Chapter 5

Employee Benefits and Services

Objectives:

 Review and discuss the Philippine Summary Benefits of Employees

 Identify the three kinds of benefits and understand each concept.
 Differentiate and appreciate the importance of employee benefits in a private and public
sector.
5.1. Introduction
Employee benefits are designed to help promote employee satisfaction and well-being.
This is usually done through benefits ranging from flexible working hours and child care support
right through to dental care and pension schemes. Company perks are an extra incentive
provided by employers to attract and retain employees, contributing towards improving well-
being and staff engagement across an organisation. However, it wasn’t so long ago that extra
benefits were used as a retaining measure or a ‘good will gesture’ to persuade and encourage
employees to continue their work at that organization.
Glassdoor’s Employment Confidence Survey (2015) underlines that 60% of people state
that perks and benefits are a major factor when considering whether to accept or decline a job
offer. This survey also found 80% of employees would choose additional benefits or perks over a
pay rise. As the cost of living is rising and wages barely moving, it has become a realisation to
employees that the use of perks and benefits contribute in promoting their financial wellness.
The purpose of providing employee benefits is to initially increase the economic security
of staff members, resulting in, improved worker retention throughout an organisation. This
enables employees to save money and add to their disposable income, improve their working
well-being and maintain a better work-life balance. This then results in high levels of motivation
and engagement produced by employees.
In line with this, this study aims to further converse the Philippine Summary Benefits of
employees and give further appreciation and understanding on each identified benefits.

5.2. Pre-Test
Reflect and answer the following:
1. What benefits commonly received by employees?
2. Why are these benefits important in the labor force?

5.3. Overview

In any company, whether big or small, the greatest asset is the people. The company wins
when they perform well, and the company suffers if they don’t. As an employer, you are
obliged to take care of your company’s people by giving them the proper employee benefits
as mandated by the government. By following these labor laws and ensuring your employees
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 understand their benefits you will help increase job satisfaction which, in turn, will improve
their work performance and positively impact your company. Here are the important things
you need to know about employee benefits in the Philippines, as mandated by the
government.

5.4. Types of Employee Benefits

When you are employed, you are entitled to various benefits that can be summed up into
three categories:

1. Thorough analysis of one’s strength and weakness to face to face transactions.

2. Observing thoroughly coherence of one’s ability during recruitment, in the workplace
and post labor.
3. Concretely expedites one’s ability for easier decisions for labor efficiencies.

Wage and Compensations Benefits

1. Employee Minimum Wage: Here are the illustration of all the Minimum Wages in
the Philippines:

Region Region Minimum Wage Increase

1. NCR P537 (Effective November 22, 2018)
2. CAR P300 — P320
3. Region I P256 — P310
4. Region II P340
5. Region III P393 — P400 (P339 in Aurora)
6. Region IV-A GCA: P325.50 — P400
EGA: P317.50 — P344
RBA: P317 — P327
7. Region IV-B Establishments with 10 workers or above: P290
Establishments with less than 10 workers: P247
8. Region V Upon effectivity: P305 (for establishments with 10 or
more employees)
P295 (for establishments with less than 10 employees)
9. Region VI P365
10. Region VII P366
11. Region VIII P305
12. Region IX P316
13. Region X WCI — P338.00
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 WCII — P331.00
WCIII — P323.00
WCIV — P304.00
14. Region XI Upon effectivity: P370
15. Region XII P311
16. Region XIII P305
17. ARMM P280

Figure 5.1. The Minimum Wage in the Philippines

2. Overtime Pay: The employee who renders service beyond the schedule indicated in
the contract will be given additional compensation equivalent to his regular wage
including at least 25% premium:

Sample Computation
Monthly salary P20,000.00
Working days per month 26
Daily salary P769.23
Per hour rate P96.15
Overtime rate 125%
Per hour rate-overtime P120.19
Employee overtime (in hours) 3.50
Total Overtime pay P420.67

