Labor Standards and

Social Legislations
1st Semester of AY 2022-2023
 MODULE 3
PART 2 CONDITIONS OF EMPLOYMENT
DYCBALsl313
CONDITIONS OF EMPLOYMENT - 2

• Other Statutory Monetary Benefits of Workers

• Service Charges
• Service Incentive Leave
• 13th Month Pay
• Separation Pay
• Retirement Pay
• Special Leaves
• Solo Parental Leave Conditions under Solo Parents Welfare
Act of 2000 RA 8972
• Gynecological Leave Leave coverage under RA 9710
• Maternity Leave
• Paternity Leave
• Battered Woman Leave
• MODULE 3
• Conditions of Employment – Part 2
• Other Statutory Monetary Benefits of Workers
• Service Charges
• Service Incentive Leave
• 13th Month Pay
• Separation Pay
• Retirement Pay
Learning Objectives
• Understand how service industries operates under service charges and tips.
• Explain when SIL is granted to an employee, how it is earned and
exemptions from this benefit.
• Evaluate qualifications and entitlement on different leave provisions provided
for employees as a matter of right.
• Compare and contrasts the special laws on leaves.
• Explain the nature, entitlement, exemptions and manner of payment of PD
851 also known as provision for 13th month pay
• Differentiate final pay with separation pay and retirement pay.
• Expand understanding when to give ½ month per year of service vs with 1
month of service.
• Explain different conditions of authorized causes.
• Execute accurate computation of payment of service charges, SIL
conversion, 13th month, separation pay and retirement pay.
• Summarize provisions Of RA 7641 or the Retirement Pay law as a right of
the worker
SERVICE CHARGES
Service charge is basically an additional fee
charged by a service establishment ( such as
restaurants, hotels) on top of your bill. In
general, service charge are accrued to cover a
variety of miscellaneous business expenses, but
the most common purpose is to contribute to a
service employee’s wages.

It is the amount that is added to the bill for work

or service rendered.
ARTICLE 96

Distribution of Collected Service Charge:

Rank and File 85%
Management to cover losses 15% I
The shares of the employees in the service charges
shall be distributed to them once every two (2)
weeks or twice a month at intervals not exceeding
sixteen (16) days.
 RA 11360

All service Charges actually collected by the covered establishments shall be distributed
completely and equally, based on the actual hours or days of work or service rendered
among the covered employees, including those already receiving the benefit of sharing in
the service charges

Covered Employees:
Refer to all employees, except managerial employees as defined herein, under the direct
employ of the covered establishment, regardless of their position, designations or
employment status and irrespective of the method by which their wages are paid.

The service charges collected must be distributed and paid to such employees:
Not less than once every two weeks; or
Twice a month at intervals not exceeding 16 days.
 RA 11360

The service charges collected must be distributed and paid to such employees:
Not less than once every two weeks; or
Twice a month at intervals not exceeding 16 days.

In the event that the minimum is increased by law or wage order, service charges paid to
the covered employees shall not be considered in determining the covered establishment’s
compliance with the increased minimum wage
SERVICE INCENTIVE LEAVE

Every employee who has rendered at least

one year of service is entitled to SERVICE
INCENTIVE LEAVE (SIL) of five (5) days with
pay.
SERVICE INCENTIVE LEAVE
• SIL may be used for Sick and vacation
leave purposes
• The unused SIL at the end of the year can
be converted in to cash using the salary
rate and the date of conversion
EXEMPTIONS
• Government employees, whether employed by the National Government
or any of its political subdivisions, including those employed in
government-owned and/or controlled corporations with original charters or
created under special laws;
• Persons in the personal service of another;
• Managerial employees, if they meet all of the following conditions:
• Their primary duty is to manage the establishment in which they are employed or
of a department or subdivision thereof;
• They customarily and regularly direct the work of two or more employees therein;
and
• They have the authority to hire or fire other employees of lower rank; or their
suggestions and recommendations as to hiring, firing, and promotion, or any other
change of status of other employees are given particular weight.
• Officers or members of a managerial staff, if they perform the following
duties and responsibilities:
• Primarily perform work directly related to management policies of their employer;
• Customarily and regularly exercise discretion and independent judgment;
• Regularly and directly assist a proprietor or managerial employee in the
management of the establishment or subdivision thereof in which he or she is
employed; or (b) execute, under general supervision, work
EXEMPTIONS

