Blanco, Harley David R.

Basic Philippine Labor Laws and Regulations

Employers, including small businesses, may implement policies and impose terms and conditions of employment as they deem fit given their operating and profitability requirements. These policies and employment terms and conditions however must be consistent with mandated labor policies set forth in the Labor Code of the Philippines.Under the Labor Code, your employees are entitled to compensation or wages, overtime pay, holiday and premium pay, service charges and tips in service businesses, SSS, EC and NHI remittances, service incentive leaves, and retirement pay.CompensationRegular compensation

You must pay your employees no lower than the minimum wage rates prescribed by law. The minimum wage rates are based on the normal working hours of eight (8) hours a day.

Businesses Exempt from Minimum Wage Laws

If your company is a service establishment with not more than 10 employees, a distressed establishment with a deficit of 20% or more of current paid-up capital, or a new business enterprises outside the National Capital Region (NCR) or is in an export processing zones, you may pay your employees below minimum wage rates on condition that you file a request for exemption from compliance with wage orders with the National Wage and Productivity Council (NWPC).

If you do not pay minimum wages, you will be subject under Republic Act No. 8188 to a fine not less than Twenty-five thousand pesos (P25.000) nor more than One hundred Thousand pesos (P100.000) 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. You may also be ordered to pay an amount equivalent to double the unpaid benefits owing to the employees. Payment of this indemnity may not absolve you of criminal liability.

Computation of Wages

The salaries and wages of your employees depend on whether you pay them on a monthly or daily basis.

Monthly-paid employees are those whom you pay every day of the month, including unworked rest days, special days and regular holidays.

Daily-paid employees are those whom you pay for days actually worked and on unworked regular holidays.

The EMR (equivalent monthly rate) of your employees is computed as follows:

Monthly Paid Employees

The formula for the EMR of monthly paid employees is:

EMR = (Applicable Daily Rate x 365)/12

The factor of 365 days consists of: 302 ordinary working days, 51 rest days, 10 regular holidays, and 2 special days.

Daily-paid employees:

The EMR of daily-paid employees depends on whether they are required to work on rest days and holidays.

The EMR ofemployees who are required to work every dayincluding Sundays or rest days, special days and regular holidays is:

EMR = (Applicable Daily Rate x 391.50)/12

The factor of 391.5 days consists of: 302 ordinary working days, 20.60 (9 regular holidays x 200% plus one regular holiday/Sunday*260%), 66.3 (51 rest days x 130%), 2.6 (2 special days x 130%).

The EMR ofemployees who do not work and are not considered paid on Sundays or rest daysis:

EMR = (Applicable Daily Rate x 314)/12

The factor of 314 days consists of: 302 ordinary working days, 10 regular holidays, 2 special days (if actually worked, equivalent to 2.6 days).

The EMR ofemployees who do not work and are not considered paid on Saturdays and Sundays or rest days

EMR = (Applicable Daily Rate x 262)/12

The factor of 262 days consists of: 250 ordinary working days, 10 regular holidays, 2 special days (if actually worked, equivalent to 2.6 days). Factor of 260 maybe used if the 2 special days are not worked and are not considered paid.

Workers Paid by Results

Your workers who are paid by results, including homeworkers and those who are paid on piecework, takay, pakyaw, or task basis, shall receive not less than the applicable statutory minimum wage rates prescribed under the Regional Wage Orders for normal working hours, or a portion thereof.

Adjustments in the AMW (applicable minimum wage rate) are computed as follows:

is:1. Amount of increase in AMW Previous AMW x 100 = % increase2. Existing rate/piece x % increase = Increase in rate/piece;3. Existing rate/piece + increase in rate/piece = Adjusted rate/piece;Apprentices, Learners and Handicapped Workers

If you have apprentices, learners or handicapped workers, you need to pay them no less than seventy five percent (75%) of the applicable statutory wage rates. Apprentices and learners are those who are covered by apprenticeship/learnership agreements duly approved by the DOLE.

Additional Compensation

Holiday Pay

You need to pay your employees holiday pay when you require them to work on legal, declared holidays or special days.