Figure 5.2. Sample Computation of Overtime Pay

3. Premium Pay: A premium pay is an overtime pay for rest days and official holidays.
Employee shall be paid an additional compensation from the rate of the first eight
hours on a holiday or rest day plus at least 30%. There are three types:
a. Regular Holidays – these refer to fixed dates like Christmas Day,
Independence Day, or New Year’s Day. However, National Heroes Day and
Holy Week are considered regular holidays despite changing dates.

b. Special Holidays – also known as Special Non-Working Holidays, they fall on

flexible dates, depending on the circumstance. Examples are ASEAN Summit

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 or regional events like festivals or class suspensions. A day becomes a special
holiday if: proclaimed by the President, enacted by the Congress, or 3)
declared by LGUs in the specific regions.

c. Double Holidays – this is a rare occurrence wherein a regular holiday and a

special holiday fall on the same day. Example: President Rodrigo Duterte
declared August 21, 2018 as special non-working (Eid’l Adha) and regular
holiday (Ninoy Aquino Day) at the same time.

All employees are eligible for premium pay, but normally, the slots for working on
holidays or rest days are scheduled in advance and approved by authorized personnel.
Now, how do you compute for premium pay? Computation differs for each type.
a. Regular Holidays – Working on Rest day Premium / Working on Special
Holiday Premium Both types of premium follow the same formula: (Hourly
rate × 130% × 8 hours)

Sample Computation
Hourly rate 81.49
Rest day/ Special Holiday pay 130%
Hours of duty 8
Total premium P847.496

Figure 5.3. Sample Computation of Regular Holidays

b. Special Holidays – Working on Special Holiday and at the same time Rest day
Premium = (Hourly rate × 150% × 8 hours)

Sample Computation
Hourly rate 81.49
Rest day/ Special Holiday pay 150%
Hours of duty 8
Total premium P977.88

Figure 5.4. Sample Computation of Special Holidays

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 c. Regular Holidays Premium – Working on Regular Holiday Premium =
(Hourly rate × 200% × 8 hours).

Sample Computation
Hourly rate 81.49
Rest day/ Special Holiday pay 200%
Hours of duty 8
Total premium P1,303.84

Figure 5.5. Sample Computation of Regular Holidays Premium

d. Regular Holidays Premium with Rest Day – Working on Regular Holiday and
at the same time Rest day Premium = (Hourly rate × 260% × 8 hours)

Sample Computation
Hourly rate 81.49
Rest day/ Special Holiday pay 260%
Hours of duty 8
Total premium P1,694.992

Figure 5.6. Sample Computation of Regular Holidays Premium with Rest Day

e. Double Holiday Premium with Rest Day – Working on a Double Holiday

Premium, and Working on a Double Holiday and at the same time Rest Day
Premium Both types of premium follow the same formula: (Hourly rate ×
300% × 8 hours)

Sample Computation
Hourly rate 81.49
Rest day/ Special Holiday pay 300%
Hours of duty 8
Total premium P1,955.76

Figure 5.7. Sample Computation of Double Holiday with Rest Day

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 4. Night Differential Pay: Also known as night shift pay, it applies to employees who
work between 10:00 PM and 6:00 AM. An additional 10% premium is applied for
every hour at work. The following are eight types of NSD:

a. Night shift on an Ordinary Day = (per hour rate × 10% × 8 hours)

Sample Computation
Per hour rate 96.15
Additional Premium 10%
Working hours per day 8 hours
Total NSD P76.92

Figure 5.8. Sample Computation of NSD in Ordinary Day

b. Night shift on a Rest Day = (per hour rate × 130% × 10% × 8 hours)

Sample Computation
Per hour rate 96.15
Rest day premium 130%
Additional Premium 10%
Working hours per day 8 hours
Total NSD 99.996

Figure 5.9. Sample Computation of NSD in a Rest Day

c. Night shift on a Regular Holiday = (per hour rate × 200% × 10% × 8 hours)