• (a) Regularly and directly assist a proprietor or managerial employee in

the management of the establishment or subdivision thereof in which he
or she is employed; or (b) execute, under general supervision, work
along specialized or technical lines requiring special training, experience,
or knowledge; or (c) execute, under general supervision, special
assignments and tasks; and
• Do not devote more than twenty percent (20%) of their hours worked in a
workweek to activities which are not directly and closely related to the
performance of the work described in paragraphs 4.1, 4.2, and 4.3
above;
• Field personnel and those whose time and performance is
unsupervised by the employer.
• Those already enjoying this benefit;
• Those enjoying vacation leave with pay of at least five (5) days.
• Those employed in establishments regularly employing less than
ten (10) employees.
SERVICE INCENTIVE LEAVE
Every employee who has rendered at least
one year of service is entitled to SERVICE
INCENTIVE LEAVE (SIL) of five (5) days with
pay.

“One year of service” in this provision means

that service is within twelve (12) months,
whether continuous or broken, reckoned from
the date the employee started working.
SERVICE INCENTIVE LEAVE
Annie was hired June 1, 2020 and no favorable
company policy on availing SIL. She is receiving
Php620.00 a day
December 1, 2020 – still not entitled to SIL
June 1, 2021 – entitled to 5 days with
accrual/earning of .42 / month
Annie resigns on September 30, 2020 and has not
used her SIL
(4/12) x 5 days = 1.67 day
Total accrued SIL as of September = 6.67 days
SERVICE INCENTIVE LEAVE
• SIL may be used for Sick and vacation leave purposes
• The unused SIL at the end of the year can be converted in to cash
using the salary rate and the date of conversion

Total accrued SIL as of September 2020 for

Annie = 6.67 days

Daily rate is Php 620.00

Php620.00 x 6.67 days = Php 4,135.4
Let us try some Examples
1. Mervin is a Manager of ABC Bank with an
earnings of Php 120,000 a month.
2. Jasper is working as a call center agent with a
salary of Php 18,000 a month with 5 days Sick
Leave, 5 Days Vacation leave and 3 days
Emergency leave per year.
3. Jane is works as a Sales Lady receiving
minimum wage rate. She is a casual employee who
stayed for 5 months.
4. CJ is a clerk in a Food Service industry and has
been in service for 15 months receiving Php 16,000
a month working for a 5 day work week with unpaid
rest days.
Let us try some Examples
4. CJ is a clerk in a Food Service industry and has
been in service for 15 months receiving Php
16,000 a month working for a 5 day work week
with unpaid rest days. If he resigned and on his
15th month and has used only 2 days of SIL.
How much will be converted to cash
12 months = 5 days
(3/12) x 5 days = 1.25
Used SIL = 2 days
For conversion = 4.25
735.63 /day x 4.25 days = Php 3, 126.4275
Scenario

• ANNIE is working 8 hours a day every Monday

to Friday. Her monthly salary is Php 20,000.
She is entitled to 15-day vacation leave and
15-day sick leave for a total of 30 days leave
credits per year.
• Scenario 1: She used a total of 20 days paid
leaves. Is she entitled to cash conversion for
the remaining 10 unused leave days?
Scenario

• NO. Leave conversion is applicable only for

maximum of 5 days leave with pay per year. If
the employee is receiving more than that and
already utilized at least 5 days, no more cash
conversion is allowed unless there is favorable
company policy.
Scenario

