Employer’s Guide on the Minimum Terms and Conditions of Employment

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Published — March 16, 2017

The following post does not create a lawyer-client relationship between Alburo Alburo and Associates Law Offices (or any of its lawyers) and the reader. It is still best for you to engage the services of your own lawyer to address your legal concerns, if any.

Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.

MINIMUM WAGE RATES
(R.A. No. 6727, Regional Wage Orders)

In establishing labor standards, it is the policy of the State to rationalize the fixing of minimum wages and to promote productivity-improvement and gain-sharing measures to ensure a decent standard of living for the workers and their families. Thus, employees are to be paid minimum wage rates, as determined by the Regional Tripartite Wage and Productivity Board.

In the National Capital Region, the minimum wage rates (based on an 8-hour workday), as prescribed under Wage Order No. NCR-21, are as follows:

Sector/Industry	Basic Wage	Basic Wage Increase	New Basic Wage	New COLA	New Minimum Wage Rates
Non-Agriculture including Private Hospitals with bed capacity of 100 or less	P 481.00	P 21.00	P 502.00	P 10.00	P 512.00
Agriculture (Plantation and Non Plantation)	P 444.00	P 21.00	P 465.00	P 10.00	P 475.00
Retail/Service Establishments employing 15 workers or less	P 444.00	P 21.00	P 465.00	P 10.00	P 475.00
Manufacturing Establishments regularly employing less than 10 workers	P 444.00	P 21.00	P 465.00	P 10.00	P 475.00

The minimum wage rate for kasambahays in the National Capital Region is P3,500.00 per month.

All workers paid by results, including homeworkers and those who are paid on piece rate, takay, pakyaw or task basis, shall also receive not less than the prescribed minimum wage rates for normal working hours, which shall not exceed eight (8) hours a day, or a proportion thereof.

RULES ON HOURS OF WORK UNDER THE LABOR CODE
(Article 82-96, Labor Code)

The labor standards rules on hours of work shall apply to all employees in general, except for the following:

1. Government employees;

2. Managerial employees;

3. Field personnel;

4. Members of the family of the employer who are dependent on him for support;

5. Domestic helpers, persons in the personal service of another, and workers who are paid by results as determined by the Secretary of Labor in appropriate regulations.

Holiday Pay
(Article 94, Labor Code)

Under our labor standards laws, holiday pay means that the employee is entitled to at least 100% of his daily wage rate even if he does not report for work during a regular holiday, provided he is present or is on leave of absence with pay on the work day immediately preceding the holiday. If the employee reports to work on a regular holiday, he shall be entitled to 200% of his daily wage rate (100% holiday pay + 100% pay for actual work done for the day).

Where the holiday falls on the scheduled rest day of the employee, he shall be entitled to at least an additional 30% of the employee’s regular holiday rate of 200%, or a total of at least 260%.

The Arroyo administration practiced “holiday economics” or moving holidays that fall on a weekday to the nearest Monday, to boost the local economy. However, the Aquino administration discontinued the practice as it tended to dilute the significance and observance of important dates in the country, prejudiced daily wage earners, and disrupted business operations [See LIST: 2015 Philippine holidays; Rappler.com; July 24, 2014].

The following are the regular holidays under R.A. 9849.

1. New Year’s Day, January 1
2. Maundy Thursday, Movable date
3. Good Friday, Movable date
4. Araw ng Kagitingan, Monday nearest April 9
5. Labor Day, Monday nearest May 1
6. Independence Day, Monday nearest June 12
7. National Heroes’ Day, Last Monday of August
8. Eidl Fitr, Movable date
9. Eidl Adha, Movable date
10. Bonifacio Day, Monday nearest November 30
11. Christmas Day, December 25
12. Rizal Day, Monday nearest December 30

When two regular holidays fall on the same day, such as Araw ng Kagitingan with Maundy Thursday or Good Friday, the concerned employee shall be entitled to at least 200% of his daily wage even if said day is unworked (100% for each holiday, for a total of 200% for the two holidays falling on the same day). If he reports to work, then an additional 100% shall be received by the employee. In such case, he will then be receiving 300% of his daily wage (200% for the two holidays, and 100% for working on that day).

Please take note that the employee shall be entitled to holiday pay only if he is present, or is on leave of absence with pay, on the previous working day.

Premium Pay
(Articles 91, 92, 92, Labor Code)

Our labor standards laws also provide for premium pay, which refers to the additional compensation of 30% of his wage for work on non-working days, such as rest days, and special holidays or special non-working days (which is also based on an 8-hour workday).

The following are the special non-working days under R.A. No. 9849.

