Professional Documents
Culture Documents
Week 1-2: Unit Learning Outcomes (ULO): At the end of the unit, you are expected
to:
Metalanguage
1. Compensation. This refers to the total cash and non-cash payments given to
employees in exchange for the work rendered to the company.
2. Premium Pay. This pertains to a sum of money or bonus paid in addition to the
regular price, salary or other amount.
Essential Knowledge
The Compensation Plan (CP) under RA No. 6758 is an orderly scheme for
determining rates of compensation of government personnel.
It was crafted to attract, motivate, and retain good and qualified people to accomplish
the Philippine Government’s mission and mandates, to encourage personal and
career growth, and to reward good performance and length of service. To achieve
these goals, the CP has a mix of compensation components, namely: basic pay or
salaries, fringe benefits, incentives, and non-financial rewards which provide
reasonable levels of compensation packages within existing government resources,
and are administered equitably and fairly.
Compensation administration is a s segment of management or human resource
management focusing on planning, organizing, and controlling the direct and indirect
payments employees receive for the work they perform.
Compensation includes direct form such as base, merit, and incentive pay and indirect
forms such as vacation pay, deferred payment, and health insurance. Compensation
does not refer, however, to other kinds of employee rewards such as recognition
ceremonies and achievement parties.
The compensation plan lays out the overall statements of belief around which to
design, administer, and communicate reward programs. It becomes the “stake in the
ground” that reinforces the culture and management style. It tells employees what you
stand for.
§ base pay
§ wage and salary add-ons
§ incentive payments
§ benefits and services
1. Base pay refers to the cash that an employer pays for the work performed. This
base pay can be further delineated as either a wage or a salary.
§ Wages are hourly rates of pay regulated by the Labor Standards of the
Department of Labor and Employment together with the National Wages
and Productivity Committee (NWPC).
§ Salaries, which are usually paid to managers and professionals, are
annual or monthly calculations of pay that usually have less relation to
hours worked.
4. Benefits and services include paid time-off, health insurance, deferred income
such as pension and profit-sharing programs, company cars, fitness club
memberships, child care services, and tuition reimbursement. Social security, workers’
compensation and unemployment compensation are three legally required benefits.
Benefits may also come in the form of protection programs, such as life and health
insurance and pensions and retirement plans.
1. Statement of overall objectives. This should explain how the rewards program
supports the needs of the business, employees, shareholders, and/or customers. each
reward element should have a defined role.
4. Competitive reference points. The plan should describe the comparative group for
your rewards package. This might be your industry and/or geographic competitors, for
example. The key is to define the program benchmarks.
5. Competitive positioning. Describe your desired position vs. the market in the last
point. For example, do you want to provide salaries consistent with the industry
average? Or do you want to establish yourself as a company who provides premium
pay over the competition? No matter what your position is, be transparent an state the
intent. If your intended positioning is below the industry average, be sure to explain
why. Lack of information will only allow rumors to circulate.
6. Internal equity and consistency. Will your strategy be consistent? Will it apply to all
employee groups? Employees will look for fair and uniform treatment without
favoritism before groups. You also need to decide whether you will choose between
internal and external consistency or try to balance the two.
8. Governance. The program should be reviewed and refreshed; the frequency and
responsibility for review needs to be established before proceeding to the next level.
The Labor Code of the Philippines, otherwise known as Presidential Decree No. 442,
governs all employee-employer relations, their rights, and obligations. Payroll Salary
Compensation and Benefits in the Philippines is provided under the Labor Code of the
Philippines and other relevant laws.
1. Minimum Wage. The Wage Rationalization Act, Republic Act No. 6727, sets the
minimum wage rates applicable per region, province, and industry sector. The industry
sectors are: non-agricultural, agriculture (plantation and non-plantation), cottage and
handicraft, retails and service sectors. Minimum wage may vary depending on the
number of employees and gross-sales of an enterprise and its industry sector. As of
June 2016, the minimum wage of non-agricultural workers in Metro Manila is Php 537
inclusive of COLA.
Overtime Rates:
The “No Work, No Pay” principle applies during special non-working days and such
other special non-working days as may be proclaimed by the President of the
Philippines. Workers who are not required or permitted to work on these days are,
therefore, not entitled to any compensation. This, however, is without prejudice to any
voluntary practice or CBA providing for payment of wages and benefits for declared
special days even if unworked.
4. Holiday Pay. The Labor Code requires the payment of an employee’s daily basic
wage for all non-working regular holidays. There are 12 regular and three special non-
working holidays in the Philippines.
Rate Example:
Absences
§ All covered employees shall be entitled to holiday pay when they are on leave
of absence with pay on the workday immediately preceding the regular holiday.
