Hello Class,

May I inform you that this is the last handout I prepared for you. I truly missed
the days we are meeting in our classroom, and we all know that had it not been for this
ECQ due to COVID19, we could have had a more healthy discussion of significant topics in
Human Resource Management (HRM). I hope the handouts/readings and exercises I
provided, somehow increased your knowledge and skills in understanding the various topics.
Please note that whatever information you would want me to explain, feel free to send me
PM or text message. We will continue to journey until you become a successful member of
the work force in a fast-changing industry.

May I also remind you to please read the memo of VPHE and Fr. President dated
April 22, 2020.

Class, let us pray for the End of the corona virus. Let’s join hands. Thank you and
all God’s blessings. ----) ma’am Debbie

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HANDOUTS on
Compensation, Employee Benefits, and Employee Relations in Work Environment

Learning Objectives:
1. Identify components and bases of compensation.
2. Describe the ways in which benefits become an organization’s attraction, retention, and
engagement drivers.
3. Define how labor relations can be managed effectively.
4. Compose an essay on a phrase aligned to HRM functions.

Compensation and its components

The compensation that employees receive from work is considered by most as a very important
motivator for employee retention. Some employees take pride of the amount of check that they receive
every payday. It is a status symbol to receive a higher salary or compensation package than what the
average employee receives in the same company. It helps define one’s lifestyle. Receiving a high pay
allows individuals to buy what they need and to acquire things that give them satisfaction, status, and
convenience. For instance, those who receive high pay can afford to travel, live in high-end condo,
purchase a car, eat in expensive restaurants, and the like.

Compensation consists of three main components. Direct compensation encompasses employee

wages and salaries, incentives, bonuses, and commissions. Indirect compensation comprises the many
benefits supplies by employers. Nonfinancial compensation includes employee recognition programs,
rewarding jobs, organizational support, work environment, and flexible work hours to accommodate
personal needs.
 The way the three main components of compensation are allocated sends a message to the
employees about what management believes is important and the types of activities it encourages. For an
employer, compensation constitutes a sizeable operating cost.

Employee Benefits
The critical challenges in today’s competitive business environment include attracting, retaining,
and engaging competent, and productive employees. One of the critical areas in human resource
management (HRM) is designing the organization’s benefits program strategically. It is true that
employee benefits program is the key to successful talent management regardless of the size of the
organization.

Employee benefits are indirect and non-cash compensation paid to an employee in addition to
wages and salaries. The following are legally required benefits in the Philippines:
1. Membership in the Social Security System (SSS) – under Republic Act No. 8282 also known
as the Social Security Act of 1997.
2. Membership in the Government Service Insurance System (GSIS)
3. Membership in Philippine Health Insurance (PhilHealth)
4. Membership/Contribution to the Home Development Mutual Fund, known as Comprehensive
and Integrated Shelter Financing Act of 1994.
5. Paid leaves mandated by law when employees may still be paid despite their absence from
work.
6. Service Incentive Leave (SIL) provides an employee with five (5) days leave with pay every
year after he/she has rendered at least one (1) year of service with the company. The term of “at least
one-year service” means service for not less than 12 months, whether continuous or broken, reckoned
from the date the employee started working, including authorized absences and paid regular holidays.

Other benefits mandated by law are bonuses and other recognition for work such as the
following:
1. 13th Month Pay
2. Meal and rest periods
3. Night shift differential
4. Retirement Pay

Types of Benefits:
Benefits are any perks offered to employees in addition to salary. These are some:
1. Supplemental pay
2. Insurance
3. Retirement benefits
4. Fringe benefits

Employee Relations Management

The success of organization depends on the people comprising the organization. Employees are,
the heart and soul of every organization and employers should take extra efforts in their human relations
responsibility.

In the Philippines, it is the constitutional duty of the State to protect the rights of workers to
security of tenure which means that the employer shall not terminate the services of an employee except
for a just cause or when authorized by law and after due process (Art. XIII, Sec.3, 1987) Constitution.
 The law provides that an employer may terminate any employee for any of the following just
causes (Art. 282, Labor Code):
1.Serious misconduct or wilful disobedience by the employee or representative in connection
with his/her work;
2. Gross and habitual neglect by the employee of his/her duties;
3. Fraud or wilful breach by the employee of the trust reposed in him/her by his/her employers or
duly authorized representatives;
4. Commission of a crime or offense by the employee against the person of his/her employer or
any immediate member of his/her family or his/her duly authorized representative; and
5. Other causes analogous to the foregoing.

The Labor Code (Art. 283, and 284) also provides for authorized causes of termination. These
are as follows:
1. Installation of labor saving devices
2. Redundancy
3. Retrenchment to prevent losses
4. Cessation of operation of the establishment or undertaking
5. Disease

Exercises:
Compose a one-page essay to any two (2) of the following phrases. Relate your discussion to an
appropriate HRM function. In terms of preparation and submission, follow the same instruction with
Weeks 1-4. Thank you.

1. “Supervisors who lead by good examples and who possess sound human relations in dealing with their
employees seldom encounter problems involving discipline.”

2.“Discipline is an employer’s action against an employee for infraction of the organization’s p policies,
rules and regulations.”

3. “An employee whose needs are sufficiently and consistently satisfied would want to further grow
professionally and contribute to the realization of the business objectives of the organization.”

4. “Salary and other pay increases depend on what competencies employees acquire and how well they
acquire these competencies.”

Book references:
DeCenzo, David A. and Robbins. Stephen P (2005). Fundamentals of Human Resource Management, 8 th ed., NJ:
John Wiley & Sons, Inc.

Diamante, Melva M. and Ledesma-Tan, Genevieve (2015). Managing Human Resources: Local and Global
Perspectives (Outcomes-based Learning), QC: C & E Publishing, Inc.

Snell, Scott and Bohlander, Goerge (2014). Principles of Human resource Management. 16 th ed., Philippine Branch:
Cengage Learning Asia Pte Ltd.

/debbie FN:Handouts 4 Compensation, Benefits, Separation & Work Environment

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