Managing Employee

Benefits
 Benefits
• Benefit
➢ An indirect compensation given to an employee or
group of employees as a part of organizational
membership.
• Strategic Perspectives on Benefits
➢ Benefits absorb social costs for health care and
retirement.
➢ Benefits influence employee decisions about
employers (e.g., recruitment and retirement).
➢ Benefits are increasingly seen as entitlements.
➢ Benefit costs average over 40% of total payroll costs.
Strategic Benefits Considerations
 Employee Benefits And
Services
• An employer is required by law to pay his
employees the following mandated economic
benefits:
 Minimum Wage:
• The amount is determined per region or per
industry by the Regional Tripartite Wage and
Productivity Boards. Minimum wages, therefore,
vary from one region to another. Minimum
wages in the provinces are generally lower than
in the cities.
Overtime Pay Work in Excess of Eight Hours:

Art.87 states that work rendered in the excess of

the prescribed eight (8) hours a day will be
treated as Overtime Work.
• If ordinary days: +25 percent of basic hourly
rate, if special holidays, rest day and holidays:
+30 percent of regular hourly rate on said day.
 Nightshift Differential Pay:
• Plus 10% of the basic / regular rate for work
rendered from 10PM to 6AM.
 Paternity Leave:
“All employers are obligated by law to grand
paternity benefit to all married male employees
whose spouse is about to or has given birth”
• 7 days with full pay to attend the needs of legal
wife before, during and after delivery.
 Maternity Leave Benefits
“ The provision Article 133 states that the Sec of Labor
and Employment shall implement and maintain strict
standards that will guarantee the health and safety
of women employees””’
 Maternity leave benefits in the Philippines have
helped millions of women get through the
maternity period financially.
 A covered female employee who is able to
contribute at least three monthly contributions
within the twelve-month period prior to the
semester that she gave birth, had an abortion or
miscarriage is eligible for benefits for maternity
leave..
However, these benefits are subject to these
conditions:
That you shall have notified your employer about
your pregnancy and your due date, which should
also be transmitted to SSS and subject to their
rules and regulations;
Your employer will make the advance payments
which shall be paid in two equal installments
within 30 days from the day you filed your
maternity leave application;
• Payment of benefits for maternity leave shall be
considered your sickness benefits as provided by law
for an equivalent of 60 days for the same childbirth,
miscarriage, or abortion;
• Your maternity leave benefits is only limited to the first
four deliveries, which shall be paid the same
compensable period of 60 days equivalent to 100
percent of your daily wage per day;
• SSS shall reimburse your employer one hundred percent
(100%) of the amount given to you immediately after all
verifications of the requirements you submitted together with
your maternity leave application;
• When you have given birth, suffer an abortion, or have a
miscarriage and your employer failed to remit the required
contributions or transmit your application for a maternity
leave benefit to SSS at the time of your pregnancy, it is the
employer's responsibility to pay the SSS the same amount of
maternity leave benefits due to you and the latter shall in turn
pay such amount to you.
 MATERNITY BENEFIT
• All working mothers in the government and private sector are
guaranteed with 105 days of paid maternity leave credits,
with 7 days transferable to fathers. An additional 15 days of
paid leave will be granted to single mothers.
• The law gives mothers the option to extend their leave for
another 30 days without pay, provided that the employer is
given due notice in writing at least 45 days ahead before the
end of the maternity leave.
• For cases of miscarriage or emergency termination of
pregnancy, a 60-day paid maternity leave shall be
granted to a female worker.

Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved. 14–13
 Holiday Pay :
• Includes January 1 or New Year’s Day, Maundy
Thursday, Good Friday, May 1 (Labor Day),
June 12 (Independence Day), Last Day of
August (National Heroes Day), November 30
(Bonifacio Day), December 25 (Christmas) and
December 30 (Rizal Day).
 Benefits under Collective Bargaining
Agreements (CBA)
• For unionized companies, union members are
entitled to CBA benefits.
• Other existing benefits extended by employer to
his employees cannot be withdrawn under the
principle of “non-diminution” rule.
 Social Security SyStem (SSS)

