ANNEX A3

CEAP Task Force COVID19 for Institutional Assessment and Response

(CEAP TF COVID 19 IAR)
Subcommittee on Government Advisories

On Compensation of Employees during COVID-19

(updated as of May 6, 2020)

During the uncertainty of this COVID-19 pandemic, there may be a lot of concerns regarding the
ability of schools to compensate its employees – especially its teachers. To assist us in this, we
need to remember the following:

1. In this jurisdiction, we abide by the principle of “No work, no pay.”

Basic is the rule – the employer has to abide by the “NO WORK, NO PAY” policy. For
example, when a school decides to temporarily suspend its entire operations on account
of the ECQ and onwards (if the GCQ or other modes of quarantine restrictions still
prohibit schools from re opening/allowing employees to physically enter the campuses),
and does not provide any flexible working arrangements pursuant to the DOLE advisory,
the school is not obligated to pay its employees. Should they do so, said schools must
report their temporary closures with the appropriate DOLE Regional Office using
the Establishment Report on COVID-19 prescribed under the COVID-19 Flexi-Work
Advisory.

This temporary closure on account of the ECQ has to be distinguished from the
provision in our Labor Code on the bona fide suspension of the operation of a business
or undertaking for a period not exceeding six (6) months under article 301 of the Labor
Code which would not terminate employment.

However, the mandate on reinstatement without loss of seniority rights if the employee
indicates his or her desire to resume work, should still be observed once the ECQ is
lifted or as soon as the relevant government advisory is issued which will allow physical
entry of employees to their work establishments.

2. However, see LABOR ADVISORY 9 s. 2020 (Covid-19 Flexi-work Advisory) which allows
schools to consider alternative working arrangements that would give rise to the
obligation to compensate employees fairly for the number of hours worked, even if the
work is not done in the school campus.
 Under the said advisory, employers are encouraged to adopt FWAs to prevent the
spread of COVID-19, including:

a. reduction of workhours and/or workdays,

b. rotation of employees and
c. other alternative work arrangements

In order to cushion or mitigate the effect of the loss of income of the employee. To
adopt an FWA, employers are obliged to notify the appropriate DOLE Regional Office by
submitting the Establishment Report on COVID-19, with employers and employees being
primarily responsible for the FWA’s administration.
3. If a school adopts a Flexi- Work Arrangement, how should employees be
compensated?

If the school decides to implement for example a “work from home arrangement” for
those qualified personnel who can work from the confines of their home, the nearest
guideline or standard that employers should take note of is the Telecommuting Act,
under which a WFH Arrangement may be considered as “telecommuting” -- “a work
arrangement that allows an employee in the private sector to work from an alternative
workplace with the use of telecommunication and/or computer technologies[.]”

The principles of the Telecommuting Act require “fair treatment” of WFH employees as
opposed to employees physically reporting in the establishment in terms of: (a) legal
benefits, (b) workplace standards, (c) training and career development opportunities,
and (d) the exercise of an employee’s collective rights. Applying this similarly to the
present situation, an employee engaged under a WFH Arrangement is entitled to
receive full pay for a full day’s work. However, this list would not cover other incidental
conveniences provided by the employer at the workplace.

Important to take note of at this point is the fact that while compliance to Labor
Advisory 9 (resort to FWA) is an accommodation to employees and as an alternative to a
complete loss of income, the Telecommuting Act covers a work from home
arrangement as the normal operations of a business. As such, under regular
telecommuting, a higher burden for providing the “same treatment” is imposed on an
employer, but this burden is relaxed with respect to FWAs implemented owing to
COVID-19 –i.e. the employer can qualify who are allowed to resort to FWAs as well as
adopt hybrid arrangements in this FWA scheme.

4. Other arrangements that can be resorted to:

a. Reduction of hours worked

 Under a reduced workhours/workdays arrangement, employees will continue to
receive their salaries, although it will be reduced in proportion to the reduction of
workhours/workdays.
For such employees, hours worked shall continue to be governed by the principles
on working time under the Labor Code such that an employee is considered to be
working for (a) all hours they are required to give the employer while on duty, (b)
when the employee is suffered or permitted to work, as well as (c) time when the
employee is considered as on call.

The period of the reduction of workhours/workdays shall not be paid.

Will it violate the rule on non-diminution of benefits?

For as long as the resort to the FWA is consistent with DOLE LA 9 s. 2020, that this
has been properly reported to the DOLE Regional Office, AND provided the employer
has secured the written consent of the employees, there is no violation of the said
rule.

b. Rotation of employees

A rotation program is when employees are alternately provided work within the
week. This arrangement allows an employer to maintain its operating hours during a
work week, but with reduced productivity due to the reduction of the number of
employees present. If an employer resorts to this arrangement, the same rules as
par. a on compensation still applies.

5. Use of leaves by employees

Leave benefits allow employees to be absent from work without incurring any reduction
in pay or any penalty. They are also in the nature of a right given to employees,
meaning as a rule it is the employee that decides when to avail of the same.

As an exception, employers of essential establishments which continue to physically

operate may require their employees to go on “forced leave,” as authorized under
the COVID-19 Flexi-Work Advisory, whenever they are sick, or as an exercise of
management prerogative to mitigate the effects of COVID-19 in the workplace.
But for establishments that have temporarily ceased operations (in whole or in part) as
a result of the ECQ, only the employee can decide whether to use their leave benefits in
order to continue receiving pay even when the workplace has ceased from operating.