1. Ninoy Aquino Day, Monday nearest August 21
2. All Saints Day, November 1
3. Last Day of the Year, December 31

Though it is a special non-working day, the “no work, no pay” principle applies for those who do not report to work. For those who do, they shall receive an additional 30% of their daily wage. When the special day falls on the employee’s rest day, and the employee reported to work, then he shall be entitled to an additional 50% of his daily wage.

The Cost of Living Allowance (COLA) shall not be included in computing the premium pay.

Overtime Pay
(Article 87, Labor Code)

Overtime (OT) pay refers to the additional compensation being given to employees who render work beyond 8 hours a day.

1. OT in ordinary work day = +25% of hourly rate
2. OT in rest day or special day = +30% of hourly rate
3. OT on rest day and special day = +50% of hourly rate
4. OT on regular holiday = +30% of hourly rate

Night Shift Differential
(Article 86, Labor Code)

It is the additional compensation of 10% to an employee’s regular wage for each hour of work performed between 10:00 in the evening to 6:00 in the morning. The COLA shall be excluded in the computation.

Service Incentive Leave
(Article 95, Labor Code)

Employees who have rendered at least 1 year of service shall be entitled to 5 days of service incentive leave with pay.

One year of service means service rendered within a 12-month period, whether continuous or broken, counted from the date the employee started working. The period includes authorized absences, unworked weekly rest days, and paid regular holidays.

Unused service incentive leaves may be converted to its cash equivalent at the end of the year, to be given to the concerned employee.

LEAVES UNDER SPECIAL LAWS
(R.A. Nos. 8282, 8187, 8972, 9262, 9710)

Other than the Labor Code, other laws also provide for certain special leaves as well as other benefits. Said leaves and benefits likewise form part of the terms and conditions of employment, and therefore, considered among the labor standards.

Maternity Leave
(R.A. No. 8282)

Pregnant women (whether married or not), who are members of the Social Security System (SSS), are entitled to maternity leave benefits equivalent to 100% of the member’s daily average salary credit for 60 days (in case of normal delivery) or 78 days (in case of caesarian delivery).

In order to avail of the benefits, the employee must have notified her employer of her pregnancy and the probable date of her childbirth, which notice shall be transmitted to the SSS. Moreover, employer must have also paid at least 3 monthly contributions within the 12-month period immediately before the date of delivery or miscarriage.

However, maternity benefits shall be available only for the concerned employee’s first 4 deliveries or miscarriages.

Paternity Leave
(R.A. No. 8187)

Benefits of 7-day (calendar days) paternity leave with full pay shall be available only for married male employees, to allow him to support his wife while she is recovering from childbirth, and nursing their newborn child. Benefits of paternity leave is availed of after the wife had already given birth, but must be applied for by the employee within a reasonable time from the expected date of delivery of his pregnant wife.

As an additional restriction, the benefit shall be available only for the first 4 deliveries or miscarriage of the employee’s wife. It is also required that he is living together with his wife at the time when the latter gives birth.

Included in the computation of paternity leave are the basic salary plus COLA. Failure to make use of paternity leave benefits shall not make it convertible to cash.

Parental Leave For Solo Parents
(R.A. No. 8972)

Solo parents, as defined below, and who has rendered at least 1 year of service, shall be entitled to leave with pay for 7 working days. A solo parent, for purposes of availing the benefits of parental leave, is any of the following:

1. A woman who gives birth as a result of rape and other crimes against chastity even without a final conviction of the offender, provided that the mother keeps and raises the child;

2. Parent left solo or alone with the responsibility of parenthood due to death of spouse;

3. Parent left solo or alone with the responsibility of parenthood while the spouse is detained or is serving sentence for a criminal conviction for at least 1 year;

4. Parent left solo or alone with the responsibility of parenthood due to physical and/or mental incapacity of spouse as certified by a public medical practitioner;

5. Parent left solo or alone with the responsibility of parenthood due to legal separation or separation-in-fact from spouse for at least one (1) year, as long as he/she is entrusted with the custody of the children;

6. Parent left solo or alone with the responsibility of parenthood due to declaration of nullity or annulment of marriage as decreed by a court or by a church, as long as he/she is entrusted with the custody of the children;

7. Parent left solo or alone with the responsibility of parenthood due to abandonment of spouse for at least one (1) year;

8. Unmarried parent who has preferred to keep and rear his/her child/children instead of having others care for them, or give them up to a welfare institution;

9. Any other person who solely provides parental care and support to a child or children;

10. Any family member who assumes the responsibility of head of the family as a result of the death, abandonment, disappearance or prolonged absence of the parents or solo parent.