Sample Computation
Per hour rate 96.15
Rest day premium 200%
Additional Premium 10%
Working hours per day 8 hours
Total NSD 153.84

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 Figure 5.10. Sample Computation of NSD in Regular Holiday

d. Night Shift on Special Holiday = (per hour rate × 130% × 10% × 8 hours)

Sample Computation
Per hour rate 96.15
Rest day premium 130%
Additional Premium 10%
Working hours per day 8 hours
Total NSD 99.996

Figure 5.11. Sample Computation of NSD in Special Day

e. Night Shift on a Double Holiday = (per hour rate × 330% × 10% × 8 hours)

Sample Computation
Per hour rate 96.15
Double holiday premium 330%
Additional Premium 10%
Working hours per day 8 hours
Total NSD 253.836

Figure 5.12. Sample Computation of NSD in Double Holiday

f. Night Shift on a Regular Holiday plus Rest Day = (per hour rate × 260% ×
10% × 8 hours)

Sample Computation
Per hour rate 96.15
Regular holiday premium + Rest day premium 260%
Additional Premium 10%
Working hours per day 8 hours
Total NSD 199.992

Figure 5.13. Sample Computation of NSD in Regular Holiday plus Rest Day

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 g. Night Shift on Special Holiday plus Rest Day = (per hour rate × 150% × 10%
× 8 hours)

Sample Computation
Per hour rate 96.15
Special holiday premium + Rest day premium 8 hours
Additional Premium 150%
Working hours per day 10%
Total NSD 115.38

Figure 5.14. Sample Computation of NSD in Special Holiday plus Rest Day

h. Night Shift on Double Holiday plus Rest Day = (per hour rate × 390% × 10%
× 8 hours)

Sample Computation
Per hour rate 96.15
Double holiday premium + Rest day premium 390%
Additional Premium 10%
Working hours per day 8 hours
Total NSD 299.988

Figure 5.15. Sample Computation of NSD in Double Holiday plus Rest Day

5. 13th Month Pay: The 13-month pay is often mistaken as the Christmas Bonus but pay
times the number of months you rendered for the whole year and divided by 12.
Example: In case of perfect attendance, the employee will get the full monthly salary
for 13th month pay. Generally, it’s a bonus amounting to one month of basic pay.

Sample Computation
Gross Monthly Salary P30,000.00
Perfect attendance (12 months) P30,000 x 12 months / 12 months
Total take home 13th month pay P30,000

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 Figure 5.16. Sample Computation of 13th Month Pay

If ever you wondered why, you receive different rates of 13-month bonus, that’s
because it is pro-rated. It means that the amount of pay will be adjusted to the total
time you rendered the services. As a result, what you will receive may not be the
same with your monthly basic pay and may differ from other employees because of
variables. Absences or unpaid leaves will be deducted from the basic salary before
being divided by 12. Also, other benefits on top of your basic pay like unused credit
service incentive leaves, overtime, premium, night differential, and allowances are
not part of the computations. Deduction from the bonus is possible to cover the
upcoming tax deficits. The 13-month pay is basically not taxable, except for the
amount of P82,000. Under the new TRAIN law, tax exemptions now cover the rate of
P90,000.

6. Separation Pay: Separation pay is also part of the Labor Code and is given to
employees terminated from the company. The only exception is those terminated
because of misconduct or crime involvement. There are two types of Separation Pay:

a. 1/2 Month Pay per Year of Service – an employee is eligible for separation
pay with the value of one-half (1/2) month pay for every year of service if the
separation from the service is because of retrenchment to save the company
from pitfalls, closure or termination of the operations due to bankruptcy and
other bad instances, and grave illness incurable within 6 months or harmful
for co-workers.

b. One-Month Pay per Year of Service – an employee is eligible for a separation

pay worth of one month per year of service if the termination of the contract is
because of: installation of devices or machines that reduce the number of
labors, redundancy, or when there is excessive manpower, impossible
reinstatement to the former position because of significant reasons.