The Social Security System was created by the

Philippine government. All employees hired by
private companies are required to become an SSS
member (Republic Act No. 8282).
This system aims to protect its members for
when they are unable to work such as sickness,
disability, maternity, old age and death, or other
such contingencies not stated but will result in
loss of income or results to a financial burden.
When an employee gets sick, SSS will reimburse
them with their equivalent daily salary multiplied by
the number of days absent. .
 Government Service Insurance
System (GSIS)
 is a government-owned and -controlled corporation
(GOCC) of the Philippines. Created by
Commonwealth Act No. 186 passed on November
14, 1936, the GSIS is mandated to provide and
administer the following social security benefits for
government employees: compulsory life insurance,
optional life insurance, retirement benefits, disability
benefits for work-related contingencies and death
benefits.
 Benefits and services
• The principal benefit package of the GSIS
consists of compulsory and optional life
insurance, retirement, separation and
employee's compensation.
• Active GSIS members are entitled to the
following loan privileges: salary, policy,
emergency and housing loans.
 BENEFITS AND SERVICES

The Death Benefit is granted in event of the

deceased SSS member's beneficiaries, receiving
from the System an amount equivalent to the
deceased member's monthly income benefit, plus a
ten percent (10%) fraction of the death benefit thereof
for every listed dependent child, with the list not
exceeding five, beginning with the youngest to the
oldest. The list may not be substituted nor appended.
Employees disability benefits
• The Disability Benefit is granted depending on the
severity of the disability claim which is to be
determined by the Medical Director of the System
and approved by the Employees' Compensation
Commission. Articles 191, 192 and 193 of the
Philippine Labor Code cover the different degrees
of the disability and the benefits accompanying
them.
• The employee disability benefits offered by the System
depends on the severity of the disability claim which is to
be determined by the Medical Director of the System
and approved by the Employees' Compensation
Commission.
• In Article 191, under the subheading Temporary Total
Disability, any employee who acquires temporary total
disability due to a sustained injury or disease will enjoy a
monetary aid paid by the Government. For each day of
such a disability (or fraction of the disability period
thereof) he/she will enjoy the income benefit equivalent
to ninety percent of his average daily salary wage.
• Provided, as amended by Section 2, Executive
Order No. 179, the disability benefit is subject to the
following conditions: that the daily benefit income
should not be less than ten pesos (P10) nor it
should be more than ninety pesos (P90). Moreover,
these disability benefits will extend only up to one
hundred twenty days (120 days), except as
otherwise stated by the Commission. In any event,
the System will be notified of the injury or sickness.
 Under Article 192 Permanent Total Disability,
the following disabilities are considered total and
permanent:
• total disability, temporary or permanent (except as otherwise stated
in the Rules) but which persisted for more than one hundred and
twenty days is deemed already permanent
• total loss of sight on both eyes is automatically deemed permanent
disability
• loss of both limbs, or the loss of an appendage part starting from the
ankle or wrist is automatically permanent
• total paralysis of a limb or both limbs, whether hands or feet is
considered permanent
• brain injury that results in permanent imbecility or mental illness
• Under this regulation as the Employees'
Compensation Commission may approve, the
employee who fall under this Title shall, for each
month until his death, be paid an amount equal to
his/her monthly income benefit, plus ten percent
thereof for every listed dependent. The list shall not
exceed five, beginning with the youngest to the oldest.
• Article 193 covers the Permanent Partial Disability. A
legally employed worker in the Philippines can apply
for the disabled benefits under this Title if he/she
sustains an injury or contracts a disease resulting in
his/her permanent partial disability.

Under this regulation as the Employees'

