ICT-ED INSTITUTE OF SCIENCE AND TECHNOLOGY LIPA

2/F Mercedes Bldg. P. Torres St. Lipa City, Batangas 4217

(043) 757-4445 / (043) 757-5944

COLLEGE DEPARTMENT

Learning Module
In
BUSINESS LAWS AND REGULATIONS
(SY. 2021-2022)

Prepared by:
PAULYN MARIE R. BATHAN
ICT-ED INSTITUTE OF SCIENCE AND TECHNOLOGY LIPA
2/F Mercedes Bldg. P. Torres St. Lipa City, Batangas 4217
(043) 757-4445 / (043) 757-5944
 ICT-ED INSTITUTE OF SCIENCE AND TECHNOLOGY LIPA
2/F Mercedes Bldg. P. Torres St. Lipa City, Batangas 4217
(043) 757-4445 / (043) 757-5944

TYPES OF EMPLOYMENT

There are five types of employment in the Philippines, mostly determined by the nature
of activities that employees perform. The employer is required to establish the terms and
conditions of the employment contract, which is subject to limitations under the Labor Code.

Regular/Permanent Employment
Regular or Permanent Employment is when an employee performs activities that are
necessary or desirable to the business/trade of the employer. Regular employees enjoy the
benefit of tenure and cannot be terminated for causes other than those provided by law and
only after due process.

Most companies in the Philippines require their new employees to undergo

probationary employment for a maximum of six (6) months to evaluate their skills and
performance and determine if they are able to meet the reasonable standards to become
permanent employees.

Casual Employment
Casual Employment is when an employee performs work that is usually not necessary
or primarily related to the employer’s business/trade. The period of employment must be made
clear to the employee at the time they started rendering service.

However, employees that have rendered service for at least one (1) year in the same
company, whether continuous or not, shall be considered regular employees with respect to the
activities they perform and will continue rendering service while such activities exist in the
company.

Term/Fixed-Term Employment
Term or Fixed-Term Employment is a type of employment that is not determined by the
activities that employees are required to perform but by the commencement and termination of
the employment contract. A fixed-term employee can only render services within the set period
of time stipulated in the employment contract and the employer must terminate his/her
employment after such period expires.

Fixed-term employment in the Philippines is highly regulated and subject to the

following guidelines:

⚫ be voluntarily agreed upon by the parties without coercion or improper pressure to the
employee
⚫ employer and employee dealt with each other on more or less equal terms with no
dominance exercised by the former over the latter

Project Employment
Project Employment is when an employee is hired for a specific project and the
duration of employment is defined by the scope of work and/or length of the project. A project
employee can acquire the status of a permanent employee if they are continuously rehired to
 ICT-ED INSTITUTE OF SCIENCE AND TECHNOLOGY LIPA
2/F Mercedes Bldg. P. Torres St. Lipa City, Batangas 4217
(043) 757-4445 / (043) 757-5944

undertake other projects for the company or the tasks they perform are necessary and
indispensable to the usual operations of the company.

Seasonal Employment
Seasonal Employment is defined when an employment contract is only for a certain
time or season of the year. This is common practice in service industries, such as Retail, Food
and Beverage, and Hospitality to increase manpower and cover labor demand during peak
seasons.

Many companies hire “regular seasonal employees” who are only called to work during
peak seasons (e.g. Christmas season) and are temporary suspended during off-seasons.
These employees are not separated from service but are only on Leave of Absence (LOA)
without pay until re-employed.

MINIMUM WAGE IN THE PHILIPPINES

Minimum wage rates in the Philippines vary per region and are prescribed by the
Regional Tripartite Wages and Productivity Board (RTWPB). Under the most recent wage order
for the National Capital Region (i.e., Metro Manila), the minimum gross rate is Php 500.00 per
day.