• ANNIE is working 8 hours a day every Monday

to Friday. Her monthly salary is Php 20,000.
She is entitled to 15-day vacation leave and
15-day sick leave for a total of 30 days leave
credits per year.
• Scenario 2: Out of 30 days, she only used 3
days of her leave credits. Is she entitled to
cash conversion?
Updates
• March 2020 House of Representatives
approved on the final reading of increasing the
number of SIL
• Proposal to increase by 10 days to amend the
LC on SIL
• Share your thoughts on 13th Month
 13TH MONTH
13th MONTH
It is a mandatory benefit provided to
employees pursuant to Presidential Decree No. may not give to employees
851 which requires employers to grant
13th month pay to all its rank and file
employees.
monetary benefit equivalent to the monthly
basic compensation received by an employee,
computed pro-rata according to the number of
months within a year that the employee has
rendered service to the employer
Obligatory to be fulfilled by the employer
The thirteenth-month pay shall be paid not
later than December 24 of every year
Bonus
Company initiated to which employer may or
Bonus is an amount granted to an employee in
excess of what the law requires as a reward or
incentive for achieving a goal and/or
contributing to the success of the employer’s
business.
Not demandable and enforceable obligation
No defined schedule
 Who are entitled to 13th month?

• rank-and-file employees who have worked

for at least one month during the calendar
year, regardless of resignation or
termination.
 Exempted

• The government and any of its political subdivisions, including government-owned and
controlled corporations, except those corporations operating essentially as private
subsidiaries of the Government;
• Employers who are already paying their employees 13th month pay or more in a
calendar year or its equivalent at the time of the issuance of PD 851;
• Employers of persons in the personal service of another in relation to such workers;
and
• Employers of those who are paid on purely commission, boundary, or task basis, and
those who are paid a fixed amount for performing specific work, irrespective of the
time consumed in the performance thereof, except those workers who are paid on
piece-rate basis, in which case the employer shall grant such workers the required
13th month pay.
Amount of 13th Month Pay

The 13th month pay shall not be

less than 1/12 of the total basic salary earned by an employee within a
calendar year.

To illustrate:

Total basic salary earned for the year = proportionate 13th month pay
12 months
 Sample Computation
Let’s take Annie’s case with Php 620.00 daily rate on a no work no pay with work schedule of
Monday to Friday with unpaid rest days of Sat and Sunday. She resigns on September 30. How
much 13th month pay will she be entitled to if she was on maternity leave for 105 days which she
extended until the end of April (total of 4 months from March to June) .S filed for a 5 days leave
with pay in September prior to her resignation . How much 13th month will she be entitled to?
January no absence Php 13,485.00
February no absence Php 13,485
March ML no salary
April ML no salary
May ML no salary
June ML no salary
July no absence Php 13,485.00
Aug no absence Php 13,485
Sept 5 days leave with pay Php 13,485
Total Basic Salary Earned Php 67,425
Proportionate 13th month Php 5,618.75
 13th Month for Some Type of
Employees
• Employees who are paid on piecework basis are entitled to the thirteenth-
month pay.
• Employees who are paid a fixed or guaranteed wage plus commission are also
entitled to the thirteenth-month pay, based on their earnings during the
calendar year (i.e., on both their fixed or guaranteed wage and commission).
• Employees with multiple employers
• Government employees working part-time in a private enterprise, including
private educational institutions, as well as employees working in two or more
private firms, whether on full-time or part-time basis, are entitled to the
thirteenth-month pay from all their private employers, regardless of their total
earnings from each of their employers.
The frequency of payment of this monetary benefit may be the subject of an
agreement between the employer and the recognized/collective bargaining agent
of the employees

13th month is not part of the regular wage of employees, for purposes of
determining overtime and premium payments, fringe benefits and other
contributions.