Compensation Commission may approve, the
employee who fall under this Title shall be paid by the
System (SSS, GSIS or as the case may be) during
such a disability an income benefit for a permanent
total disability but not exceeding the period
designated herein:
 Complete and Permanent N0. of Months
Injury
One thumb 10
One index finger 8
One middle finger 6
One ring finger 5
One little finger 3
One big toe 6
One toe 3
One arm 50
One hand 39
One foot 31
One leg 46
One ear 10
Both ears 20
Hearing of one ear 10
Hearing of both ears 50
 The Retirement Benefits
“The retirement benefit plan is a life annuity”
The Retirement Benefit is granted when an employee
retires from work upon reaching the retirement age
established in the collective bargaining agreement or
other applicable employment contract.
The term “retirement plan”(or superannuation) refers to a
pension (benefits in retirement) granted when an
employee retires from work upon reaching the retirement
age established in the collective bargaining agreement
or other applicable employment contract.
• In the absence of a retirement plan that provides for
the employee’s retirement benefits in the
establishment, an employee shall be entitled to an
employee retirement benefit upon reaching the
compulsory retirement age.
• 60 yrs or more not beyond 65 year – compulsory retirement
age
• If the employee served the least of five (5) years, he/she
may retire and enjoy the retirement benefits equivalent
of at least one-half (1/2) month salary for his/her every
year of service. A fraction of at least six (6) months is
considered as one whole year.
 Philippine Health Insurance
(PhilHealth)
The Philippine Health Insurance Corporation is
the medical insurance company of the
Philippines. All employees are required to be
contributors of this service (Republic Act
7875). Members are given health and
hospitalization subsidies should they or a
dependent be hospitalized. Monthly
contributions are based on actual employee
monthly salaries and the amount of employee
contribution is matched equally by the employer.
 Home Development Mutual Fund (Pag-
ibig Fund)
Employers are also required to contribute, on
behalf of their employees, to the Home
Development Mutual Fund (Republic Act
7835). This company provides the lowest
interest housing and land acquisition loans to its
members that are payable for up to 30
years. This gives every Filipino worker an
opportunity to own a house in easy-payment
plans that can directly be deducted from their
monthly wages.
 13th Month Pay
• Based on Presidential Decree No. 851, all
Filipino employees are entitled to a year-end
bonus equivalent to one (1) month salary
regardless of the nature of their
employment. The 13th month pay is to be given
no later than December 24 of every year a
worker is employed.
 Service Incentive Leave
• – According to Article 95 of the Labor Code of
the Philippines, an employee who has worked
for at least one (1) year in a company is entitled
to five (5) days leave of absence, with pay, every
year. If the employee does not avail of these
paid leaves, the company may opt to have them
do a mandatory leave of absence, with pay, or
convert these unavailed paid leaves to their
cash equivalents, to be given at the end of each
year.
 Meal and Rest Periods
• - According to Article 83 of the Labor Code of
the Philippines, employees are entitled to one
(1) hour break for meals on an eight-hour work
day. Employees are also entitled to adequate
rest periods in the morning and afternoon, of
short durations, that will be counted as hours
worked. These rest periods normally last for 15
minutes and can be used by employees as
coffee or snack breaks.
Overtime Pay and Holiday/Rest Day Pay

• Under Article 87, an employee who renders over

eight (8) hours of service per day shall be given
an overtime pay which is equivalent to his
regular hourly wage plus at least twenty-five
percent (25%) thereof. Under Article 93, if an
employee is asked to work on their scheduled
rest day or on a non-working holiday, the
employee shall be paid an additional
compensation of at least thirty percent (30%) of
his regular wage.
 Night Shift Differential
• According to Article 86, every employee shall be
paid a night shift differential of not less than ten
percent (10%) of his regular wage for each hour
of work performed between ten o’clock in the
evening and six o’clock in the morning.
 Contractual and Regular Employee
Benefits
• The Philippine Labor Code stipulates that an employee
may be hired with a probationary period from one to six
months upon date of engagement, and it shall not be
continued further than that unless due to required period
of apprenticeship. After the probationary period, an
employer may continue or end an individual's
employment based on pre-agreed Key Results Areas
(KRA) or other forms of performance appraisals.

During the probationary period, however, an employer

has no right to neither discriminate an employee nor
waive his /her contractual employee benefits. And at the
end of this period, hired individuals should receive
regular employee benefits as provided by Philippine
Laws on employment.
 How do contractual and regular employee
benefits compare?
Benefits Contractual Regular
Employees Employees
Sick Leaves None yes
Vacation Leaves None yes

Social Security System –private sector Company yes

GSIS – public sector discretion
Home Development and Mutual Fund none yes
(HDMF)
HMO none yes

Phil. Health Insurance Corp. (PhilHealth) none yes

Other company benefits(e.g. Rice Typically none yes

allowance, transportation allowance)
 Other company benefits
• Other company benefits that are not government
mandated, but are usually given to employees
anyway are:
Holiday/Christmas Bonus – This is given in
December, on top of the 13th month pay. This is
considered as the company’s Christmas gift to
their employees.
Mid-Year Bonus – This is given in June, when
the country’s school year starts. This is to assist
employees in school enrollment fees for their
children. This is also known as an educational
assistance plan.
Cost of Living Allowances – Some companies
provide their employees with yearly rice,
medicine, and clothing allowances.
• Paid Holiday and Vacation Leaves – On top of
the mandated 5 days/year leave with pay, some
companies give their employees additional paid
holiday and vacation leaves. The number of
days allocated for these leaves usually vary from
company to company and depends on the
number of years an employee has been of
service to the company.
 Other Benefits

Credit Unions
Purchase Discounts
Stock Investment

Family-Care Relocation
Benefits Expenses

Family-Oriented
Benefits Life, Disability,
Benefits Legal Insurances

Social and Educational

Recreational Assistance