Regular holidays include:DateHoliday

January 1New Years Day

Movable DateMaundy Thursday

Movable DateGood Friday

April 9Araw ng Kagitingan

May 1Labor Day

June 12Independence Day

Last Sunday of AugustNational Heroes Day

November 30Bonifacio Day

December 25Christmas Day

December 30Rizal Day

Your employees who work on a regular holiday (for work within 8 hours) are entitled to twice (200%) their basic wage.

Where the holiday falls on their scheduled rest day, they are entitled to an additional 30% of the employees regular holiday rate of 200% or a total of at least 260%.

All covered employees are entitled to holiday pay when they are on leave of absence with pay. Those who are on leave of absence without pay on the day immediately preceding a regular holiday may not be paid the required holiday pay if they do not work during the regular holiday.

National Special Days

There are two national special days: All Saints Day on November 1 and Last Day of the Year, December 31. During these days, the principle of no work, no pay applies. Workers who were not required or permitted to work on those days are not entitled to any compensation. This is without prejudice to any voluntary practice or provision in the Collective Bargaining Agreement (CBA) providing for payment of wages and other benefits for days declared as special days.

Employees who work on special days are entitled to additional compensation of not less than 30% on top of the basic pay or a total of 130%. If the special day is also the persons rest day, he is entitled to at least 50% over and above the basic pay or a total of 150%.

Muslim Holidays

There are five (5) recognized Muslim holidays, namely:a. Amun Jadid (New Year), which falls on the first day of the lunar month of Muharramb. Maulid-un-Nabi (Birthday of the Prophet Muhammad), which falls on the twelfth day of the third lunar month of Rabiul- Awwalc. Lailatul Isra Wal Mi Raj (Nocturnal Journey and Ascension of the Prophet Muhammad), which falls on the twenty-seventh day of the seventh lunar month of Rajabd. Id-ul-Fitr (Hari Raya Pausa), which falls on the first day of the tenth lunar month of Shawwal commemorating the end of the fasting seasone. Id-ul-Adha ( Hari Raha Haji), which falls on the tenth day of the twelfth lunar month of Dhul-Hijja.If your business is located in the provinces of Basilan, Lanao del Norte, Lanao del Sur, Maguindanao, North Cotabato, Sultan Kudarat, Sulu, Tawi-Tawi, Zambaonga del Norte and Zamboanga del Sur and in the cities of Cotabato, Iligan, Marawi, Pagadian and Zamboanga, you need to pay your employees holiday pay.

Premium Pay

You need to pay your employees premium pay or additional compensation if you require them to perform work on nonworking days, such as rest days and special days.

The current premium pay rates are as follows:WorkPremium Rate(of daily rate)Total Rate

Work on rest days or special days30%130%

Work on rest day which is also a special day50%130%

Work on regular holiday which also a rest day30% of 200%260%

You may opt not to pay your managerial employees, workers paid by results or field personnel the above premium pay.

Overtime Pay

If you require your employees to perform work beyond eight (8) hours a day, you need to pay them additional compensation as follows:WorkOvertime Rate

Work > 8 hours on ordinary working days25%

Work > 8 hours on rest day or special or regular holiday30%

Night Shift differential

If your employees work at night between 10:00 pm and 6:00 am, you are required to pay them Night Shift Differential (NSD), as follows:WorkRate (of hourly rate)Pay

Night shift (10pm to 6 am) considered regular work

Ordinary day10%110%

Rest day, special day or regular holiday10% of rest day, special day or holiday rate110% of rest day, special day or holiday rate

Night shift considered overtime work

Ordinary day10% of 125%110% of 125% of basic rate

Rest day, special day or regular holiday10% of rest day, special day or holiday rate110% of rest day, special day or holiday rate

If you employ not more than five workers and you are a retail or a service establishment, you need not pay night shift differential. You also do not need to pay your managerial employees and field personnel the NSD.

Service Incentive Leave (SIL)

If your employees have been with you already for at least one (1) year, whether service is continuous or broken, you need to pay them Service Incentive Leave (SIL) equivalent to five days. The SIL may be used for sick and vacation leave purposes. If the SIL is not used up within the year, you may commute or pay its money equivalent at the end of the year. In computing the 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.

You need not grant SIL if your employees are already enjoying this benefit such as when they are already given a vacation leave of at least five days.