13th month pay together with productivity incentives and bonuses not exceeding
ninety thousand (90,000) are tax exempt.
RETIREMENT AND
RESIGNATION
• Retirement from service is contractual ( i.e.
based on the bilateral agreement between the
employer and the employee)
• Termination of employment is statutory. ( i.e.
governed by the Labor Code and other laws as
to its grounds, benefits and procedure.
• Voluntary retirement cuts employment ties
leaving no residual employer liability.
RETIREMENT
• In the absence of such agreement or any policy, the
retirement age is governed by Article 302( Pre 287 of
the Labor Code.
• Compulsory retirement upon reaching the age 65 years; and
• Optional retirement on the part of an employee upon reaching
the age of 60 years. Prerogative is exclusively lodged in the
employee.
• In both cases, the employee must have rendered at least 5
years in the establishment concerned to be entitled to the
retirement benefits. In both cases, ( optional and compulsory)
retirement, employee is entitled to retirement pay to at least ½
month for every year of service or 15 days + 1/12 of the 13th
month pay + cash equivalent of 5 days service incentive
leave.
• Those in retail and service establishments employing not
more than 10 employees are exempted from retirement
benefits.
• Retirement Benefits under a Collective
Bargaining Agreement or Applicable
Contract
• SSS Different from Retirement Benefits
• Income tax coverage
Retirement Pay Example
• A clerk reached 60 this November 30, 2021.
She has stayed in the company for 12 years
with her current rate of Php 24,000 monthly
salary. How much retirement pay will she be
entitled to?
RESIGNATION
“the formal pronouncement or relinquishment of a position or office — is
the voluntary act of an employee who is in a situation where he believes
that personal reasons cannot be sacrificed in favor of the exigency of the
service, and he has then no other choice but to disassociate himself from
employment.” - De Vega
RESIGNATION
• Under Article 285 of the Labor Code an employee
may terminate without just cause the employee-
employer relationship by serving a written notice
on the employer at least one (1) month in advance.
• The 30 days’ notice is for the benefit of the
employer, therefore the employer may waive such
period. Thus it become discretionary on the part of
management if the employee who intends to
resign may be allowed a shorter period before
his/her resignation become effective. The
management ahs the right to move the effectivity
date to an earlier date.
Immediate resignation of the
employee
• The following grounds under Art. 285 of the Labor
Code are considered just causes allowing the
employee to resign immediately:
• Serious insult by the employer or his representative on
the honor and person of the employee;
• Inhuman and unbearable treatment accorded the
employee by the employer or his representative;
• Commission of a crime or offense by the employer or
his representative against the person of the employee
or any of the immediate members of his family; and
• Other causes analogous to any of the foregoing.
•
• The resignation is complete upon acceptance by
the employer. Once the employee resigns and it
has been accepted, the said employee no longer
has any right to the job. In case the employee
changes his mind, approval of the withdrawal of
resignation is dependent on the management’s
decision. It is also the discretion of the
management to determine if service would still be
continued or not. The employee cannot claim for
illegal dismissal on this because it was the
employee who voluntarily resigned from the
institution, and that he /she only changed his mind.
FINAL PAY
• Is the money of employee receive after
resigning from a company
• Typically given a month after the employee’s
last day or after submitting all clearance
requirements
• Last salary
• Pro-rated 13th month
• Tax refund
• VL/SL or SIL unused
• Deductions
 Separation Pay
• Separation pay is given to employees in instances covered by Articles 298and
299(formerly Articles 283 and 284) of the Labor Code of the Philippines.

• An employee’s entitlement to separation pay depends on the reason or ground for

the termination of his or her services.

• An employee may be terminated for just cause (i.e., gross and habitual neglect of
duty, fraud, or commission of a crime), and other similar causes as enumerated
under Article 297(formerly Article 282) of the Labor Code and, generally, may not be
entitled to separation pay.

• On the other hand, where the termination is for authorized causes, separation
pay is due.
 AUTHORIZED CAUSES
 Introduction of labor-saving devices
 Redundancy
 Retrenchment (to prevent losses i.e., reduction of personnel effected by
management to prevent losses);
 Closure or Cessation of business
 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.
 Separation Pay
½ month for every year of service or 1
month pay whichever is higher
o Retrenchment to prevent losses (i.e., reduction of
personnel effected by management to prevent
losses);
o Closure or cessation of operation of an
establishment not due to serious losses or financial
reverses; and
o When the employee is suffering from a disease not
curable within a period of six (6) months and
his/her continued employment is prejudicial to
his/her health or to the health of his/her co-
employees.
o Lack of service assignment of security guard for a
continuous period of six (6) months
1 month pay or 1 month pay per year of
service
• Installation of Labor Saving Device
• Redundancy, as when the position of the employee has
been found to be excessive or unnecessary in the
operation of the enterprise; and
• Impossible reinstatement of the employee to his or her
former position or to a substantially equivalent position
for reasons not attributable to the fault of the employer,
as when the reinstatement ordered by a competent
authority cannot be implemented due to closure or
cessation of operations of the establishment/employer,
or the position to which he or she is to be reinstated no
longer exists and there is no substantially equivalent
position in the establishment to which he or she can be
assigned.
• Lack of service assignment of security guard by reason of
age.
 Separation Pay
½ month for every year of service or 1 One month salary or 1 month pay per year of
month pay whichever is higher service o
o 15,000 monthly salary o 15,000 monthly salary

