate may be
determined as follows:
Rate on Rest day = Basic pay + Premium pay
Where,
Premium pay = 30% of Basic pay
= 30% of P250.00
= 0.3 x P250.00
= P75.00
Thus,
Rate on Rest day = Basic pay + Premium pay
= P250.00 + P75.00
= P325.00
For work performed on a regular holiday which is also the employees rest day, the
rate may be determined as follows:
Rate = Daily rate on holiday + Premium pay
Where,
Premium pay = 30% of Daily rate on holiday, and
Daily rate on holiday = 200% of Basic pay = P500.00
Thus,
Premium pay = 0.3 x Daily rate on holiday
= 0.3 x P500.00
= P150.00
Thus, the rate on rest day falling on a holiday is:
Rate = Daily rate on holiday + Premium pay
= P500.00 + P150.00
= P650.00
Or,
Rate = 260% of Basic pay
= 2.6 x P250.00
= P650.00
Premium pay for Special Days

There are two national special days observed in the Philippines:
1.
All Saints Day (November 1); and
2.
The last day of the year (December 31).

Work performed on special days merits additional compensation of not less than
30% on top of the basic pay or a total of 130%.
Computation
Using P250.00 as daily rate (Basic pay), the Rate on special day may be determined
as follows:
Rate on special day = Basic pay + Premium
Where,
Premium = 30% of Basic pay
= 30% of P250.00
= P75.00
Thus,
Rate on special day = Basic pay + Premium
= P250.00 + P75.00
= P325.00
Or,
Rate on special day = 130% of Basic pay
= Basic pay x 1.3
= P250.00 x 1.3
= P325.00
Premium Pay For Special Day falling on Rest Day.

If the special day falls on employees scheduled rest day, he is entitled to at least
50% over and above the basic pay or a total of 150%.
Computation
Rate for work on special days which is also the employees rest day entitles him to
an additional 50% of the daily rate (Basic pay).
Rate = Basic pay + Premium pay
Where,
Premium pay = 50% of Basic pay
= P250.00 x 0.5
= P125.00
Thus,
Rate = Basic pay + Premium pay
= P250.00 + P125.00
= P375.00
Or,
Rate = 150% of Basic pay
= Basic pay x 1.5
= P250.00 x 1.5
= P375.00
If no regular workdays and no scheduled regular rest days
Where the nature of the work of the employee is such that he has no regular
workdays and no regular rest days can be scheduled, he shall be paid an additional
compensation of at least 30% of his regular wage for work performed on Sundays
and holidays.
Premium Pay and Holiday Pay Comparison

Using the definition of premium pay above, holiday pay is not a premium pay
because it does not requireperformance of work by the employee. In case of holiday
pay, the employee is entitled payment even if he does not work. The same cannot
be said of premium pay.
Thus, unlike in premium pay, the principle no work, no pay does not similarly
apply to holiday pay.
Retirement Pay Law in the Philippines

Employee Discipline and Termination, Employee Wages and Benefits 2014-02-21
Retirement Age
Retirement is one of the modes of termination of employment. By retirement, the
employment is terminated when the employee has reached a certain age, or after
he has completed a certain number of years of service.
Under the Labor Code (Art. 287), an employee may be retired upon reaching the
retirement age established in the collective bargaining agreement (CBA) or other
applicable employment contract. In the absence of such agreement, the employee
may retire upon reaching the age of 60 or more, but not more than 65, provided he
has served at least 5 years or more in the same establishment. The age 60 or more,
but below 65, is considered as the voluntary retirement age. Sixty-five is considered
as the compulsory retirement age.
A company may have CBA or employment contract setting a retirement age
different (higher or lower) from that fixed by law. For example, the CBA may fix the
retirement age at 50.
The CBA or employment contract may also establish a retirement age based on
years of service of the employee. For example, it may provide that the employee
may be retired after 20 years of service.
The retirement age may also be established based on the combination of the age
and tenure of the employee. For example, the contract may provide that the
employee may retire upon reaching the age of 50, or after 20 years of service,
whichever comes earlier.
For underground mining employees, the voluntary retirement age under the Labor
Code is 50 years or more, but not beyond 60. The compulsory retirement age is set
60.
It is important to note that the company cannot unilaterally fix the retirement age of
employee. Retirement age may be established only by a valid CBA or employment
contract, or in the absence of both, by the law.
Another thing, the retirement age fixed by law applies only when no CBA or
employment contract setting the retirement age exist. If there is such agreement or
contract, the retirement age fixed by law wont apply.
Retirement Pay
If the establishment has a CBA or employment contract providing for a retirement
plan or benefits to employees, the employee shall be entitled to receive the benefits
as provided in the said CBA or contract. However, such benefits must not be less
than that provided under the Labor Code.
Under the Labor Code, the retirement pay is equivalent to at least one-half month
salary for every year of service, a fraction of at least six months being considered as
one whole year. The term one-half month salary shall mean 15 days plus 1/12 of the
13th month pay and the cash equivalent of not more than 5 days of service
incentive leaves.
Last Edited: Friday, February 21, 2014
Service Incentive Leave

Basis
The basis of the grant of Service Incentive Leave to qualified employees is found
in Article 95 (Book Three, Title I) of the Labor Code.
Section 2, Rule V, Book III of the Omnibus Rules contains the rules and regulations
for the implementation this right.
Employees entitled to SIL

