O Y E E

EM P L D
IT S A N
E F
B EN IC E S
SE R V Reporters :

Jovy Mae Endriga

Rizallene Angiela Caminade
 INDIRECT FINANCIAL COMPENSATION

 Called BENEFITS and

SERVICES
NEF I TS
BE
 Typically refer to non-wage
compensation provided to employees
 are generally available to all the firms
in addition to their salary or hourly
wage. and include such things in time off
with pay, health, and life insurance,
and retirement funds.
 BENEFITS
Facts :
● Benefits are not free
● Benefits are substantial cost to
employees.
● Benefits are given over and
above the basics compensation
to serve as employee’s
rewards for belonging to an
organization.
Snell and Bohlander
Described “BENEFITS” as an indirect
form of compensation given to help
improve the quality of work and personal
lives of employees.
EMPLOYEE BENEFITS FALL UNDER 2
CATEGORIES :
Benefits voluntarily given by the company depending on
management generosity

Benefits required by government legislation

 TAX
AN TAGE OF
ADV One of the major driving
BENEFITS forces behind the growth of
employee benefits

The Bureau of Internal Revenue or BIR ruled that employers

could deduct the cost of benefits as a business expenses and
employees do not need to include the value of health benefits in
their taxable income.
 BENEFITS
UNDER THE
CODE
Compensation for sickness or injury
13th month pay and other bonuses not
exceed P30,000.00 per year
Allowances and benefits given for the
convenience of the employer
Allowances and benefits given which are in the
nature of or necessary to the taxpayer’s
business, trade, or profession
SSS, PHILHEALTH, AND
PAG-IBIG Contributions, as
well as union dues.
Contributions of the employers for the
benefit of the employee including retirement,
hospitalization, and health insurance
 i t on t he value of
t s a li m
The BIR se “D E M INIMIS
tax-exempt 0 00, as
De minimis
RR 8 - 2
E N E F IT S” . Under
B
d e d by R R 10-2000
me n

Benefits
Benefits which are in the nature of
facilities or privileges furnished or
offered by an employer
 e ne f it s a r e e xc lu d ed from
B of
g ro s s in c o m e
the
Following are lo y e e s f o r in c om e tax
em p
considered
purpose.
as :

a. Monetized unused vacation leave credits of

employees not exceeding 10 days during the
year and the monetized value of leave credits
paid to government officials and employees;
 b. Medical cash allowance to
dependents of employees not d. Uniforms and clothing
exceeding P750.00 per allowance not exceeding
employee per semester or P4,000.00 per annum;
P125.00 per month;

c. Rice subsidy of P1,500.00 or

one sack of 50-kg rice per e. Actual yearly medical benefits
month amounting to not more not exceeding P10,000.00 per
than P1,500.00; annum;
 f. Laundry allowance not
exceeding P300.00 per g. Employees achievement awards,
month;

i. Flowers, fruits, books, or

h. Gifts given during Christmas and similar items given to
major anniversary celebrations employees under special
not exceeding P5,000.00 per circumstances,
employee per annum;

j. Daily meal allowance for

overtime work not
exceeding 25 percent of
the basic minimum wage.
EMPLOYEE
ALLOWANCE

 is a universal benefit awarded

to employees in the various
levels in an organization.”
1. They are nontaxable. Allowances for employees, such as clothing,
mileage, or meal allowances are exempt from tax.

2. They come in different forms. Among the most common are clothing
allowances, meal allowances, and transportation allowances, while
extravagant companies can offer discounts on health insurances, and
give fringe benefits to executives, such as private use of the company
jet, grand vacation, use of the company fitness facilities, and other such
privileges.

3. Employee allowances are exempt from tax if they do not exceed the
price ceilings set by law.
4. Fringe benefits that exceed the price limit on benefits are no longer tax-
exempt, and the benefactor will shoulder the tax imposed on it.

5. Only the “de minimis” benefits with small value and limited only to
facilities and privileges furnished by companies to promote goodwill,
health, efficiency, and contentment to employees are exempt from tax.