Employee A = 10 years of service Employee A = 10 years of service

Employee B = 2 years of service Employee B = 2 years of service

Employee C = 1 year of service Employee C = 1 year of service

A = 7,500 X 10 YEARS = phP 75,000 VS Php 15,000 A 15,000 X 10 YEARS = Php 150,000

B. = 7,500 x 2 years = Php 15,000 vs Php 15,000 B. 15,000 X 2 YEARS = Php 30,000

C. = 7,500 X 1 YEAR = Php 7,500 vs Php 15,000 c. 15,000 x 1 YEAR = Php 15,000
Separation Pay
• If an employee earning P15,000.00 per month
and who has been working in the company for
10 years gets laid off due to installation of labor
saving device, the package is computed as
follows.
• One-month pay for every year of service =
P15,000.00 x 10 = 150,000
• This is higher than 1 month salary of Php
15,000
Separation Pay
• If an employee has only been working for the
company for only five months, the separation
pay computation is as below.

• One-month salary = P15,000.00,

or One-month income for every year of service =
P15,000.00 x 0 = 0.00
• He will be paid P15,000.00
Separation Pay
• If an employee earning P15,000.00 per month
and who has been working in the company for
10 years gets laid off due to closure/cessation
of the business the package is computed as
follows.
• One-month pay = P15,000.00 or
• ½ of Php 15,000 x no. of years
• 7,500.00 x 10 years = Php 75,000
Separation Pay
• If an employee has only been working for the
company for only five months, the separation
pay computation is as below.

• One-month salary = P15,000.00,

or ½ month income for every year of service =
P7,500 x 0 = 0.00
• He will be paid P15,000.00
Separation Pay
• If an employee has only been working for the
company for only five months, the separation
pay computation is as below.

• One-month salary = P15,000.00,

or ½ month income for every year of service =
P7,500 x 0 = 0.00
• He will be paid P15,000.00
• If an employee has only been working for the
company for only five months, the separation
pay computation is as below.

• One-month salary = P15,000.00,

or ½ month income for every year of service =
P7,500 x 0 = 0.00
• He will be paid P15,000.00
Notice of Termination

serving a written notice on the employee and the Department of Labor and Employment
through its regional office having jurisdiction over the place of business at least one (1)
month before the intended date thereof.

Basis of Separation Pay

The computation of separation pay of an employee shall be based on his/her latest salary
rate.

Inclusion of Regular Allowance in the Computation

In the computation of separation pay, it would be error not to integrate the allowance with
the basic salary. The salary base properly used in computing the separation pay should
include not just the basic salary but also the regular allowances that an employee has been
receiving.

Tax Coverage in Separation Pay

Exempted from taxation is the separation pay received by an employee as a result of his
separation from service due to death, sickness or other physical disability for other cause
beyond the control of the said employee such as retrenchment, redundancy or cessation of
business operations.
Thank you !!!
SPECIAL LEAVES
• Solo Parent Leave
• Magna Carta for Women / Gynecological
Leave
• Maternity Leave
• Paternity Leave
VAWC Leave
https://www.pinterest.ph/pin/684265737104868102/?nic_v2=1a6RLEwgx
https://tinainmanila.com/2020/07/06/hr-talk-105-day-
expanded-maternity-leave/
• Extended period where member can claim the benefit.
• The maternity leave must be done in a continuous and
uninterrupted manner.
• Payment in full or regular payment.
• Employers who do not fulfill their obligations shall be fined
Php 20,000 – 200,000 with imprisonment of 6 years to 12
years
• Maternity Benefit is non-taxable