Every employee (subject to the exceptions below) who has rendered at least one
year of service is entitled to yearly service incentive leave of five days with pay.
At least one year of service Meaning
The term at least one-year service means service for not less than 12 months,
whether continuous or broken.
The 12-month period shall be reckoned from the date the employee started
working, including authorized absences and paid regular holidays.
However, where the operation of the establishment as a matter of practice or policy,
or that provided in the employment contract, is less than 12 months, such period
shall be considered as one year.
Employees not covered

The following employees are excluded from entitlement to SIL under the Labor Code
(but they may be entitled to the same or similar benefits if so provided under other
laws, or collective bargaining agreement or employment contract):
1.
Those of the government and any of its political subdivisions, including

government-owned and controlled corporations;
2.
Domestic helpers and persons in the personal service of another;
3.
Managerial employees as defined in Book Three of the Labor Code;
4.
Field personnel and other employees whose performance is unsupervised by

the employer including those who are engaged on task or contract basis, purely
commission basis, or those who are paid a fixed amount for performing work
irrespective of the time consumed in the performance thereof;
5.
Those who are already enjoying the benefit herein provided;
6.
Those enjoying vacation leave with pay of at least five days; and
7.
Those employed in establishments regularly employing less than ten

employees. (Omnibus Rules)
Manner of availment
The service incentive leave may be used for sick and vacation leave purposes. And,
at the end of the year, the unused SIL may be commuted to cash.
Commutability to cash
Under the Omnibus Rules, the unused service incentive leave is commutable to its
money equivalent at the end of the year. [N.B. Not found in the LC.]
Accumulation of Leave Credits

Instead of using up SIL, the employee may accumulate it and opt for its
commutation to cash upon his resignation or separation from employment.
Computation of SIL
In computing SIL, the basis shall be the salary rate at the date of commutation. The
availment and commutation of this benefit may be on a pro rata basis. (DOLE
Handbook)
Illustration
An employee was hired on January 1, 1997, and resigned on March 1, 1998.

Assuming he has not used or commuted any of his SIL credits, he is entitled upon
his resignation to the commutation of his accumulated SIL as follows:
SIL earned as of Dec. 31, 1997 = 5 days
Proportionate SIL for Jan. and Feb. 1998 = (2/12) x 5 days = 0.833 day
Total as of March 1, 1998 = 5.833 days
Part-time Workers
Are part-time workers entitled to the full five days SIL, or should the entitlement be
on pro-rata basis? Part-time workers are entitled to full five days SIL. (BWC Advisory
Opinion)
The reason is that the Labor Code speaks of number of months worked in a year,
not number of hours worked in a day, as basis for entitlement.
Vacation and Sick leave

The Labor Code treats vacation leave and sick leave under the same category as
Service Incentive Leave or leave with pay.
Thus, the grant of vacation or sick leave with pay of at least five days may be
credited as compliance with SIL. For example, if a company is giving its employees
15 days vacation leave, five days of which is with pay, the five-days paid vacation
leave may be credited as SIL.
Case
1.
Petitioner CIT claimed that teachers are not entitled to SIL because they are
engaged by the school on contractual basis. The claim was not sustained. It was
held that the phrase those who are engaged on task or contract basis as
mentioned in the Omnibus Rules should be read in relation to field personnel.
Teachers, not being field personnel, are entitled to SIL. (CIT vs. Ople, 1987.)
2.
Applying Article 291 of the Labor Code in light of this peculiarity of the
service incentive leave, we can conclude that the three (3)-year prescriptive period
commences, not at the end of the year when the employee becomes entitled to the
commutation of his service incentive leave, but from the time when the employer
refuses to pay its monetary equivalent after demand of commutation or upon
termination of the employees services, as the case may be. (Auto Bus Transport,
Inc. vs. Bautista, 2005)
3.
Petitioners contention that respondent is not entitled to the grant of service

incentive leave just because he was paid on purely commission basis is misplaced.
What must be ascertained in order to resolve the issue of propriety of the grant of
service incentive leave to respondent is whether or not he is a field personnel. (Auto
Bus Transport, Inc. vs. Bautista, 2005)
4.
Exemptions. To claim exemption from payment of service incentive leave

pay, it is the employers duty to prove that it is covered under the exemption. Thus,
where the employer claims that the employee is not entitled to service incentive
leave pay inasmuch as establishment employing less than ten (10) employees are
exempted from paying service incentive leave pay, it has the duty to prove that
there were less than ten employees in the company. (C. Planas Commercial, et al.
vs. NLRC, G.R. No. 144619, November 11, 2005.)
Special Leave Benefits for Women

Employee Wages and Benefits, News & Current Events 2011-08-19
Under the Republic Act 9710, otherwise known as The Magna Carta of Women, a
woman employee 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. As guidelines for the implementation of special leave
benefits for women in the private sectors, the Department of Labor and
Employment issued Department Order No. 112-11, Series of 2011. For female
employees in the government service, you may refer to Civil Service Commission
Guidelines on the Availment of the Special Leave Benefits for Women under RA
9710, CSC Resolution No. 1000432.
What is special leave benefit for women

Special leave benefits for women refers to a female employees leave entitlement of
two months with full pay based on her gross monthly compensation following
surgery caused by gynecological disorders.
This benefit is in addition to leave privileges under existing law.
Who are qualified to avail of this benefit; Conditions

All women employees in the private sector, regardless of age and civil status, are
entitled to special leave benefits, provided she has complied with the following
conditions:
1.
She has rendered continuous aggregate employment service of at least 6

months for the last 12 months;
2.
She has filed an application for special leave;
3.
She has undergone surgery due to gynecological disorders as certified by

competent physician.
Female employees who have taken a leave of absence following surgery
for gynecological disorder or or after 15 September 2009 are entitled to avail of the
benefit.
What is gynecological disorders