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 7. Retirement Pay: Upon the age of 60 years or more, an employee who has served at
the establishment for at least five years may be granted a retirement pay 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. As stipulated by the DOLE National Wages
and Productivity Commission, “The minimum retirement pay shall be equivalent to
one-half (1/2) month salary for every year of service, a fraction of at least six (6)
months being considered as one (1) whole year.” Included in the one-half pay are 15
days salary based on the latest salary rate, cash equivalent of 5 days of service
incentive leave, one-twelfth (1/12) of the 13th month pay.: to compute the pension,
here the formula:

(1/12 x 365/12 = .083 x 30.41 = 2.5)

Minimum Retirement Pay = Daily Rate x 22.5 days
x number of years in service

Figure 5.17. Formula for Pension

Leave Benefits

1. Service Incentive Leave: Article 95 of the Labor Code says that an employee who
has worked for a year is entitled to five (5) SILs with full pay. These can be used for
vacation leave or sick leave.

2. Parental Leave: There are 3 types of parental leaves:

a. Maternal – any pregnant woman employee who has worked with the company
for at least six months will be granted a maternity leave of at least two weeks
prior to her due date (expected date of delivery) and four weeks after normal
delivery or miscarriage with full pay based on her regular salary. As of
February 21, 2019, the Expanded Maternity Leave (EML) Bill has been

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 signed into law. This law grants 105 days of paid maternity leave credits. The
law also allows new mothers to extend this leave for an additional 30 days,
but this will be unpaid. The EML is applicable to all a woman’s pregnancies.

b. Paternal – the R.A No. 8187, or Paternity Leave Act of 1996, grants seven (7)
days of fully paid leave to married fathers. This is effective up to the first four
deliveries of the legitimate spouse. Under the EML, seven days of a woman’s
paid maternity leave credits can be transferred to fathers, extending the
allowed seven-day paternity to be extended to 14.

c. Solo Parent – Solo or single mothers and fathers have seven days leave with
pay for every year of service, on top of other leave privileges, e.g. Maternity
or Paternity Leave. Solo mothers are covered by the EML, so they also get
105 days of paid maternity leave credits. However, solo mothers can extend
their leave for 15 days and these should be paid leaves.

3. Special Benefits for Women: There are 2 types of Special Benefits for Women:

a. Magna Carta for Women – this entitles women who underwent surgery due to
gynecological disorders to two months’ leave with full pay, as stipulated in
R.A. 9710 or the Magna Carta of Women. This applies to employees who
have rendered at least six months of service with the company.

b. Leave for women and their children who are victims of violence – victims of
violence against women, as stipulated in R.A. 9262 or the Anti-Violence
Against Women and Their Children Act of 2004, are entitled to 10 days leave
with full pay.

4. Bereavement Leave: This is a 3 days’ additional time off from work to mourn for the
death of immediate family members such as mother, father, siblings, and children. It
must be noted that this is not a paid leave.

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 5. De Minimis Leave: These are either relatively small amounts of money or leave
credits that are optional for employers to grant. Examples are calamity leave, rice
subsidy, transportation/clothing/laundry allowance, daily meal allowance, other goods
that are not monetary.

6. Sick Leave: Twelve (12) days for the first two years of service and additional 1 day
every year starting on the 3rd year. Maximum total sick leave is 15 days. All unused
leave is convertible to cash at the end of the year.

Mandatory Government Contribution

1. Social Security System: The Social Security System serves as an insurance program
set by the government for all wage earners from the private institutions (the
counterpart for government employees is GSIS) in the country. Members are required
to contribute a certain amount depending on their salary bracket.

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 Figure 5.18. The New SSS Contribution Schedule
Generally, your monthly contribution is a shared payment between you (EE) and your
employer (ER):

ER – 7.37% of the total contribution

EE – 3.36% of the total contribution (deducted from the salary).

