COMPENSATION

“The purpose of the compensation is to attract,

motivate and to maintain employees”

DIRECT COMPENSATION
e.g. Incentives &Profit Sharing (Pay for Performance)
Compensation Management (Wages and Salaries)

INDIRECT COMPENSATION
Security, Safety and health (Legally mandated benefits)
Benefits and Services (“Fringe” benefits)
Benefits and Services are called indirect compensation and are
also known as “fringe benefits” and “Perks”.

Perks (services) are something in addition to the payment like car fuel and
free parking, clothing, and educational supports.
Whereas fringe benefit means something extra (such as vacation time) that
is given by an employer to workers in addition to their regular pay.

Such benefits and services are used to persuade, to motivate,

and/or to retain employees and are not linked with the employees
performance (e.g. stimulating them to greater effort and higher
performance).
 Definition of Benefits and Services

Employee Benefits
In general, indirect and non-cash (or sometimes in cash) compensation
paid by an employer to employees in addition to their regular pay.
Benefits tends to be necessities for manypeople.
Somebenefits are mandated by law (such as SSS, Pag-IBIG, and
PhilHealth), others vary from firm to firm or industry to industry.
 Definition of Benefits and Services

Employee Services
According to the Employee Services Management Association,
employee services encompasses"recreation programs, community
services, recognition programs, event planning, childcare/eldercare
services, convenience services, and travel offerings.“
Employee services can include anything an employer deems necessary
to provide as a perk for employees. Noreal limit exists as to what can be
included as an employee service.
Employee services are more of a convenience than a true benefit.

Although employee services might be considered a benefit, they are usually optional
and not necessarily what job seekers first look for whenconducting a job hunt.
Objectives of Benefit Programs
The main objective is to attract (recruit) and
to retain employees.

• To Improve Morale
• To Meet Health and Safety Needs
• ToAttract Good Employees
• To Reduce Turnover
• To Maintain a Competitive Position
• To Enhance the Organization's Image
Types of Benefits

• Insurance benefits
• Health benefits (and services)
• Security benefits
• Time-off benefits
• Work scheduling benefits
• Retirement benefits
• Disability benefits
 Mandatory Government Benefits and Contributions
Covered by the Philippine Labor Code

1. Social Security System (SSS) Contributions

Republic Act No. 8282 or otherwise known as the Social Security Act of 1997

The social security system is aimed at providing protection for the SSS member
against socially recognized hazard conditions such as sickness, disability, maternity,
old age and death, or other such contingencies not stated but resulted in loss of
income or results to financial burden.
The employee and his/her employer(s) are to contribute for the social security benefits
of the said employee in accordance to a given schedule by the Philippine Social
Security System.
Soci al Secu r i t y Syst em ( SSS)
Schedule of Contributions
2018
 Mandatory Government Benefits and Contributions
Covered by the Philippine Labor Code

2. Contribution to National Health Insurance Program (NHIP)

The employee and his/her employer(s) are to contribute to the medical
insurance of the said employee in accordance to the Republic Act 7835 on Medicare
Program which is administered by the Philippine Health Corporation (PhilHealth).
Monthly employee contribution depends on the employee’s monthly salary. The
monthly schedule is provided by Philhealth.

PhilHealth PremiumContribution 2018

Monthly Basic Salary Monthly Premium Personal Share Employer Share
X 2.75%
₱10,000 and below ₱275.00 ₱137.50 ₱137.50
₱10,000 to ₱39,999.99 ₱275.02 to ₱1,099.99 ₱137.51 to ₱549.99 ₱137.51 to 549.99
₱40,000 and above ₱1,100.00 ₱550.00 ₱550.00
 Mandatory Government Benefits and Contributions
Covered by the Philippine Labor Code

3. Contribution to Home Development and Mutual Fund (HDMF/Pag-IBIG)

HomeDevelopment Fund Law of 2009, employer(s) is required to contribute
per month not less than ₱100.00 to the employees Home Development and Mutual
Fund. In accordance to the periodic remittance schedule provided by HDMF, employers
will remit this contribution, in addition to that of the employees, which is to be deducted
from his/her payroll.

Percentage of Monthly Compensation

Monthly Compensation Employee Share Employer Share

₱1,500 and below 1% 2%

Over ₱1,500 2% 2%
 Mandatory Government Benefits and Contributions
Covered by the Philippine Labor Code

4. The 13th Month Pay

As mandated by the Presidential Decree No. 851, the employee shall
receive a bonus salary equivalent to one (1) month, regardless the nature of his/her
employment, not later December 24 of every year.

5. Service Incentive Leave

Book III, Chapter III of the Labor Code of the Philippines covers the employee benefits
for Incentive Leaves. According to Article 95, an employee who has rendered atleast
one year of service is entitled to a yearly five days service incentive leave with pay.
 Mandatory Government Benefits and Contributions
Covered by the Philippine Labor Code

6. Meal and Rest periods

Under Article 83, the employee is provided one-hour employee benefit for regular
meals, when working on an eight-hour (8-hours) stretch. Employees are also
provided adequate rest periods in the morning and afternoon which shall be
counted as hours worked.