Gynecologial disorders refer to disorders that would require surgical procedures
such as dilatation and curettage and those involving female reproductive organs
such as vagina, cervix, uterus, fallopian tubes, ovaries, breast, adnexa and pelvic
floor. Gynecological surgeries shall also include hysterectomy, ovariectomy, and
mastectomy.
How to apply for special leave

The employee shall file her application for 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 by collective bargaining
agreement (CBA).
When application for special leave is not necessary

Prior application is not necessary in cases requiring emergency surgical procedure.
However, the employee must notify the employer verbally or in writing within
reasonable period of time, and after the surgery or recuperating period, she must
immediately file her application using the prescribed form.
When special leave benefits shall be granted

Special leave benefits shall be granted after the employee has undergone surgery.
The employer, however, has the option to pay the employee before or during the
surgery.
Benefit
The employee is entitled to full pay for two months based on her gross monthly
compensation. Gross monthly compensation refers to the monthly basic pay plus
mandatory allowances.
Benefit is non-convertible to cash

Special leave benefit is non-cumulative and non-convertible to cash unless
otherwise provided by a CBA.
Last Edited: Tuesday, April 24, 2012
Overtime Pay
Basis.
All employees required to work beyond eight hours in one workday is entitled to
overtime pay. The basis of overtime pay is found in Article 87 of the Labor Code.
Article 87. Overtime work. Work may be performed beyond eight hours a day
provided that theemployee is paid for the overtime work an additional
compensation equivalent to his regular wage plus at least twenty-five percent
thereof. Work performed beyond eight hours on a holiday or rest day shall be paid
an additional compensation equivalent to the rate for the first eight hours on a
holiday or rest day plus at least 30 percent thereof.
Terminology.
Overtime Pay.
Overtime pay is the additional compensation payable to employee for services or

work rendered beyond the normal eight hours of work. It is computed by multiplying
the overtime rate with the number of hours in excess of the regular eight hours of
work.
Overtime Work.
Any work performed beyond the normal 8 hours of work in one workday is
considered as overtime work.
Workday.
A workday is the consecutive 24-hour period which commences from the time the
employee starts to work and ends at the same time the following day. To illustrate, if
the employee regularly works from 8AM to 4PM, hisregular workday is the 24-hour
period from 8AM to 8AM of the following day. Workdays do not necessarily
corresponds to calendar days.
Overtime Pay Rates.

Overtime pay rates depend upon the day the work is performed, whether it is
ordinary working day, special day, holiday or rest day.
For ordinary working day, an additional compensation equivalent to his regular
hourly rate plus at least 25% thereof.
For holiday, special day and rest day, an additional compensation equivalent to the
rate for the first eight hours on a holiday or rest day plus at least 30% thereof.
Computation of Overtime Pay

Assuming that the mininum wage rate is P250, how much is the overtime rate per
hour?
On ordinary day
On an ordinary day, the overtime rate per hour is determined as follows:

First, compute the hourly rate of the employee:
Regular hourly rate = Minumum wage rate 8 hours
= P250 8 hours
= P31.25 per hour
Now to determine overtime rate per hour:
Overtime rate = Regular hourly rate + 25% of Regular hourly rate
Overtime rate = P31.25 + (25% of P31.25)
= P31.25 x 1.25
= P39.06 per hour
On rest day and special day
Compute the hour rate of the employee on a rest day or special day:
Hourly rate = 130% of Regular hourly rate
= P31.25 x 1.30
= P40.625 per hour
(Note: The hourly rate on rest day and special day is 130% of the regular rate.)
To determine overtime rate per hour:

Overtime rate = Hourly rate on rest day + 30% Hourly rate on rest day
= P40.625 + (30% of P40.625)
= P40.625 x 1.30
= P52.81 per hour
On rest day which falls on a special day
Compute the hourly rate of the employee on a rest day which falls on a special day:
= P31.25 x 1.50
= P46.875 per hour
Overtime rate = Hourly rate + 30% of Hourly rate
= P46.875 + (30% of P46.875)
= P46.875 x 1.30
= P60.94 per hour
On a regular holiday
Compute the hourly rate on regular holiday:

= P31.25 x 2
= P62.5 per hour
= P62.50 + (30% of P62.50)
= P62.50 x 1.30
= P81.25 per hour
On a rest day which falls on a regular holiday
Compute the hourly rate:

= P31.25 x 2.60
= P81.25 per hour

= P81.25 + (30% of P81.25)
= P81.25 x 1.30
= P105.625 per hour
Work need not be Continuous.

Work performed by the employee need not be continuous as long as it falls within
the same work day. For example, an employee who works in two shifts, one from
8AM to 12AM (four hours), and another from 4PM to 8PM of the same work day
(another four hours), suffers a total of 8 hours of work. If he is required to work for
another hour within the same work day (from 8AM to 8AM of the following day),
then such work is subject to overtime pay.
Undertime cannot be Offset by Overtime.

Some employers has the practice of offsetting undertime and overtime. For
example, if an employee work for only 7 hours on any given day (one hour
undertime), he will be required to make up for his undertime by requiring him to
render additional one hour work on another day. This practice is prohibited under
Article 87 of the Labor Code, viz:
Article 87. Undertime not offset by overtime. Undertime work on any particular day
shall not be offset by overtime work on any other day. x x x
The rationale for provision is quite obvious. Offsetting undertime against overtime is
improper because the employee would be deprived of the additional compensation
for the overtime work he has rendered. Note that undertime is covered only by the
regular hourly rate whereas overtime is subject to additional overtime rate. If the
two are to be offset, the employee loses overtime pay to which he is entitled.
Emergency Overtime Work.