Employees who are on leave of absence without pay on the day immediately
preceding a regular holiday may not be paid the regular holiday pay if they do
not work on such regular holiday.
§ Employers shall grant the same percentage of the holiday pay as the benefit
granted by competent authority in the form of employee’s compensation or
social security payment whichever is higher, if the employees are not reporting
for work while on such leave benefits.
§ Where the day immediately preceding the holiday is a non-work day in the
establishment or the scheduled rest day of the employee, he/she shall not be
deemed to be on leave of absence on that day, in which case he/she shall be
entitled to the holiday pay if he/she worked on the day immediately preceding
the network day or rest day.
§ Successive Regular Holidays. Where there are two (2) successive regular
holidays, like Maundy Thursday and Good Friday, an employee may not be
paid for both holidays if he/she absents himself/herself from work on the day
immediately preceding the first holiday, unless he/she works on the first holiday,
in which case he/she is entitled to his/her holiday pay on the second holiday.
5. Night Shift Differential. For work done between the hours of 10 pm to 6 am,
employees are entitled to Night Shift Differential (NSD), which represents an additional
10% to the regular wage for each hour of work performed.
7. Service Incentive Leave. Every employee who has rendered at least one (1) year
of service is entitled to a Service Incentive Leave (SIL) of five (5) days with pay. SIL
may be used for Sick and Vacation Leave purposed. The unused SIL at the end of the
year can be converted into cash using the salary rate at the date of conversion. It is
the employer’s prerogative to grant additional vacation leave.
8. Parental Leaves. The Labor Code of the Philippines covers three different types of
parental leaves: maternity leave, paternity leave, and solo-parent leave.
§ Paternity leave. All married male employees are entitled to a 7-day paternity
leave for the delivery or miscarriage of his legitimate spouse with whom he must
live, for up to four pregnancies. The paternity leave is at the cost of the employer
and is not reimbursed by the SSS.
Coverage: Female employees who gave birth starting March 11, 2019
Benefits:
Amount of Benefits:
Employer shall pay the salary differential which is the difference between the full
salary and the actual cash benefit received from SSS
Requirements:
9. Other Leaves
Victims shall be entitled to take a paid leave of absence up to ten (10) days in addition
to other paid leave of absence under the Labor Code and Civil Service Rules and
Regulations, extendible when the necessity arises as specified in the protection order.
10. 13th Month Pay. Each year, a 13th month pay is given to all rank-and-file
employees. By law, this benefit must be paid before December 24th and is mandatory.
Employees who have resigned or have been severed from the company before the
payment of 13th month pay are still entitled to it in proportion to the length of time they
worked for during that year. The 13th month pay must be at least 1/12th of the total
basic salary of each employee earned during that calendar year.
11. Separation Pay. Following the labor code of the Philippines, Articles 283 and 284
state that an employee can claim separation pay if his contract is ended under
authorized causes. According to Article 282, an employee terminated for just cause
(neglect of duties, fraud, crime, etc.) is generally not entitled to separation pay.
A separation pay of ½ month pay for every year of service can be claimed under the
following authorized causes:
A separation pay of 1 month pay for every year of service can be claimed under the
following authorized causes:
12. Retirement Pay. All employees from the private sector may retire from age 60 up
to age 65, at which retirement becomes compulsory, and must have served the
establishment for at least 5 years. Retirement pay must at least be equivalent to half
of a month’s salary for each year of service and a fraction of at least 6 months is
therefore considered as one whole year. One “half-month salary” must include the
following:
Minimum Retirement Pay = Latest daily pay rate x 22.5 days per month x number of
years of service
Depending on the agreements between the employer and the employee, other
benefits can be included in the retirement pay such as a Collective Bargaining
Agreement.
13. Gross Benefits & De Minimis Benefits. To reward employee performance and
to set incentive, it is common for employees to give compensations in cash or in kind
to employees. According to the Philippine regulations, these benefits are exempt of
taxes under certain conditions. Following the tax code, benefits received are excluded
from the computation of gross income as long as it remains below 82,000.00. “Gross
benefits” include the 13th month pay, Christmas bonuses, productivity and incentive
bonuses, and other benefits of the same nature in cash or in kind. In addition to that,
compensations of small value, called De Minimis benefits, are also excluded from the
computation of gross income. De Minimis benefits have the purpose to promote the
well-being and efficiency of employees are limited to facilities or privileges or relatively
small size.
Laws must cover private sector employees under the Social Security System (SSS).