All these provisions apply in addition to every new employee

benefits furnished that are in excess of what is stipulated by the
Philippine Labor Code.
There are other Philippine employee benefits furnished by the
employer(s) and are also covered by the Philippine Labor Code.
It will be discussed in the succeeding slides…
 Philippines Benefits Summary
UnderthePhilippineLaborCode(PresidentialDecreeNo.442)
TermsandConditionsofEmployment

1. Minimum Wage
The Wage Rationalization Act, Republic Act No. 6727, sets the minimum wage rates
applicable per region, province and industry sector.
Workers that render services for a total of 40 hours per week (8 hours per day, 5 days per
week) are entitled to receive at least the daily minimum wage.
National Capital Region - the minimum gross basic wage is ₱512.00 per day (as of October
2017).

2. Night Shift Differential

This refers to additional compensation of at least 10 percent of an employee’s applicable
wage rate, payable to employees (except exempt employees) who perform
work between 10 p.m. to 6 a.m. of the following day.
 Philippines Benefits Summary
UnderthePhilippineLaborCode(PresidentialDecreeNo.442)
TermsandConditions of Employment

3. Overtime pay
The normal working hours is 8 hours per day.
An employee who renders work in excess of eight hours a day is entitled to
overtime pay equivalent to the applicable wage rate plus at least 25 percent
thereof. The overtime rate will vary if the overtime work is rendered on a rest
day, regular holiday or special day.
Under Rest day: regular/special holiday – plus 30% of the regular daily salary.

“exempt employees” are not entitled to such overtime pay.

 Philippines Benefits Summary
UnderthePhilippineLaborCode(PresidentialDecreeNo.442)
TermsandConditions of Employment

4. Rest Days
Employees, except exempt employees, are entitled to a rest period without pay of not
less than 24 consecutive hours for every six consecutive normal working days (i.e.
Sunday).
Work done on rest days = plus 30%of the regular daily compensation
5. Holidays
Unworkedregular holiday (except exempt employees) = regular daily wage
Work on regular holiday = 200% or Doublepay

Work on Special Holiday = regular daily pay +30%

Rest day + Work on Special holiday = regular daily pay +50%
 Philippines Benefits Summary
UnderthePhilippineLaborCode(PresidentialDecreeNo.442)
TermsandConditions of Employment

Special Holidays: Regular Holidays:

Benigno S. Aquino Jr. Day
(Monday nearest 21 August)
All Saints Day (1 November)
Last day of the year (31
December)
NewYear’s Day (1 January)
MaundyThursday (movable date)
GoodFriday (movable date)
Eidul Fitr (movable date)
EidulAdha (movable date)
Araw ng Kagitingan (Monday nearest 9 April)
LaborDay (Monday nearest 1 May)
Independence Day (Mondaynearest 12 June),
National Heroes Day (Last Monday ofAugust)
Bonifacio Day (Monday nearest 30November)
Christmas Day (25 December)
Rizal Day (Monday nearest 30December)
 Philippines Benefits Summary
UnderthePhilippineLaborCode(PresidentialDecreeNo.442)
TermsandConditions of Employment

6. LEAVES
Maternity Leave
60 days leave in case of normal delivery, abortion or miscarriage
78 days for caesarean delivery
maternity benefit = 100% of her average salary credit

Paternity Leave
Paternity leave benefit is granted to all married male employees
first 4 deliveries of lawful wife

7 days leave = full pay (consisting of his basic salary)

 Philippines Benefits Summary
UnderthePhilippineLaborCode(PresidentialDecreeNo.442)
TermsandConditions of Employment

6. LEAVES
Solo-parent Leave
Solo Parents Welfare, Republic Act No. 8972
Employee must have been working for atleast 1 year
7 working days of leave in a year (with pay)

Leave due to Domestic Violence

Leave for womenand their children whoare victims of violence
paid leave for up to 10 days (extendible whenthe necessity arises as
specified in the protection order)
 Philippines Benefits Summary
UnderthePhilippineLaborCode(PresidentialDecreeNo.442)
TermsandConditions of Employment

6. LEAVES
Leave due to Gynecological Disorders
Womenemployees whohave rendered continuous aggregate employment
service of at least six months for the last 12 months are entitled to the
special leave benefit of up to two months with full pay following surgery
caused by gynecological disorders.

7. 13th Month pay ( Presidential Decree No. 851)

all “rank and file” employees
13th month pay = 1/12 (or 1 month) of the total basic salary
Regardless the nature of his/her employment, he/she will be paid not later
December 24 of every year.
 Philippines Benefits Summary
UnderthePhilippineLaborCode(PresidentialDecreeNo.442)
TermsandConditions of Employment

8. Retirement Benefits
Section 1. Article 287 of Presidential Decree No. 442
60 years of age (but not beyond 65) and served for at least 5 years
Benefits = 15 days salary + service incentive leave (cash equivalent) + 13th month pay

9. Separation Pay
Basis of separation pay:
1. Introduction of labor-saving devices
2. Redundancy
3. Retrenchment
4. Closure or Cessation of business
5.Disease the employee found to be suffering and whose continued employment
is prohibited by law or is prejudicial to his health as well as the health of his co-
employees.
 Philippines Benefits Summary
UnderthePhilippineLaborCode(PresidentialDecreeNo.442)
TermsandConditions of Employment

9. Separation Pay
Article 283 and 284 of the Labor Code of the Philippines

1. Introduction of labor-saving = 1 month pay or 1 month pay every year of service

\devices
2.Redundancy year of = 1 month pay or 1 month pay every service

3.Retrenchment year of = 1 month pay or ½month pay every service

4. Closure or Cessation of business year of = 1 month pay or ½month pay every service

5. Disease the employee… year of = 1 month pay or ½month pay every service

* a fraction of at least six months is considered 1 whole year