As a general rule, employees may not be compelled to work in excess of eight hours
or to render overtime work on any given day against his will.
The exception to this rule is found in Artile 89 of the Labor Code. Under the said
article, employees may be compelled to perform overtime work in any of the
following cases:
1.
When the country is at war or under any national or local emergency;
2.
When overtime work is necessary to prevent loss of life or property, or in case

of imminent danger to public safety;
3.
When there is urgent work to be performed on machines, etc., in order to

avoid serious loss or damage to the employer;
4.
When the work is necessary to prevent loss or damage to perishable goods;
5.
When the completion or continuation of work is necessary to prevent serious

obstruction or prejudice to the business; or
6.
When overtime work is necessary to avail of favorable weather or

environmental conditions.
Managerial Employees not Entitled to Overtime Pay.

Article 82 of the Labor Code states that the provisions of the Labor Code on working
conditions and rest periods shall not apply to managerial employees. This includes
overtime pay for overtime work. Thus managerial employees are not entitled to
overtime pay for services rendered in excess of eight hours a day.
Cases
1.
Supervisory employees are considered as officers or members of the

managerial staff, and hence are not entitled to overtime, rest day and holiday pay.
(Natl Sugar Refineries Corp. vs. NLRC, G.R. No. 101761. March 24, 1993)
Employee benefits in the Philippines

Posted March 8, 2010 in Employer Tips, Philippines by EasyOutsource Support
On my previous post, I discussed the average salaries of traditional jobs in the Philippines.
I also mentioned on that post that those figures dont include other benefits that companies
offer on top of the regular salaries employees receive.
So what are the benefits that are required by the Philippine government to be given to
working Filipinos? To give a short run down, the following are government-mandated
benefits: Social Security System (SSS) contributions, Philippine Health Insurance
(PhilHealth) contributions, Home Development Mutual Fund (Pag-ibig Fund) contributions,
13th month pay, service incentive leave, meal and rest periods, overtime pay, special
holiday/rest day rates, and night shift differentials. Other more common benefits that are
not mandated but are given by a lot of companies are: holiday bonus, mid-year bonus, and
paid holiday and vacation leaves.
Social Security Sytem (SSS) The Social Security System was created by the
Philippine government. All employees hired by private companies are required to
become an SSS member (Republic Act No. 8282). This system aims to protect its
members for when they are unable to work such as sickness, disability, maternity,
old age and death, or other such contingencies not stated but will result in loss of
income or results to a financial burden. When an employee gets sick, SSS will
reimburse them with their equivalent daily salary multiplied by the number of days
absent. When a female member gives birth, SSS gives the employee 2 months
worth of salary to compensate for the time she will be off from work due to childbirth.
The SSS also serves as a pension plan for its members as SSS returns members
monthly contributions after they retire from work.The amount of SSS monthly
contribution is determined from the actual monthly salary an employee receives.
30% of total monthly contribution is deducted from an employees salary, while 70%
is subsidized by the employer.

Philippine Health Insurance (PhilHealth) The Philippine Health Insurance
Corporation is the medical insurance company of the Philippines. All employees are
required to be contributors of this service (Republic Act 7875). Members are given
health and hospitalization subsidies should they or a dependent be hospitalized.
Monthly contributions are based on actual employee monthly salaries and the
amount of employee contribution is matched equally by the employer.

Home Development Mutual Fund (Pag-ibig Fund) Employers are also required
to contribute, on behalf of their employees, to the Home Development Mutual Fund
(Republic Act 7835). This company provides the lowest interest housing and land
acquisition loans to its members that are payable for up to 30 years. This gives
every Filipino worker an opportunity to own a house in easy-payment plans that can
directly be deducted from their monthly wages.

13th Month Pay Based on Presidential Decree No. 851, all Filipino employees are
entitled to a year-end bonus equivalent to one (1) month salary regardless of the
nature of their employment. The 13th month pay is to be given no later than
December 24 of every year a worker is employed.

Service Incentive Leave According to Article 95 of the Labor Code of the
Philippines, an employee who has worked for at least one (1) year in a company is
entitled to five (5) days leave of absence, with pay, every year. If the employee does
not avail of these paid leaves, the company may opt to have them do a mandatory
leave of absence, with pay, or convert these unavailed paid leaves to their cash
equivalents, to be given at the end of each year.
Meal and Rest Periods - According to Article 83 of the Labor Code of the
Philippines, employees are entitled to one (1) hour break for meals on an eight-hour
work day. Employees are also entitled to adequate rest periods in the morning and
afternoon, of short durations, that will be counted as hours worked. These rest
periods normally last for 15 minutes and can be used by employees as coffee or
snack breaks.
Overtime Pay and Holiday/Rest Day Pay - Under Article 87, an employee who
renders over eight (8) hours of service per day shall be given an overtime pay which
is equivalent to his regular hourly wage plus at least twenty-five percent (25%)
thereof. Under Article 93, if an employee is asked to work on their scheduled rest
day or on a non-working holiday, the employee shall be paid an additional
compensation of at least thirty percent (30%) of his regular wage.