Sample Computation
 If you earn P14,437 per month, your salary credit according to the table is
deemed as P14,500.
 Your employer will pay P1,160 (7.37%) – on top of that is the additional fee
of P10 – amounting to P1,170.
 Adding the remaining P580 (3.63%) from you, the table shows that your total
contribution per month is P1740.

To check your contributions online, you need to create an account at My.SSS and
have it validated by SSS personnel. You can also view your membership records, file
salary loan application, or schedule appointments. The benefits given by SSS are for
sickness, maternity, disability, retirement benefit (pension), death cash grant, funeral
grant, and salary loan.

2. PhilHealth: This serves as a health insurance program for private employees

providing financial aid and service privileges for health care. PhilHealth has removed
the previous salary brackets, creating a new condensed contribution table with
P10,000 as the salary floor and P40,000 as the ceiling. The computation starts at
2.75% of the basic salary per month, and the payment is shared by employer and
employee. Here is an Illustration of PhilHealth Contributions.

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 Figure 5.19. The PhilHealth Premium Contribution 2019

PhilHealth Benefits Include the following for laborers to be aware:

a. Inpatient benefits (hospitalization, facility fees, and physician/surgeon fees).

b. Outpatient benefits (day surgeries, radiotherapy, hemodialysis, outpatient
blood transfusion, primary care benefits).
c. Z benefits (financial/medical aid for the patients with cancer and in need of
surgeries).
d. SDG related (Malaria package, HIV-AIDS package, anti-Tuberculosis
treatment, voluntary surgical contraception procedures, and animal bites
treatment).

Salary per month Employee share Employer share

P1,500 and below 1% 2%
Over P1,500 2% 2%
3. PAG-IBIG: Also known as the Home Development Mutual Fund (HDMF), Pag-
IBIG is another form of national savings’ program and the financing office for
affordable shelter.

Figure 5.20. The PAG-IBIG Contribution Chart

Again, the total contribution is shared between you and the employer. The highest
compensation per month subjected to Pag-IBIG contribution is P5,000 and it means

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 that the employer and employee will pay P100 each as the maximum contribution.
Pag-IBIG lets you have the following benefits: housing loan, multi-purpose loan,
calamity loan, secured savings.

5.5. 2018 Philippines Benefits Summary

Employees are eligible for most benefits program on the first day of employment.

1. Holidays: Ten (10) paid national regular holidays and Eight (8) national special
holidays per year as provided under Proclamation No. 269 (2018 Declared Holidays).

2. Vacation: Thirteen (13) vacation leave, with additional 1 day every year starting on
the 3rd year of service and convertible to cash at the end of each year. Maximum
vacation leave is 18 days.

3. Retirement: The plan is 100% funded by the company calculated at one month’s base
salary per year of service based on the employee’s latest basic rate upon normal
retirement at age 60, death or total and permanent disability. Early retirement benefit
can be available to 10 years of service equal to 50% of normal retirement benefit.

4. Healthcare: The plan provides a comprehensive health care coverage for employees
and eligible dependents through Medicard’s accredited hospitals and doctors
nationwide. The annual premium for Principal/Employees is 100% shouldered by the
company. For direct dependents, OSPI covers 53% of the cost and the rest of the 47%
is on employees account. The company also maintains an onsite medical clinic
manned by a company nurse per shift and a group of company doctors who reports to
the clinic six days a week on specified time schedules providing free medical
consultations, emergency medicines, minor and first-aid treatments and health
counseling. As part of preventive health care, free multivitamins are also provided to
employees while on duty and all employees are required to undergo an annual
medical, dental and eye check-up conducted onsite.

