CHAPTER 5

EMPLOYEE BENEFITS
ADMINISTRATION
LEARNING OUTCOMES
At the end of the chapter, the students will be able to:
 Identify the objectives and justification of employee
benefits;
 Classify and discuss government- mandated
employee benefits; and
 Discuss voluntary employee benefits
CHAPTER OVERVIEW

Two types of employee benefits

1) mandated by law
2) voluntary benefits.

Mandated by law - means the organizations are obliged to comply

Voluntary benefits - depend on the financial capacity and willingness of

organizations to provide them. Organizations may go all the way of adding more
than what is required by law to stay competitive and be more attractive to
prospective job seekers.
OBJECTIVES AND JUSTIFICATION OF
EMPLOYEE BENEFITS

Employee benefits -are perquisites or perks which are given to

employees on top of their salaries or wages.

Organizations have various benefits packages to:

 retain high performers,
 induce productivity, and
 attract highly qualified and competent people.
An attractive benefits package entices candidates to join the
organization.
 they want to be assured that they can also be protected against
illness such as medical insurance and sick leaves;
 have some respite from the pressures of work through vacation
leaves.
 attracted to a good list of benefits that can match their
investment through the efforts, dedication, and commitment
they will provide in the organization.
 Employees are more likely to be loyal to the organization if
they fell that it takes care of them in many aspects of their life.
 enables employees to become more productive in the job.
GOVERNMENT-MANDATED
COMPENSATION AND BENEFITS

The government through the Department of Labor and Employment (DOLE) has listed down the monetary benefits
for Filipino employees working in the Philippines (DOLE, 2019).
 
Minimum Wage
 
Wage Rationalization Act or Republic Act No. 6727 - fixes the minimum wage to the different industrial sectors such
as: non-agriculture, agriculture plantation and non-plantation, cottage / handicraft, and retail/service, which depends on
the annual gross sales, number of workers and capitalization.
 
Regional Tripartite Wages and Productivity Boards - is the governing body for developing proper standards and
criteria for determining the daily minimum wage for the different regions.
 
Wage Orders - are applicable to all employees in the private sector and those who are paid with the daily minimum wage
or at least in the minimum wage ceiling. They are applicable to all regardless of position, employment status, or the
manner by which their wages are paid. Exemptions are those who work in barangay micro business enterprises under
Republic Act No. 10644. These are businesses that have assets of not more than 3 million pesos (DOLE, 2019).
As of November 2018, the minimum wage in the National Capital Region is
 537.00 pesos for non-agriculture and
 500.00 pesos for agriculture workers.

As prescribed by law, the normal working hours that an employee should render for the daily
minimum wage is eight hours (DOLE, 2019).

Handbook on Workers’ Statutory Monetary Benefits (2019) - has provided sample

computations on how organizations can compute for salaries and wages for monthly and daily
paid employees.
 For monthly paid scheme, wherein employees receive them in half, usually semimonthly, the
salary received includes unworked rest days, special days, and regular holidays. The total
number of days used to determine the salary of monthly paid employees is 365.
 Daily paid workers are paid on days where actual work is performed, including unworked
regular holidays.
Those who are paid by results like those engage in a per-piece basis, or pakyaw in carpentry or construction
work, must receive not less than the mandated minimum wage under the Wage Orders for normal work
hours not exceeding eight hours.
Holiday Pay
Holiday pay - is the payment of daily wage for unworked regular holiday.

- Employees must receive 100% of their daily wage even though they do
not report for work provided that they are not on leave or absent with pay
on the day preceding the holiday.

- If they work on a regular holiday, they are entitled to 200% of their daily
rate. However, field personnel who have no regular work hours or on a
commission basis, government employees, and those officers or members
of management are not entitled to holiday pay (DOLE, 2019).
According to Executive Order No. 292 as amended by Republic Act No. 9849, the following are the 12 regular holidays in the
Philippines:
 
HOLIDAY DATE
1) New Year’s Day January 1
2) Maundy Thursday Movable date
3) Good Friday Movable date
4) Araw ng Kagitingan April 9
5) Labor Day May 1
6) Independence Day June 12
7) National Heroes Day Last Monday of August
8) Eidul Fitr Movable date
9) Eidul Adha Movable date
10) Bonifacio Day November 30
11) Christmas Day December 25
12) Rizal Day December 30

If Araw ng Kagitingan falls also on Maundy Thursday or Good Friday, employees are entitled to 200% of their daily rate if
unworked. However, if there is an order to work on that day, employees should get an additional 100% of their daily rate.
Premium Pay
Premium pay - is the additional reward for work performed either during rest days or
special days. All employees are entitled to premium pay except field personnel who have
no regular work hours or on a commission basis, those who are paid by piece rate,
government employees, and those officers or members of management (DOLE, 2019).

Under Executive Order No. 292, as amended by Republic Act 9849, the following are the
four special days:
 
SPECIAL HOLIDAYS DATE
1. Ninoy Aquino Day August 21
2. All Saints’ Day November 1
3. Feast of the Immaculate Conception of Mary December 08
4. Last Day of the Year December 31
Every year, the Office of the President declares certain days as special days or special non-working
holidays, such as:
 EDSA People Power Day,
 Chinese New Year,
 All Souls’ Day,
 Christmas Eve, or
 Election.
These occasions are declared upon the discretion of the president. The same rule applies for the
payment of premium pay for employees under special days (Barcelo, 2018).

When employees work on special days or rest days, an additional compensation of 30% is given
and 50% if the special day also fails on their rest day.
Overtime Pay
Overtime pay - is the additional pay given to employees
who render work beyond eight hours. The hourly
overtime rate is 25%. The same rule that applies to
premium pay is the same for those who can avail of
overtime pay (DOLE, 2019).
Night Shift Differential
Night shift differential - is an additional compensation of 10% per hourly wage of work
rendered between 10:00 pm to 6:00 am. The coverage for night differential is the same for
employees who can avail the other benefits, such as premium pay, overtime pay and holiday pay
(DOLE, 2019).
Service Charges
Rank and file employees who work in service-oriented establishments such
as restaurants, hotels and the like that collect service charges are entitled to
equal sharing of the 85% of the total. The remaining 15% is allotted by the
establishment as allowance for losses and breakages and for distribution to
managerial employees upon the decision of top management. The
distribution of the service charges is done every two weeks or twice a month,
not exceeding 16 days. In case the said establishment decided to collect
service charges, the average share previously given to employees must be
added as part of their basic salary. Meanwhile, some establishments do not
collect service charge but monitor the accumulated tips from customers. The
said pooled tips should be distributed in the same manner as the service
charge (DOLE, 2019).