Night Shift Differential According to Article 86, every employee shall be paid a
night shift differential of not less than ten percent (10%) of his regular wage for each
hour of work performed between ten oclock in the evening and six oclock in the
morning.
Other company benefits Other company benefits that are not government
mandated, but are usually given to employees anyway are:
Holiday/Christmas Bonus This is given in December, on top of the 13th month pay.
This is considered as the companys Christmas gift to their employees.
Mid-Year Bonus This is given in June, when the countrys school year starts. This
is to assist employees in school enrollment fees for their children. This is also known
as an educational assistance plan.
Cost of Living Allowances Some companies provide their employees with yearly
rice, medicine, and clothing allowances.
Paid Holiday and Vacation Leaves On top of the mandated 5 days/year leave with
pay, some companies give their employees additional paid holiday and vacation
leaves. The number of days allocated for these leaves usually vary from company to
company and depends on the number of years an employee has been of service to
the company.
All the benefits mentioned above, that are enjoyed by Filipino employees, are what
sweetens the deal more than the regular salaries that they receive. When faced with a
choice between two jobs that pay more or less the same in terms of salary, an employee will
always consider company benefits in order to make a sound decision. These benefits are
equivalent to 30-50% of an employees yearly wage, sometimes more. In the end,
companies who know how to take good care of their employees will have a lower employee
turn-over rate than those that give no more than government-required benefits.
Freelancers can opt to enroll themselves to SSS, PhilHealth, and HDMF as self-employed
individuals to avail of the benefits these institutions offer. However, if theyd wish to become
members, they would have to shoulder the entire contribution themselves to cover for both
employee contribution and employer subsidy. The amount of the contribution will depend
upon the income that freelancers will declare, and of course, benefits will also vary based
on the amount of monthly contributions.
On my next post, I will discuss the difference between full time jobs and part-time jobs.
REGION
WO No.
DATE OF
EFFECTIVITY
NONAGRICULTURE
AGRICULTURE
Plantation Non-Plantation
NCR a/
WO 18/October P 429.00 - 466.00

3, 2013
P 429.00
P 429.00
CAR b/
WO
16/February 3,
2014
263.00 - 280.00
247.00 268.00
247.00 - 268.00
I c/
WO
16/February 5,
2014
213.00 - 253.00
233.00
213.00
II d/
WO 16/January 247.00 - 255.00

5, 2014
235.00 243.00
235.00 - 243.00
III e/
WO 17/October 285.00 - 336.00

11, 2012
270.00 306.00
258.00 - 290.00
IV-A f/
WO 16/May 1,
2014
261.00 - 362.50
261.00 337.50
255.00 - 317.50
IV-B g/
WO
06/February 1,
2013
205.00 - 275.00
215.00 225.00
215.00 - 225.00
236.00
236.00
V h/
WO 16/ January 236.00 - 260.00

10, 2014
VI i/
WO 21/
November 29,
2013
245.00 - 287.00
255.00
245.00
VII j/
WO18/ March
21, 2014
295.00 - 340.00
275.00 322.00
275.00 - 322.00
VIII k/
WO 17/October
16, 2012
260.00
235.00241.00
220.50
IX l/
WO 18/ June
10, 2013
280.00
255.00
235.00
279.00 294.00
279.00 - 294.00
X m/
WO 17/June 20, 291.00 - 306.00

2013
XI n/
WO 18/June 1,
2014
312.00
302.00
302.00
XII o/
WO 18/Aug. 1,
2014
270.00
252.00
252.00
XIII p/
WO 12/May 21,
2013
268.00
258.00
238.00
ARMM q/ WO 15/ Feb. 1,

2014
250.00
250.00
250.00
a/ Provides P10 increase in basic pay upon effectivity and integration of the P15
COLA under W.O. No. NCR-17 into the basic pay on January 1, 2014.
b/ Granted P1, P8.00 & 6.00 increase in basic pay and P2, P6, P12 & P17 COLA
integration.
c/
Granted P8.00-P20.00 wage increase depending on asset size.
d/ Granted P9.00-17.00 increase in basic pay for retail/service establishments
employing
less
than
10
workers.
e/ Provided integration of the P24 COLA and granted P6-P8 wage increase
f/ Granted P2-90 wage increase (for workers receiving belowP255) for 5 years;
P12.50
Conditional
Temporary
Productivity
Allowance
(for
workers
receiving
above)
g/
Granted
P5
COLA
&
P1-66
increase
in
basic
pay
h/
Granted
P8.00
increase
in
basic
pay.
i/
Granted
P10.00
wage
increase
j/
Granted
P13.00
COLA
k/ Provided P10 COLA integration and additional new COLA of P7
l/
Granted
P13
wage
increase.
m/ Granted P20 increase (P10 in basic pay & P10 COLA), the COLA will be
integrated
into
the
basic
pay
on
January
1,
2014.
n/ Granted P11 increase in basic pay upon effectivity & P5 COLA effective Dec.
1, 2014; integrated the P15 COLA under WO No. 17 into the basic pay.
o/ Integration of P10 to P14 COLA under WO No. 17, into the basic pay and
granted P5 COLA effective Jan. 1 2015 and P3-P4 basic wage increase due to
simplification
of
industry
classification.
p/ Granted P10 wage increase in basic pay & integrated into the basic pay P2
COLA
under
W.O.
No.
11..
q/
Granted
P18
wage
increase.
Source: National Wages and Productivity Commission
Updated: 08 August 2014
2014 PHILIPPINES BENEFITS SUMMARY