6. Employee allowance is given at a company’s discretion and goodwill. It is

not a law- mandated benefit. Thus, one cannot demand it from the company
if it does not provide any to its employees. Many companies, on the other
hand, use employee allowance to compensate for lower pays and to appease
employee demands for higher wages.
Classification of Employee
Benefits and Services
1. Mandatory Employee Benefits/Legally
Required Benefits in the Philippines

A. Social Security System

(SSS)
was created to provide private
employee and their families with
protection against disability, sickness,
old age, and death.
 Benefits Given to SSS Members
a) Sickness Benefit
• At least three months of
• Daily cash allowance paid for contributions within the 12-
the number of days a member month period immediately
is unable to work due to before the semester of sickness
sickness or injury. has been paid
• Confinement either in
a hospital or at home
for at least four days
 b) Maternity Benefit

• Daily cash allowance granted to • Failure to observe the rule

a female member who was on notification may result
unable to work due to childbirth to the denial of the
or miscarriage maternity claim

• The maternity benefit is equivalent to 100

percent of the member’s average daily
• The maternity benefit shall be salary credit multiplied by 60 days for
paid only for the first four (4) normal delivery or miscarriage and 78 days
deliveries or miscarriages. for caesarean section delivery.
 c) Retirement Benefit

● Cash benefit either in monthly pension or lump sum paid to a

member who can no longer work due to old age.

● A member, who is 60 years old, must be separated from employment

or ceased to be self-employed, and has paid at least 120 monthly
contributions prior to the semester of retirement.

● A member, who is 65 years old, whether employed or not must have

paid at least 120 monthly contributions prior to the semester of
retirement
● Monthly pension depends on the member’s paid contributions,
including the credited years of service (CYS) and the number of
dependent minor children but not to exceed 5.

● 40 percent of the average monthly salary credit; or

● P 1,200.00, provided that the credited years of service (CYS) is at least

10 or more but less than 20, and P2,000.00 of the CYS is 20 or more.
The monthly pension is paid for not less than 60 months.
d) Disability Benefit
Permanent total disabilities include:
 Complete loss of sight of both eyes;
 Loss of two limbs at or above the ankles or
wrists;
 Permanent complete paralysis of two limbs;
 Brain injury resulting to incurable imbecility
or insanity; and
 Such cases as determined and approved by
the SSS.
e) Death Benefit

This includes cash benefit either in monthly

pension or lump sum paid to the
beneficiaries of a deceased member.
 e) Funeral Grant

A funeral grant of P20,000.00 (effective

September 1, 2000) is given to whoever
pays the burial expenses of the deceased
member or pensioner.
B. Government Service
Insurance System
(GSIS)
is the equivalent of SSS for
Philippine government employees.
Benefits Given to GSIS
Members
 Life insurance
 Retirement benefits
 Disability benefits – granted to a member due to
the loss or reduction in earning capacity caused by
a loss or impairment of the normal functions of the
employee’s physical and/or mental faculties as a
result of an injury or disease.
 Beneficiaries are entitled to a P20,000.00 funeral
benefit payable upon the death of a member or old
age pensioner.

 Survivorship benefit – When a member or pensioner

dies, his or her beneficiaries are entitled to cash
and/or pension benefits. Beneficiaries who qualify
for survivorship pension are entitled to fifty percent
(50%) of the basic monthly pension of the member
or pensioner.
C. Home Development Mutual Fund
(HDMF)
is a provident savings system providing housing loans
to private and Philippine government employees, and to self-
employed persons who elect to join the fund.

Mars
PAG-IBIG
stands for “Pagtutulungan sa Kinabukasan,
Ikaw, Bangko, Industriya at Gobyerno”

Employers are also required to contribute, on behalf of their

employees, to the Home Development Mutual Fund based on R.A.
7835. This provides the lowest interest housing and land
acquisition loans to its members that are payable 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.