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 a. Dental: Free dental benefits are likewise provided with two (2) dentists
alternately visiting the factory rendering unlimited dental consultations,
unlimited simple tooth extractions and permanent/temporary fillings, annual
oral prophylaxis, re-cementation of jacket crown inlays and onlays, simple
adjustment of dentures and emergency treatments.

b. Outpatient Medicine Reimbursement: The Company reimburses expenses for

outpatient medicines for employees and dependents. Out-patient medicines
are 100% reimbursable while PHP 2,000 per year is provided for dependents.
Approval of reimbursement requires submission of prescription and official
receipts.

c. Maternity Grant: Assistance is provided to regular female employees & legal

spouse of male employees: PHP 3,000 for miscarriage; PHP 1,500 for home
delivery; PHP 5,000 for normal delivery; 80% (Employer) - 20% (Employee)
for caesarean delivery.

5. 13th Month: The Company grants a 13th month pay equivalent to one (1) month’s
pay to all eligible employees provided that they worked for at least one (1) month
during a calendar year.

6. Mid-year Bonus: The company grants bonus equivalent to a half month pay to all
probationary and regular employees.

7. Rice Allowance: The Company provides a tax-free rice subsidy to all regular and
probationary employees and credited to their payroll account every 30th of the month.

8. Meal Subsidy: The Company provides its employees with a meal allowance to
partially cover daily meals expenses. An employee must have rendered the minimum
number of hours per day to get a full or half-meal credit.

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9. Tuition Fee Subsidy: PHP 2500 is given to regular and probationary employees every
April.

10. Employee’s Educational Assistance Program: Provides reimbursement of duly

approved educational expenses upon satisfactory completion of the course provided
that the degree or course taken is relevant to the employee’s present or prospective
job assignment. Maximum reimbursement per term is P 10,000. All regular
employees are eligible to this benefit.

11. Kapwa Tulong Club: Cash assistance provided to an employee (KTC members only)
for death of immediate dependents and during calamity. The company matches the
contribution of employees thru the Kapwa Tulong Program which is administered
through salary deduction.

12. Attendance Bonus: A bonus equivalent to one day pay given to all Regular and
Probationary Employees who are Job Grade 8 & below, and all Technicians.
Associates must have perfect attendance in one (1) month with no tardiness, under
time or unexcused absence.

13. Prolong Sickness (PSL) Benefits: It is given to all employees with at least six months
of service. Purpose of this benefit is to provide regular employees with salary
protection during recuperation period from certain medical conditions. The condition
may include but not limited to the Following: Chronic ailments requiring at least one
month of treatment whether through hospitalization or outpatient basis. o Major
Operative procedures such as, but not limited to, general and specialized surgeries,
and major gynecological operation. Obstetrical surgical procedures such as caesarean
section are not included under this benefit and Post-injury conditions which warrant
long recuperation period.

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 14. Loyalty Token – Employees are recognized for their loyal and dedicated service to
the company for every five years of continuous service by the way of gift check or
token, plus plaque of appreciation during the service award ceremony.:

5.6. Conclusion
Benefits are the essential rewards of hard work among individuals. The performances and
self investment rewards them of wide variety of benefits they will received. This leaves to a
question of your companies implemenenting of this said benefits or not. One things for sure,
this benefits aid our survival of our daily living.

5.7. Post Question

1. At present, do you receive this said benefits? Why or why not?
2. In 50 words, what is the importance of benefits to employees?

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 REFERENCES

Online Sources:
Mandatory Benefits for Regular Employees (nd.): (Accessed on:
https://www.ecomparemo.com/info/heres-a-full-list-of-mandatory-benefits-for-regular
employees-in-the-philippines).
Philippines Benefit Summary (nd.): (Accessed on:
https://www.onsemi.com/site/pdf/2018%20Benefits%20Summary%20-
%20Philippines.pdf).

YouTube Videos
Sage Talk (2021, January 30). ALL Mandatory Employee Benefits in the Philippines: KNOW
YOUR WAGE AND COMPENSATION BENEFITS. Retrieved From:
https://www.youtube.com/watch?v=gC5o-m6etOM

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