You also need not accord SIL to your managerial employees and field personnel. If you are employing less than ten employees, you need not also pay them SIL.

Service Charges

If you are a service establishment, such as hotels, restaurants and night clubs, you may charge an additional 10% to your customers bill for distribution to employees.

If you collect service charges, your employees are entitled to an equal share in the 85% of the total of such charges, except managerial employees. You may retain the remaining 15% to answer for losses and breakages and for distribution to managerial employees, at your discretion.

You must distribute the shares of the employee in the service charges no less than once every two (2) weeks or twice a month at intervals not exceeding sixteen (16) days.

If you stop collecting service charges, you are required to provide and integrate into the basic wage of your employees, the average share previously enjoyed by them for the past twelve (12) months immediately preceding such stoppage.

Tips

If you do not collect service charges but practice the pooling of tips given voluntarily by your customers to your employees, you should ensure that the pooled tips are monitored, accounted and distributed in the same manner as the service charges.

13th Month Pay

You also need to pay your rank and file employees 13th month pay no later than December 24 of every year. One half (1/2) of the required 13th month pay may be made before the opening of the regular school year and the other half on or before the 24th of December of every year. The minimum 13th month pay is not less than 1/12 of the total basic salary earned by an employee within a calendar year.

The "basic salary" includes all remunerations or earnings paid for services rendered. It does not include allowances and monetary benefits which are not considered 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.

Retirement Pay

If you have employees who have reached the age of 60 years or more but not beyond 65 years old, you need to pay them retirement. However, if you are a retail, service and agricultural establishment with no more than ten (10) employees, you are exempted from paying retirement pay.The minimum retirement pay is one-half (1/2) month salary for every year of service. A fraction of at least six (6) months is considered as one whole year."One-half month salary" includes:1. 15 days salary based on the latest salary rate;2. cash equivalent of 5 days of service incentive leave;3. one-twelfth (1/12) of the 13th month payThese benefits are over and above those granted by the Social Security System.

SSS Registration

You are also required to enroll your employees under the Social Security System (SSS) program, which provides insurance and protection for private-sector employees, including resident foreign employees. SSS benefits include disability pension, retirement,funeral benefit, sickness allowance, maternity and paternity leave and loans.

If you are the owner of a single proprietorship business, you should accomplish and submit SSS Forms R-1 (Employer's Data Record) and R-1A (Initial or Subsequent List of Employees). If your business is a partnership or a corporation, you also need to submit your articles of partnership or incorporation.

You should also require your employees to secure an SS number and that that they are reported for coverage under the SSS;

You must report all employees for SS coverage within thirty (30) days from the date of employment by submitting an accomplished SSS Form R-1A (Employment Report) at the nearest SSS office. You are also required to deduct from your employees salaries the monthly SS contributions based on the schedule of contributions and remit these contributions to any SSS-accredited bank/SSS Head Office/ SSS selected branches on or before the 10th day following the month when said contributions are due and applicable.

SSS Benefits

The Social Security System (SSS) provides insurance and protection for private-sector employees, including resident foreign employees. SSS benefits include disability pension, retirement, funeral benefit, sickness allowance, maternity and paternity leave and loans.

Maternity Benefits

You must advance maternity benefits to your female employees whether married or unmarried equivalent 60 days for normal delivery, abortion or miscarriage or 78 days for caesarian section delivery. The rate is equivalent to one hundred percent (100%) of the average daily salary credit. Your female employees should be SSS members at the time of delivery, miscarriage or abortion, must have given the required notification to the SSS thru you; and you must have paid at least three months of maternity contributions within the twelve-month period immediately before the date of contingency.

Maternity benefits, like other benefits granted by the SSS, are granted to employees in lieu of wages and is not included in computing the employees 13th month pay.

Paternity Leave under Republic Act No. 8187

You are also required to grant paternity leave or time off from work to all your married male employees, regardless of employment status, (e.g. probationary, regular, contractual, project basis) to allow them to lend support to their wives during the period of recovery and/or in the nursing of their newborn child.

The paternity leave consists of seven (7) days with full pay for the first four deliveries of the employees lawful wife. Availment of the paternity leave may be after the delivery, without prejudice to an employers policy of allowing the employee to avail of the benefit before or during the delivery, provided that the total number of days shall not be more than seven (7) days for each covered delivery.