MANDATORY EMPLOYEE BENEFITS

Under the Labor Code, employees in the private sector are granted six (6) basic
mandatory benefits, which are as follows:

⚫ Social Security System (SSS) – the social insurance program for employees in the private
sector, which provides these employees and their families protection from disability, illness,
old age, and death
⚫ Philippine National Health Corporation (PhilHealth) – the health insurance program, which
provides private employees with a practical means of paying for adequate medical care
⚫ Home Development Mutual Fund (Pag-IBIG Fund) – the housing loan program, which
offers flexible housing loans to private employees
⚫ 13th Month Pay – a mandatory salary bonus equivalent to an employee’s one (1) month
salary, which must be given not later than December 24 every year
⚫ Service Incentive Leave – employees who have rendered at least one (1) year of service
is entitled to a yearly service incentive of five (5) days with pay
⚫ Meal and Rest Periods – a meal period of not less than one (1) hour and rest periods of
short duration in the morning and afternoon that should be included in the hours worked

WORKING HOURS
Normal Work Hours
An employee’s normal hours at work must not exceed eight (8) hours a day. Working
hours shall include:
⚫ the whole duration when an employee is required to be on duty and/or to be at a
prescribed workplace;
⚫ the whole duration when an employee is permitted to work; and
⚫ rest periods of short duration during working hours.
 ICT-ED INSTITUTE OF SCIENCE AND TECHNOLOGY LIPA
2/F Mercedes Bldg. P. Torres St. Lipa City, Batangas 4217
(043) 757-4445 / (043) 757-5944

Night Shift Differential Pay

An employee performing work between 10:00 PM and 6:00 AM must be paid a night
shift premium of not less than 10% of their regular wage for each hour of work performed.

Overtime Work
Work performed beyond the normal working hours must be paid an additional
compensation equivalent to an employee’s regular wage plus at least 25% thereof.

Employees who work beyond 8 hours on a holiday or rest day shall also be paid an
additional compensation equivalent to the rate of the first 8 hours plus at least 30% thereof.

Undertime Not Offset by Overtime

Undertime work on a normal work day shall not be offset by overtime work on any
other work day. Philippine labor laws discourage the offset because the hourly rate of overtime
is higher than the hours missed when an employee works for less than 8 hours.

However, permission given to an employee to go on leave for a day in a regular work

week shall not exempt the employer from paying the additional compensation required for the
overtime work done.

Emergency Overtime Work

An employee may be required to perform emergency overtime work under any of the
following cases:
⚫ when the country is at war or when any other national or local emergency has been
declared by the National Assembly or the Chief Executive
⚫ when it is necessary to prevent loss of life or property in cases of imminent danger to
public safety due to actual or impending emergencies in the locality caused by serious
accidents, fire, flood, typhoon, earthquake, epidemic or any other disaster
⚫ when there is urgent work to be performed on machines, installations or equipment, in
order to avoid serious loss or damage to the employer or some other causes of similar
nature
⚫ when the work is necessary to prevent loss or damage to perishable goods
⚫ where the completion or continuation of the work started before the eighth hour is
necessary to prevent serious obstruction or prejudice to the business or operations of the
employer

OTHER MANDATORY RIGHTS AND BENEFITS

Right to Weekly Rest Days
Employees have a right to a weekly rest period of not less than 24 consecutive hours
after every 6 consecutive normal work days

Right to Holiday Pay

An employee shall be paid his regular daily wage during regular holidays, except in
retail and service establishments regularly employing less than 10 workers. The employee may
be required to work on a holiday but shall be paid a compensation equivalent to twice their
regular rate.
 ICT-ED INSTITUTE OF SCIENCE AND TECHNOLOGY LIPA
2/F Mercedes Bldg. P. Torres St. Lipa City, Batangas 4217
(043) 757-4445 / (043) 757-5944

Right to Separation Pay

Employees dismissed from work due to business closure, reduction of costs or other
reasons that are beyond their control should be granted separation pay equivalent to one (1)
month salary or at least one (1) month salary for every year of service in the company.

Service Charges
All service charges collected by hotels, restaurants, and similar establishments shall be
distributed at the rate of 85% for all covered employees and 15% for management. The share
of the employees shall be equally distributed among them.

In case the service charge is abolished, the share of the covered employees shall be
integrated into their salary.

LEAVES
In the Philippines, employees are entitled to the following leaves: (1) service incentive
leave; (2) maternity leave; (3) paternity leave; (4) parental leave for solo parents, (5) special
leave benefit for women; (6) leave under the Violence Against Women Act; and (7) other leaves
granted by the employer.

Service Incentive Leave

Service Incentive Leave (“SIL”) is mandated by Article 95(a) of the Labor Code for all
employees who have rendered at least one year of service. SIL is equivalent to five days off
with pay. It does not, however apply to certain kinds of employees, such as those in the
government service, domestic helpers, managerial employees, field personnel, employees in
establishments with less than 10 employees and employees that have at least five days of
vacation leave with pay.