A change in the status or circumstance of the parent claiming solo parent leave benefits, such that he/she is no longer left alone with the responsibility of parenthood, shall terminate eligibility for parental leave benefits.

For purposes of parental leave for solo parents, the term “child” refers to those living with and dependent upon the solo parent for support who are unmarried, unemployed and not more than 18 years of age, or even over 18 years but are incapable of self-support because of mental and/or physical defect/disability.

It is further required that the solo parent, to avail of the leave benefits, the employee must have notified the employer of his/her intention to avail the same within a reasonable time, and that the he/she should have a Solo Parent ID issued by the DSWD of the place where he/she resides.

Failure to use the parental leave benefits shall not make it convertible to cash.

Leave For Victims Of Violence Against Women And Children
(R.A. No. 9262)

Violence against women and children refers to any act or a series of acts committed by any person against a woman who is his wife, former wife, or against a woman with whom the person has or had a sexual or dating relationship, or with whom he has a common child, or against her child whether legitimate or illegitimate, within or outside the family abode, which will result in or is likely to result in physical, sexual, psychological harm or suffering, or economic abuse including threats of such acts, battery, assault, coercion, harassment or arbitrary deprivation of liberty.

To avail of the leave benefits of 10 days with full pay, the employee concerned only needs to present to the employer a certification that a case for violence against women and children is pending, to be issued by any of the following: Barangay Chairman, Barangay Kagawad, Prosecutor, or Clerk of Court.

In computing the amount of leave beneifts, the basic wage plus COLA shall be included.

Failure to use the said leave benefits shall not make it convertible to cash.

Special Leave For Women
(R.A. No. 9710, D.O. No. 112-11)

A female employee, regardless of age or civil status, who have rendered continuous aggregate employment service of at least 6 months for the last 12 months, shall be entitled to a special leave benefit of 2 months with full pay based on her gross monthly compensation (basic pay plus COLA) following surgery caused by gynecological disorders.

For purposes of availing said leave benefits, gynecological disorder refers to disorders that would require surgical procedures such as, but not limited to, dilation and curettage and those involving female reproductive organs such as the vagina, cervix, uterus, fallopian tubes, ovaries, breast, adnexa and pelvic floor, as certified by competent physician. Gynecological surgeries shall also include hysterectomy, ovariectomy, and mastectomy.

To avail of the leave benefits, the female employee has to comply with the following conditions:

(a) She has rendered at least 6 months continuous aggregate employment service for the last 12 months prior to surgery;

(b) She should have filed 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;

(c) She has undergone surgery due to gynecological disorders certified by a competent physician.
The special leave shall be granted to the qualified employee after she has undergone surgery without prejudice to an employer allowing an employee to receive her pay before or during the surgery.
The special leave shall also be non-convertible to cash.

THE 13TH MONTH PAY
(P.D. No. 851)

All employers are required to pay their rank and file employees 13th month pay, regardless of the nature of their employment and irrespective of the methods by which their wages are paid, provided they worked for at least 1 month during a calendar year. The 13th month pay should be given to the employees not later than December 24 of every year.

The 13th month pay shall not be less than 1/12 of the total basic salary earned by an employee in a calendar year, which shall include all remunerations or earnings paid by his or her employer for services rendered. It does not include 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 shift differential and holiday pay, and COLA. However, these salary-related benefits should be included as part of the basic salary in the computation of the 13th month pay if these are treated as part of the basic salary of the employees, through individual or collective agreement, company practice or policy.

The following employers are not covered by PD 851:

1. The government and any of its political subdivisions, including government-owned and controlled corporations, except those corporations operating essentially as private subsidiaries of the government;

2. Employers who are already paying their employees 13th month pay or more in a calendar year or its equivalent;

3. Persons in the personal service of another in relation to such workers; and

4. Employers of those who are paid on purely commission, boundary or task basis, and those who are paid a fixed amount for performing specific work, irrespective of the time consumed in the performance thereof.

The 13th month pay shall be paid not later than December 24 of every year. An employer, however, may give to his or her employees 1/2 of the thirteenth-month pay before the opening of the regular school year and the remaining half on or before December 24 of every year. The frequency of payment of this monetary benefit may be the subject of an agreement between the employer and the recognized/collective bargaining agent of the employees.

The mandated 13th month pay need not be credited as part of the regular wage of employees for purposes of determining overtime and premium payments, fringe benefits, as well as contributions to the State Insurance Fund, Social Security System, National Health Insurance Program, and private retirement plans.

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Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries regarding labor standards, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.

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