Tax Compliance

You must also ensure that you are withholding the proper taxes due on the compensation, benefits and other taxable emoluments paid to all your employees.

Employee DisciplineAll employees are expected to meet performance standards and behave appropriately in the workplace. Disciplinary or corrective action is a process of communicating with the employee to improve unacceptable behavior or performance. You may take disciplinary action when other methods such as coaching and performance appraisal have not been successful. In cases of serious misconduct, you may choose to proceed straight to disciplinary action up to and including termination.Contact Human Resources before taking disciplinary action to help you determine whether discipline is the best approach to problem-solving in a particular situation.

In carrying out disciplinary action be sure to: Build trust and maintain a professional manner by keeping the disciplinary process confidential between you and the employee Make a careful diagnosis of the problem to determine whether disciplinary action is appropriate Provide specific examples of performance discrepancies or work rule violations so the employee fully understands what needs correction Allow the employee ample opportunity to explain so that you have all the facts Make sure discipline is the appropriate tool. Would coaching or performance appraisal be sufficient to get the employee's attention? When you take disciplinary action, make sure the punishment fits the crime Help the employee improve performance by providing specific recommendations and requirements Communicate clearly so the employee understands the consequences if performance or conduct does not improveIt is the policy of some companies that supervisory efforts should be concentrated on the prevention of serious personnel problems rather than on disciplining employees for misconduct. However, supervisors have the ability to discipline or discharge an employee without cause. An employee being disciplined should be told what he/she has done wrong and should clearly understand what is expected of him/her.

For repeated but relatively minor incidents of substandard performance, misconduct, or rule violations, corrective counseling and disciplinemay be progressive.The normal sequence of action is:1. Initial discussion;2. Oral Warning;3. Written Warning;4. Suspension;5. Discharge.Important Note:While it is a good practice to contact Human Resources early in the corrective action process, you must consult with Human Resources prior to any disciplinary action that affects an individuals pay. These actions include:suspension, demotion or termination.