Employees are eligible for most benefits program on the first day of employment.
Holidays: Seventeen (17) paid holidays (regular and special) per year as provided
under Proclamation No.
655 (2014 Declared Holidays)
Vacation: Thirteen (13) vacation days, with additional 1 vacation day every year
starting on 2nd year of
service and convertible to cash at the end of each year. Maximum total vacation
leave is 18 days.
Retirement: The plan, which is 100% funded by the company calculated at one
months base salary per
year of service based on the employees latest basic rate upon normal retirement at
age 60, death or total
and permanent disability. Early retirement benefit can be available to 10 years of
service equal to 50% of
normal retirement benefit.
Healthcare: The plan provides a comprehensive health care coverage for employees
and eligible
dependents through Medicard accredited hospitals and doctors nationwide. The
company pays 100% of
the cost of employees coverage while contributing 53% of the cost of dependents
coverage. The company
also maintains an onsite medical clinic manned by a company nurse per shift and a
group of company
doctors who reports to the clinic six days a week on specified time schedules
providing free medical
consultations, emergency medicines, minor and first-aid treatments and health
counseling. As part of
preventive health care, free vitamins are also provided to employees while on duty
and all employees are
required to undergo an annual medical, dental and eye check-up conducted onsite.
Dental: Free dental benefits are likewise provided with two (2) dentists alternately
visiting the
factory rendering unlimited dental consultations, unlimited simple tooth extractions
and
permanent/temporary fillings, annual oral prophylaxis, re-cementation of jacket
crown inlays and
onlays, simple adjustment of dentures and emergency treatments.

Outpatient Medicine Reimbursement: The Company reimburses expenses for
outpatient
medicines for employees and dependents. Medicines for out-patient employee is
100%
reimbursable while for dependents up to a total amount of Php2,000 per
employee/year. Approval
of reimbursement requires submission of prescription and official receipts.
Maternity Grant: assistance is provided to regular female employees & legal
spouse of male
employees: Php 3,000 for miscarriage; Php 1,500 for home delivery; Php 5,000 for
normal delivery;
80%-20% for caesarian delivery (requires Philhealth membership).
Leaves:
Sick Leave: Twelve (12) days per year for the first two years of service. With
additional 1 sick leave
every year starting on 2nd year of service. Maximum total sick leave is 15 days. All
unused leave
days are convertible to cash in December of each year.
Paternity Leave: All legally married male employees are eligible for 7 working
days up to four (4)
child birth or miscarriage of legitimate spouse to be availed within sixty (60) days
from deliver /
miscarriage.
Bereavement: Three (3) days in the event of death of an immediate family
member which includes
the employees children, parents, grandparents, brother, sister, spouse, and
parents-in-law.
Solo Parent Leave: Seven (7) working days parental leave for solo parents
certified by the DSWD
Calamity Leave: Two (2) days leave for employees who were affected by flood,
fire and typhoon
(must be supported by a Government proclamation)
Magna Carta for Women: Sixty (60) calendar days leave. It is given to all female
employees who
underwent surgery caused by gynecological disorders and who have rendered at
least six (6)
months continuous aggregate employment service for the last twelve (12) months
prior to surgery. DISABILITY/LIFE INSURANCE: Employee life insurance is 100%
funded by the Company, provides
insurance benefits to the employees designated beneficiaries in the event of
disability, terminal/critical
illness and death due to illness or accident. The amount of benefits is specified
below:
Life Insurance Benefit Limit - 26 x monthly base salary base on the employees
latest basic
rate.
Accident, Death and Disability Benefit Limit - 13 x monthly base salary based on
the
employees latest basic rate.
Total Permanent Disability Benefit Limit - 26 x monthly base salary based on the
employees
latest basic rate.
Terminal Illness Benefit Limit 50% of Life, maximum of Php 3.5M
Critical Illness Benefit 60% of Life, maximum of Php 1M
OTHER BENEFITS:
13th month: The Company grants a 13th month pay equivalent to one (1)
months pay to all
eligible associates every November of each year. Associates with at least one (1)
year of service as
of November 20th shall receive a full bonus equivalent to one (1) months basic
monthly salary
while those less than one (1) year of service shall receive a pro-rated bonus
provided they have
worked for 1 month.
Mid-year Bonus: The company grants bonus equivalent to a half month pay. All
probationary and
regular employees are eligible to this bonus.
Rice Allowance: The Company shall provide rice subsidy to all eligible associates
in cash which
shall be incorporated in the payroll, tax-free, every month.
Meal Subsidy: The Company provides its associates with a meal subsidy to
partially cover for
meals every day that the associate reports for work and to alleviate his daily
expenses. An
employee must have rendered the minimum number of hours per day to get a full
or half-meal
credit.
Tuition Fee Subsidy: All employees are eligible upon hire. Amount of subsidy: P
2,500 given in
April of each year.
Employees Educational Assistance Program: Provides reimbursement of duly
approved
educational expenses upon satisfactory completion of the course and provided that
the degree or
course taken is relevant to the employees present or prospective job assignment.
Maximum
reimbursement per term is P 10,000. All regular employees are eligible to this
benefit.
Kapwa Tulong Program: Cash assistance provided to an employee in cases of
death of
immediate dependents or calamity. The company matches the contribution of

employees thru the
Kapwa Tulong Program which is administered through salary deduction.
Attendance Bonus: A bonus equivalent to one day pay given to all Regular and
Probationary
Employees who are Job Grade 8 & below, and all Technicians. Associates must have
perfect
attendance in one (1) month with no tardiness, undertime or unexcused absence.
Prolong Sickness (PSL) Benefits: It is given to all employees with at least six
months of service.
Purpose of this benefit is to provide regular employees with salary protection during
recuperation
period from certain medical conditions. The condition may include but not limited
to;
o Chronic ailments requiring at least one month of treatment whether through
hospitalization
or outpatient basis.
o Major Operative procedures such as, but not limited to, general and specialized
surgeries,
and major gynecological operation. Obstetrical surgical procedures such as
caesarian
section are not included under this benefit.
o Post-injury conditions which warrant long recuperation period.
Loyalty Token Employees are recognized for their loyal and dedicated service to
the company
for every five years of continuous service by the way of gift check or token, plus
plaque of
appreciation during the service award ceremony.
Mandatory Employee Benefits - Philippines