The SIL shall be commutable to its money equivalent if not used or exhausted at the
end of the year.

Maternity Leave
Under Sec. 14-A of Republic Act No. (“R.A.”) 1161 (Social Security Law), as amended
by R.A. No. 7322, R.A. No. 8282 and R.A. No. 11210, every pregnant woman in the private
sector, married or unmarried, is entitled to maternity leave benefits. The law provides for daily
maternity benefit equivalent to the average daily salary credit for 105 days, regardless of
whether the woman gave birth by normal delivery or caesarean delivery. For miscarriages or
emergency termination of pregnancy, the woman is given a 60-day leave. For solo parents, an
additional 15 days maternity leave shall be granted. At the option of the woman, she can
allocate up to seven days of leave to her child’s father.

The law requires that the employee has contributed at least three monthly contributions
to the Social Security System for the 12-month period immediately preceding the semester of
her childbirth or miscarriage. She must also have properly notified her employer of her
pregnancy and probable date of childbirth. The leave can be availed by female workers in
every instance of pregnancy, miscarriage or emergency termination of pregnancy, regardless
of frequency.
 ICT-ED INSTITUTE OF SCIENCE AND TECHNOLOGY LIPA
2/F Mercedes Bldg. P. Torres St. Lipa City, Batangas 4217
(043) 757-4445 / (043) 757-5944

Paternity Leave
Under the Paternity Leave Act, the seven-day paternity leave is granted to married
men, employed in both the private and public sector, regardless of their employee status. The
benefit can only be used if the husband is cohabiting with the spouse at the time of the delivery
and the leave can only be availed by the husband after the delivery or miscarriage. In the event
that this leave is not availed, it is not commutable to cash.

Parental Leave for Solo Parents

The Solo Parent’s Welfare Act provides for leave benefits for solo parents as defined in
the law. This includes any solo parent or individual who is left with the responsibility of
parenthood due to various factors such as death of spouse, declaration of nullity of marriage or
annulment of marriage, physical or mental incapacity of spouse, or abandonment of spouse for
at least one year, among others.

The seven-day solo parent leave can only be availed of by solo parent employees that
have rendered at least one year of service, have notified their employer of intent to avail of
leave within a reasonable time, and have presented to his or her employer their Solo Parent
Identification Card.

The law also mandates employers to provide flexible working schedules and to not
discriminate against the employees on the basis of their status as solo parents.

Special Leave Benefit for Women

As provided under the Magna Carta of Women and the regulations of the Department
of Labor, the Special Leave Benefit for Women is a leave benefit for women that have been
diagnosed with gynecological disorders and have undergone surgical procedures, such as
dilatation and cutterage, hysterectomy, ovariectomy, mastectomy and other procedures
involving the female reproductive system, as certified by a competent physician. The woman
shall be entitled to a leave of two months with full pay based on her gross monthly
compensation following the surgical procedure.

To avail this benefit, the employee must have rendered at least six months continuous
aggregate employment service for 12 months prior to surgery.

The special leave benefit is non-cumulative and not convertible to cash, unless
otherwise provided by agreement with the employer.

Violence Against Women Leave (VAWC leave)

Under the Violence Against Women and Children (“VAWC”) Act (R.A. No. 9262), at
any time during the application of any protection order, investigation, prosecution and/or trial of
the criminal case by a VAWC victim, she may apply for the VAWC leave, which is paid leave of
up to 10 days in addition to other paid leaves under the Labor Code and Civil Service Rules
and Regulations, extendible when the necessity arises as specified in the protection order.

The only requirement is a certification from the Punong Barangay, prosecutor, or clerk
of court that there is a pending action under this law. The leave can be used by the woman to
attend to her medical and legal concerns. This leave is non-cumulative and not convertible to
 ICT-ED INSTITUTE OF SCIENCE AND TECHNOLOGY LIPA
2/F Mercedes Bldg. P. Torres St. Lipa City, Batangas 4217
(043) 757-4445 / (043) 757-5944

cash. Employers that fail to comply will be charged under R.A. No. 9262 for discrimination and
violation.

Additional Leaves Granted by the Employer

Employers in the Philippines are free to stipulate other types of leaves for their
employees such as sickness leaves, birthday leave and emergency leaves. For the leaves
mandated by the employer, company policy and regulations will govern on matters such as in
the application, qualification and duration of the said leaves.