Based on each employee’s gross monthly pay, both the employer and the employee
remit monthly contribution to the SSS. In turn, the SSS benefits cover maternity,
retirement, sickness, disability, and death, and pension benefits.
PHILHEALTH
For all employees covered by the SSS, medical coverage is mandatory and automatic.
Both the employer and the employee contribute equal monthly amounts to the
Philippine Health Insurance Corporation.
The Home Development Mutual Fund (HDMF), also known as the Pag-Ibig Fund, is
mandatory to all employees who are compulsorily covered by the Government Service
Insurance System (GSIS, for Government Employees) or the SSS.
§ Savings
§ Short-term loans
§ Access to low cost housing programs
DOLE
The Department of Labor and Employment (DOLE) is the national government agency
mandated to formulate and implement policies and programs, and serve and the
policy-advisory arm of the Executive Branch in the field of labor and employment.
Self-Help: You can also refer to the sources below to help you
further understand the lesson:
Metalanguage
Below are the essential terms that are operationally defined for you to better
understand this section of the course.
1. Total rewards program. This constitute all the things a business uses to attract
employees including salary, bonuses, incentive pay, benefits, and employee growth
opportunities.
Essential Knowledge
Compensation
Base pay Wages and salaries
Merit pay Base-pay increases based on employee
performance
Incentives Cash bonuses based on employee
performance
Promotions Base-pay increases based on potential
to perform new job
Pay increases Base-pay increases based on length of
service with the organization
Benefits
Personal Growth
The most successful total rewards initiatives are guided by a project team from start
to finish. By assembling the right team, you greatly boost your chances of success.
As your first step in assembling the team, think about whom you’ll designate as the
project leader. The best leaders are senior HR professionals with project management
and total rewards experience – they encourage ongoing communication between the
project team and top management, and lend credibility to the project.
The team might include a consultant from outside the organization. This individual can
bring technical knowledge to the project, wisdom gained from experiences with similar
organizations, and project management skills. An outsider may also have a more
objective view of the implementation process.
In addition, the project team should show employee representation. If your
organization has unionized employee, then the team should include a union official.
By involving the union in the project, you will have a better chance of gaining its support
for proposed total rewards strategies. Likewise, be sure the project team includes one
or two high performing and well-liked employees from the non-union workforce. By
representing the interest of non-union employees who will be affected by the new total
rewards plan, these individuals further increase your chances of gaining buy-in from
the workforce.
You will need team members who bring expertise in finance, employment law, and HR
information and payroll systems, as well as someone to represent the middle and
lower layers of management in your organization. Lastly, the team should include
several HR professionals with extensive total rewards experience and the ability to
develop policies and procedures. You can also consult a legal expert during and after
the design phase rather than throughout the entire implementation process.
Each member of the project team should start off with a clear understanding of his or
her role. Team structure shows how one project team organized themselves. As this
suggests, ultimate authority for the total rewards project resides with senior
management, while the project task force and consultants coordinate the effort.
A separate subcommittee, each headed by a project team member who reports back
to the larger task force, takes responsibility for each element of the company’s
compensation system.
During the assessment phase, the project team evaluates the company’s current total
rewards system and generates ideas for improving it. In this phase, task include
conducting focus groups and industry benchmark surveys, examining current reward
strategies and employee attitudes toward them, reviewing rewards related literature,
and creating a report documenting the team’s findings and recommendations.
During the design phase, the project team identifies which employee and
organizational attributes to reward and which types of rewards to offer. The team
should consider the full range of reward strategies, including compensation, benefits,
personal and professional development, and work environment.
Once the project team has designed a total rewards system, it moves to the execution
phase of the implementation process - putting the new system in place in the
organization. During this phase, the team must consider numerous issues.
In this phase, the project team compares the actual results of the executed total
rewards strategies against the desired results.
§ Improving the ease of recruitment. The more items or inducements that you are
able to put on the table, the stronger the case you make for selling your
organization which can help you bring high-performing candidates on board.
§ Increasing retention rates. Positive messages of caring will help with employee
retention. The better the overall work environment, the more reluctant an
employee would be to leave.
WORK ENVIRONMENT
§ Work/Life Balance. Though work/life balance can take many forms, most of the
research to date have focused on flexible work schedules and compressed
work weeks. Flexible work schedules exert a more positive impact on
performance while compressed work schedules improve employee attitudes.
§ Employee Retention.
§ Employee Performance
§ Controllable Expenses
§ Program Administration
*Nair, R. (2019, 08). Is your total rewards strategy still effective? Recognition and
Engagement Excellence Essentials, Retrieved from
https://search.proquest.com/magazines/is-your-total-rewards-strategy-still-
effective/docview/2307435350/se-2?accountid=31259