Employee Benefits, Incentives, Coverage, and Contributions
The Philippine Social Security System consists of the following bodies:
Social Security System (SSS) - The SSS was created to provide private
employees and their families with protection against disability, sickness, old age, and
death. The Government Service Insurance System (GSIS) is an equivalent system for
Philippine government employees.
Home Development Mutual Fund (HDMF) - The HMDF is a provident
savings system providing housing loans to private and Philippine government

employees, and to self-employed persons who elect to join the Fund.
Philippine Health Insurance Corporation (PhilHealth) - PhilHealth is
administered by the Philippine National Health Corporation, which is designed to

provide employees with a practical means of paying for adequate medical care in the
Philippines.
Coverage in the Philippines

All persons under the age of 60 who earn income from employment of more than P1,000
per month are required to contribute to the SSS. Government employees are required to
contribute to the equivalent GSIS.
Employees are also required to contribute to the HDMF and PhilHealth. Membership is
optional, however, for self-employed persons. Foreign personnel are also required to make
contributions. Opting out is not possible, except in limited circumstances under some of the
Philippines' international social security agreements. In practice, however, the potential
savings involved are generally insufficient to justify the efforts required to effect the
exemption.
Contributions in the Philippines

Employee contributions for social security are deducted from employee's salary payments.
These are withheld by the employer on a monthly basis.
Employers in the Philippines are also required to make contributions. SSS contributions are
roughly 180% of the employee contributions, with the maximum employer contribution of
P1,090 per month. HDMF and Philhealth contribution by employers in the Philippines are
roughly the same with the maximum for 2008 set at P100 for HDMF and P437.50 for
PhilHealth monthly (for Philhealth, effectivity is from January to December 2013 only).
C. Basis
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 everyday of the month,
including unworked rest days, special days, and regular holidays. Factor
365 days in a year is used in determining the equivalent monthly salary of
monthly-paid employees.
Daily-paid employees are those who are paid on the days they actually
worked and on unworked regular holidays.
Computation of the Estimated Equivalent Monthly Rate (EEMR) of
Monthly-Paid and Daily-Paid Employees
For monthly-paid employees:
Factor 365 days in a year is used in determining the equivalent annual
and monthly salary of monthly-paid employees. To compute their Estimated
Equivalent Monthly Rate (EEMR), the procedure is as follows:
Applicable Daily Rate (ADR) x 365 = EEMR
12 months
Where 365 days/year = 298 ordinary working days
52 rest days
12 regular holidays
3 special days
365 Total equivalent no. of days/year
For daily-paid employees:
The following factors and formula may be used in computing the EEMR
of different groups of daily-paid employees for purposes of entitlement to

minimum wages and allied benefits under existing laws:
1. For those who are required to work everyday, including Sundays or
rest days, special days and regular holidays 6
Applicable Daily Rate (ADR) x 393.5 = EEMR
12 months
Where 393.50 days/year = 298 ordinary working days
24 regular holidays x 200%
67.60 52 rest days x 130%
3.9 3 special days x 130%
393.50 Total equivalent no.
days/year
2. For those who do not work and are not considered paid on Sundays or
rest days
12 months
12 regular holidays
3 special days (if considered paid; if
actually worked, this is
equivalent to 3.9 days)
313 Total equivalent no. of days/yeara
3. For those who do not work and are not considered paid on Saturdays
and Sundays or rest days
12 months

12 regular holidays
3 special days (if considered paid; if
actually worked, this is equivalent
to 3.9 days)
261 Total equivalent no. of days/yearb
Without prejudice to existing company policies, practices and/or

agreements, the above formula are merely suggestions and may be used
as guides in determining the equivalent monthly minimum wage rates.
a Factor 310 may be used instead of 313 if the 3 special days are not considered
paid
b Factor 258 may be used instead of 261 if the 3 special days are not considered
paid 7
E. Minimum Wage and Rights of Kasambahay
The minimum wage of Kasambahay shall not be less than the following:
a) Two thousand five hundred pesos (P2,500.00) a month for those
employed in the National Capital Region (NCR);
b) Two thousand pesos (P2,000.00) a month for those employed in
chartered cities and municipalities; and
c) One thousand five hundred pesos (P1,500.00) a month for those
employed in other municipalities.
After one year from the effectivity of the Batas Kasambahay and
periodically thereafter, the Regional Tripartite Wages and Productivity
Boards (RTWPBs) shall review and if proper, determine and adjust the
minimum wage rates of Kasambahay. The RTWPBs shall conduct
consultations/hearings with stakeholders prior to the issuance of a wage