 Prior to the cessation of the implementation of the DOLE- CAMP program,

establishments were guided by DOLE Labor Advisory 11 s. 2020 which provides:
“The leaves of absence during the community quarantine period shall be charged
against the employee’s existing leave credits, if any. Remaining unpaid leaves
 during said period may be covered and be subject to the conditions provided for
in CAMP.”

6. On Salaries and other benefits provided while on a FWA:

In the event that an employer seeks to modify the grant of other benefits or allowances
which are granted on top of the employees’ salaries for the duration of the FWA, it is
important to consider whether these benefits/allowances have become a company
practice or is contractually stipulated (i.e. specifically mentioned in the CBA).

In such cases, any reduction of such benefits or allowances while employees are on
FWAs must be consented to and agreed upon between the employer and the concerned
employees consistent with the rule on non-diminution of benefits.

7. Deferment of payment of holiday pays

Labor Advisory 13-a s. 2020 provides that employers are allowed to defer the payment
of holiday pays on those legal holidays falling in the month of April. For those
establishments that have temporarily closed on account of the ECQ, they are exempt
from providing holiday pay.

In my opinion, this labor advisory might be adopted for the coming legal holiday/s in
May.

8. 13th month pay not obligated; but may be given as additional aid to employees

There is no legal requirement for employers to advance the whole or pro-rated

13th month pay of its employees in light of the COVID-19 pandemic. But, heeding the call
of the President of the Philippines in his media pronouncements, employers (especially
the big establishments) may, as an exercise of their management prerogative, grant its
employees’ 13th month pay in advance, whether in whole or pro-rated, as a means for
mitigating the impact of the COVID-19 pandemic.

9. Can we defer payments of our employee’s membership contributions with Philhealth,

SSS, and Pag-ibig ?

In their respective websites, these agencies have issued guidelines on the payment of
membership contributions:

a. For PHILHEATH, please see this link:

https://www.philhealth.gov.ph/advisories/2020/adv2020-0027.pdf
 PhilHealth is issuing a moratorium on contribution payments for the applicable
months of February to April 2020. Payment of premiums for these applicable
months shall be extended until May 31, 2020 without interest for all Direct
Contributors.

For Employers implementing a skeletal workforce arrangement, please ensure

that employees with no earnings or income are properly reported using the RF-1.
For Employers who have temporarily stopped operations, please submit an
electronic copy of a properly accomplished ER-3 to your respective Accounts
Officer.

b. For SSS, please see this link:

https://sssinquiries.com/payment/sss-contributions-payment-deadline-
extended-in-light-of-covid-19/

For Regular Employers, contributions for the applicable months of February,

March and April 2020 may be paid until June 1, 2020. 

For employers with approved installment proposals under the Contribution

Penalty Condonation Program, their post-dated checks due in February, March.
April and May 2020 shall be deposited on June 1, 2020.

Payment deadline for the applicable months after April 2020 shall observe the
original payment deadline

c. For Pag-Ibig, their website only mentions they are allowing a three-month
moratorium period on loans, not membership contributions.

On the whole, however, it might be advisable (and if your schools are capable of doing
so), to simply pay these membership contributions during the affected months.

For one, it would allow the enrolled members (the employees of your school) the
possibility of applying for much needed loans (SSS, Pagibig) during this period when the
school’s employees might not be able to receive their salaries.

Second, the updated payment of contributions allows the employees to avail of

whatever discounts may be given to them in the event they should be hospitalized
during this quarantine period.

Finally, as catholic schools, this could be considered this as an act of charity especially if
the said schools are not capable of providing the full salaries of the employees, at the
very least they are able to provide these benefits.

10. After May 2020 what can employers do?

In the recent quick survey prepared by the COCOPEA and the CEAP, most schools have
admitted that it may no longer be able to provide for salaries of its teachers after May
2020, especially considering that no tuition income can be collected for the months that
the school goes on its summer break (unless of course these schools will provide online
summer classes.)

a. Some schools might consider advancing the “summer pay” of their teachers. For
most schools, this summer period is still compensable time for teachers, even if they
do not report for work, insofar as their employment contract extends beyond the
required number of school days.

There are proposals in some schools to advance this summer pay which the teachers
are supposed to get in 2021. This would give the employees the additional cash
needed during this period of the ECQ. To do this, however, may require the written
consent of the employees/unions.

b. Consider resorting to trimming of “non-essential personnel” on account of business

closure, redundancy or retrenchment.

Despite the imposition of the ECQ, lay-offs of employees remain to be governed by

the Labor Code. Therefore, schools must be guided that employees may be
dismissed from their employment on account of the any of the following authorized
causes for termination: (a) Business Closure, (b) Redundancy, or (c) Retrenchment,
only upon compliance with the substantive and procedural requirements for an
authorized cause dismissal. This includes the requirement to give notice of
termination to both the employee and the appropriate DOLE Office within thirty
(30) days from the date of termination of employment, and the payment of the
appropriate separation pay to the employees.

(For example, if there will be no actual physical education classes because classes
will now be conducted via online or distance learning, coaches and instructors may
be regarded as non-essential personnel.)
c. If small/mission schools can be qualified to apply under the small business wage
subsidy program of the government, consider availing of the same.

d. Consider asking for help in the form of donations/gifts from alumni and corporate
friends/sponsors. These donations, pooled together, may be given to the employees
as a form of subsidy during this ECQ. As a bonus, these donations (especially from
corporations) can actually be written off as tax deductions for corporations.

- One innovative project undertaken by a school is a social media fundraising

program aimed to provide subsidy to its minimum wage earners during this
covid-19 crisis.
Prepared by:
Atty. January Faye Risonar-Bello
Subcommittee on Government Advisories