Safety in the WorkplaceYour safety is the constant concern of this organization. Every precaution has been taken to provide a safe workplace. [Title of the person in charge of safety] makes regular inspections and holds regular safety meetings. The [title] also meets with management to plan and implement further improvements in our safety program. Common sense and personal interest in safety are still the greatest guarantees of your safety at work, on the road, and at home. We take your safety seriously and any willful or habitual violation of safety rules will be considered cause for dismissal. [Name of public entity] is sincerely concerned for the health and well being of each employee.The cooperation of every staff member is necessary to make this entity a safe place in which to work. Help yourself and others by immediately reporting unsafe conditions or hazards to your supervisor or to a member of the safety committee. Give earnest consideration to the rules of safety presented to you by posters, signs, discussions with your supervisor, posted department rules, and regulations published in the handbook. Begin right by always thinking of safety as you perform your job, or as you learn a new one.Accident reportingAny injury at workno matter how smallmust be reported immediately to your supervisor and receive first-aid attention. Serious conditions often arise from small injuries if they are not cared for at once.Safety rules and guidelinesTo ensure your safety, and that of your co-workers, please observe and obey the rules and guidelines appropriate to the general populace or specific jobs: Observe and practice the safety procedures established for the job. In case of sickness or injury, no matter how slight, report at once to your supervisor. In no case should an employee treat his or her own or someone elses injuries or attempt to remove foreign particles from someone elses eye. In case of injury resulting in possible fracture to legs, back, or neck, or any accident resulting in an unconscious condition, or a severe head injury, the employee is not to be moved until medical attention has been given by authorized personnel. Do not wear loose clothing or jewelry around machinery. It may catch on moving equipment and cause a serious injury. Never distract the attention of another person, as you might cause him or her to be injured. If necessary to get the attention of another person, wait until it can be done safely. Where required, you must wear protective equipment, such as goggles, safety glasses, masks, gloves, hair nets, etc. appropriate to the task. Safety equipment such as restraints, pull backs, and two-hand devices are designed for your protection. Be sure such equipment is adjusted for you. Pile materials, skids, bins, boxes, or other equipment so as not to block aisles, exits, firefighting equipment, electric lighting or power panel, valves, etc. Fire Doors and Aisles Must be Kept Clear! Keep your work area clean. Use compressed air only for the job for which it is intended. Do not clean your clothes with it, and do not fool around with it. Observe No Smoking regulations. Shut down your machine before cleaning, repairing, or leaving it. Tow motors and lift trucks will be operated only by authorized personnel. Walk-type lift trucks will not be ridden and no one but the operator is permitted to ride the tow motors. Do not exceed a speed that is safe for existing conditions. Running and horseplay are strictly forbidden. Do not block access to fire extinguishers. Do not tamper with electric controls or switches. Do not operate machines or equipment until you have been properly instructed and authorized to do so by your supervisor. Do not engage in such other practices as may be inconsistent with ordinary and reasonable common sense safety rules. Report any unsafe condition or acts to your supervisor. Help to prevent accidents. Use designated passages when moving from one place to another; never take hazardous shortcuts (i.e., between moving equipment or across roadways). Lift properlyuse your leg muscles, not your back muscles. For heavier loads, ask for assistance. Do not adjust, clean, or oil moving machinery. Keep machine guards in their intended places. Do not throw objects. Clean up spilled liquid, oil, or grease immediately. Wear hard-sole shoes and appropriate clothing (i.e., shorts or mini dresses are not permitted). Place trash and paper in proper containers and not in cans provided for cigarette butts.Safety checklistIt is every employees responsibility to be on the lookout for possible hazards. If you spot one of the conditions on the following listor any other possible hazardous situationreport it to your supervisor immediately. Slippery floors and walkways Tripping hazards, such as hose links, piping, etc. Missing (or inoperative) entrance and exit signs and lighting Poorly lighted stairs Loose handrails or guard rails Open, loose or broken windows Dangerously piled supplies or equipment Unlocked doors and gates Electrical equipment left operating Open doors on electrical panels Leaks of steam, water, oil, other liquids Blocked aisles Blocked fire extinguishers, hose sprinkler heads Blocked fire doors Evidence of any equipment running hot or overheating Oily rags Evidence of smoking in non-smoking areas Roof leaks Directional or warning signs not in place Safety devices not operating properly Machine, power transmission, or drive guards missing, damaged, loose, or improperly placedSafety equipment

Your supervisor will see that you receive the protective clothing and equipment required for your job. Use them as instructed and take care of them. You will be charged for loss or destruction of these articles only when it occurs through negligence.

Safety shoes

The organization will designate which jobs and work areas require safety shoes. Under no circumstances will an employee be permitted to work in sandals or open-toe shoes. A reliable safety shoe vendor will visit the entity periodically. Notices will be posted prior to the visits.

Safety glasses

The wearing of safety glasses by all shop employees and volunteers is mandatory. Strict adherence to this policy can significantly reduce the risk of eye injuries.

Seat belts

All paid and volunteer staff must use seat belts and shoulder restraints (if available) whenever they operate a vehicle on organization business. The driver is responsible for seeing that all passengers in front and rear seats are buckled up.

Good housekeeping

Your work location should be kept clean and orderly. Keep machines and other objects (merchandise, boxes, shopping carts, etc.) out of the center of aisles. Clean up spills, drips, and leaks immediately to avoid slips and falls. Place trash in the proper receptacles. Stock shelves carefully so merchandise will not fall over upon contact.

Boosting Employee MoraleRealize that the first step begins with the employer.To recognize the value of your employees is key. Many business have the attitude that employees are a 'dime a dozen'. If one leaves, another can be found to take their place without much trouble on their part. While this maybe true to some extent, the cost of advertising, interviewing and training the new employee can be prohibitive.Realize that the first step begins with the employer.To recognize the value of your employees is key. Many business have the attitude that employees are a 'dime a dozen'. If one leaves, another can be found to take their place without much trouble on their part. While this maybe true to some extent, the cost of advertising, interviewing and training the new employee can be prohibitive.Provide employee perks such as casual Friday, free lunches, and cash bonuses or gift certificates.Sponsor social events such as a softball team, barbecues for employees and their families, or office picnics.Provide employee perks such as casual Friday, free lunches, and cash bonuses or gift certificates.Sponsor social events such as a softball team, barbecues for employees and their families, or office picnics.