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.
Compensation
Regular 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 of employees who are required to work every day including
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 of employees 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 of employees 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 = % increase
2. 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:
Date

Holiday

January 1
Movable Date

New Years Day

Maundy Thursday

Movable Date
Good Friday
April 9
Araw ng Kagitingan
May 1
Labor Day
June 12
Independence Day
Last Sunday of August National Heroes Day
November 30
Bonifacio Day
December 25
Christmas Day
December 30
Rizal 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 Muharram
b. Maulid-un-Nabi (Birthday of the Prophet Muhammad), which falls on
the twelfth day of the third lunar month of Rabiul- Awwal

c. 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 Rajab
d. 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 season
e. 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:
Work

Premiu
m Rate
(of daily
rate)

Total
Rate

Work on rest days or special

days

30%

130%

Work on rest day which is

also a special day

50%

130%

Work on regular holiday

30% of
260%
which also a rest day
200%
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:
Work

Overtime

Rate
Work > 8 hours on ordinary
working days

25%

Work > 8 hours on rest day

or special or regular holiday

30%

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:
Work

Rate (of hourly

rate)

Pay

Ordinary day

10%

110%

Rest day, special day or

regular holiday

10% of rest day,

special day or
holiday rate

110% of rest day,

special day or holiday
rate

Ordinary day

10% of 125%

110% of 125% of basic

rate

Rest day, special day or

regular holiday

10% of rest day,

special day or
holiday rate

110% of rest day,

special day or holiday
rate

Night shift (10pm to 6

am) considered regular
work

Night shift considered

overtime work

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 pay
These 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 privatesector 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 SSSaccredited 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 Discipline
All 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 improve

It 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 discipline may 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 Workplace

Your 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 reporting
Any 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 guidelines
To 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 checklist
It 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 placed
Safety 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 Morale

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.
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.