order.
Rights and Benefits of Kasambahay:
1. Minimum wage;
2. Other mandatory benefits, such as the daily and weekly rest
Periods;
3. Service Incentive Leave;
4. 13th month pay;
5. Freedom from employers interference in the disposal of
wages;
6. Coverage under the SSS, PhilHealth and Pag-IBIG laws;
7. Standard of treatment;
8. Board, lodging and medical attendance;
9. Right to privacy;
10. Access to outside communication;
11. Access to education and training;
12. Right to form, join, or assist labor organization;
13. Right to be provided a copy of the employment contract;
14. Right to certificate of employment;
15. Right to terminate the employment; and
16. Right to exercise their own religious beliefs and cultural practices.
F. 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, such as when there is a 8
substantial slump in the demand for his/her goods or services or when
there is lack of raw materials, the employer may deduct the wages
corresponding to the days taken off from the workweek, consistent with the
principle of no work, no pay. This is without prejudice to an agreement or
company policy which provides otherwise.
G. 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
which 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 a fine of not less than Twenty-five Thousand Pesos
(P25,000.00) nor more than One Hundred Thousand Pesos (P100,000.00)
or imprisonment of not less than two (2) years nor more than four (4)
years, 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 for 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 entitys responsible officers, including, but not limited to,
the president, vice-president, chief executive officer, general manager,
managing director or partner.
H. Barangay Micro Business Enterprises (BMBEs)
BMBEs or business enterprises engaged in the production, processing
or manufacturing of products or commodities including agro-processing,
trading and services whose total assets, excluding the land on which the
particular business entitys office, plant and equipment are situated, are
not more than Three Million Pesos (P3,000,000) shall be exempt from the
coverage of the Minimum Wage Law: Provided, that all employees shall
still be entitled to the same benefits given to regular employees such as
social security and healthcare benefits. 9
To avail of the benefits, the BMBE should register with the city or
municipality having jurisdiction over the same and must secure a
Certificate of Authority authorizing them to operate as such.
The BMBE workers and owners shall agree on the acceptable wage
rates based on the wage advisories issued by the RTWPBs.
I. Minimum Wage of Workers Paid by Results
All workers paid by results, including homeworkers and those who are
paid on piece rate, takay, pakyaw or task basis, shall receive not less than
the prescribed minimum wage rates under the Regional Wage Orders for
normal working hours which shall not exceed eight (8) hours a day, or a
proportion thereof.
The wage rates of workers who are paid by results may be determined
through time and motion studies or consultation with representatives of
employers and workers organizations in a tripartite called by the DOLE
Secretary.
J. Minimum Wage of Apprentices, Learners, and Persons with disability
Wage of apprentices and learners shall in no case be less than seventyfive
(75%) percent of the applicable minimum wage rates.
Apprentices and learners are those who are covered by apprenticeship
and learnership agreements duly approved by the Technical Education and
Skills Development Authority (TESDA).

A qualified disabled employee 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 (Sec. 1 of
RA 10524 or the Magna Carta for Persons with disability.

13th Month Pay Law

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13th Month Pay Law

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13th Month Pay Law

Employee Wages and Benefits 2010-02-21

Employees Covered by 13th Month Pay Law.

Amount of 13th Month Pay.

Time of Payment of 13th Month Pay.

Employees excluded from coverage of 13th month pay law.

Those covered under the civil service law;

Household helpers and persons in the personal service of another; and

13th Month Pay of Certain Types of Employees

Commission as an incentives or encouragement to ensure productivity, i.e.,

Commission as a direct remuneration for service rendered.

Commission that take the form of an incentives or encouragement to ensure

Assuming an employee earning a basic salary of P12,000.00 per month had

For 2 to 3 years, Sevilla Trading, allegedly by mistake, added the night

Employees paid according to boundary system are not entitled to 13th mo

Presidential Decree No. 851, effective December 16, 1975.

Revised Rules and Regulations Implementing Presidential Decree No. 851

Determining compensable hours worked

Normal Hours of Work

Hours worked definition

All the time during which an employee is required to be on duty or to be at a

All the time during which an employee is suffered or permitted to work.

Shortened meal periods

In case of actual or impending emergencies or there is urgent work to be

Where the work is necessary to prevent serious loss of perishable goods.

Principles in determining hours worked

If the work performed was necessary, or it benefited the employer, or the

The time during which an employee is inactive by reason of interruptions in

Lectures, meetings, training programs

Attendance is outside of the employees regular working hours;

Attendance is in fact voluntary; and

Rule I, Book Three, Omnibus Rules Implementing the Labor Code.

Determining compensable hours worked

Normal Hours of Work

Hours worked definition

All the time during which an employee is required to be on duty or to be at a

All the time during which an employee is suffered or permitted to work.

Shortened meal periods

In case of actual or impending emergencies or there is urgent work to be

Where the work is necessary to prevent serious loss of perishable goods.

Principles in determining hours worked

If the work performed was necessary, or it benefited the employer, or the

The time during which an employee is inactive by reason of interruptions in

Lectures, meetings, training programs

Attendance is outside of the employees regular working hours;

Attendance is in fact voluntary; and

Rule I, Book Three, Omnibus Rules Implementing the Labor Code.

Determining compensable hours worked

Employee Wages and Benefits, Labor Fundamentals 2009-09-05

Normal Hours of Work

Hours worked definition

All the time during which an employee is required to be on duty or to be at a

All the time during which an employee is suffered or permitted to work.

Shortened meal periods

In case of actual or impending emergencies or there is urgent work to be

Where the work is necessary to prevent serious loss of perishable goods.

Principles in determining hours worked

If the work performed was necessary, or it benefited the employer, or the

The time during which an employee is inactive by reason of interruptions in

An employee who is required to remain on call in the employers premises or so

Lectures, meetings, training programs

Attendance is outside of the employees regular working hours;

Attendance is in fact voluntary; and

Rule I, Book Three, Omnibus Rules Implementing the Labor Code.