Mandatory Employee Benefits in the Philippines

Mar 12

The Department of Labor and Employment is responsible in implementing policies, programs, and services to protect the Filipino rights and privileges as an employee, worker, or laborer.  It is tasked with the enforcement of the provisions of the Labor Code.

If you are a first-time employee, or one who has yet to be acquainted with the Labor Code, you might find this piece helpful.  This can also help business people, who employ others to fulfill their day-to-day deliverables, be more familiar with the required compensation and mandatory government contributions for Pinoy workers.

Here is a summary of all the pays, benefits, and privileges that should be afforded every Pinoy employee.

Wage and Compensation Benefits

The following table shows the minimum wage rate per region and industry in Philippine Pesos:

Summary of Current Regional Daily Minimum Wage Rates
Non-Agriculture, Agriculture
(As of February 2018)

Click on the image to get a clearer view.


13th Month Pay

This is one-twelfth (1/12) of your basic salary within the calendar year; in simpler terms, you should receive one month’s worth of your basic salary, in full.  This should be released to you no later than the 24th of December every year.  The following is a clear example of how your 13th month pay is computed.

Example your monthly salary is P25,000 and for the whole year, you have not had any unauthorized leaves or absences (perfect attendance), here is how your 13th month pay will look like:

Php 25,000 x 12 / 12 = Php 25,000.00

But what if you incurred some absences such as a maternity leave for a couple of months?  How will your 13th month be computed then?

  • January – Php 25,000
  • February – Php 25,000
  • March – Php 25,000
  • April – Ph 25,000
  • May – Php 25,000
  • June – Maternity Leave
  • July – Maternity Leave
  • August – Php 25,000
  • September – Php 25,000
  • October – Php 25,000
  • November – Php 25,000
  • December – Php 25,000

Your total annual basic salary is Php 250,000

250,000 / 12 = Php 20,833.33 à this will be your 13th month pay.

All 13th month pays that are exempted from being taxed up to Php 82,000.00.

Retirement Pay

An employee who has worked for an establishment for at least five years may be granted a retirement pay upon reaching 60 years old.  The retirement pay is equivalent to at least one-half month of salary for every year of service (a fraction of at least six months is considered as one whole year).

Overtime Pay

Overtime work is work rendered beyond the required 8-hour shift per day.  An employee who renders overtime should be compensated for the extra work hours that is equivalent to his regular wage plust at least 25% premium.

If the overtime was rendered on a holiday or on the employee’s rest day, the employee shall pay an additional compensation from the rate of the first eight hours on a holiday or rest day, plus at least 30%.

If the overtime was rendered on a special non-working day, or the employee’s rest day, an additional compensation of 30% premium will be paid in addition to the rate of the first eight hours on holiday or rest day.

Night Differential

Working at night is no strange thing in the Philippines and anyone who renders service between 10pm to 6am is entitled to an additional 10% premium for every hour at work.  This is the minimum rate; other companies offer higher Night Differential premiums (when I began working in 2002, my employer gave us 25% premium as night differential. Good times!).

Leave Benefits

  1. Maternity Leave

The ML is granted to pregnant women employees who have worked with the company for at least six months.  The maternity leave may take effect at least two weeks prior to the employee’s due date and four weeks after normal delivery or miscarriage. This shall be compensated in full based on the employee’s regular salary.

ML benefits are applicable up to four deliveries (including miscarriages).

  1. Paternity Leave

R.A. No. 8187 grants seven full days of fully paid leaves to married fathers and is effective up to the first four deliveries of his legitimate spouse.

  1. Parental Leave for Solo Parents

A solo parent is granted seven days leave with pay for every year of service, on top of other leave privileges.

  1. Special Leave Benefits for Women

This is a special leave granted by the government to women who underwent gynecological surgeries.  She may go on leave for two months with full pay, for as long as she has rendered at least six months of service with the company.

Women who were victims of violence, as stipulated in RA 9262 or the Anti-violence Against Women and their Children Act, are entitled to 10 days leave with full pay.

Mandatory Government Benefits and Contributions

As a regular employee, your salary shall be subject to deductions in order to comply with your monthly contributions to SSS, Pag-IBIG, and PhilHealth.  Of the three, SSS now has an online facility where you can check updates on the posting of your contributions and payments to loans (if any).  For as long as you are employed, you shall contribute to these government agencies and shall thereby be entitled to certain benefits and privileges, until you retire from employment.

This week we will feature the step-by-step process on how to be a member of PhilHealth and Pag-IBIG and how much you should be contributing to these agencies if you are employed, self-employed, or a voluntary member.





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Published by MasterCitizen

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