Employee Wages and Compensation Benefits You Are Entitled To

Among the fundamental rights of anyone making a living in the Philippines is knowing they ought to be earning no less than what’s mandated by law

Whether you’re a fresh graduate trying to land your first job or an experienced employee looking to move to a new company, it is always a good rule of thumb to do your due diligence on your prospective employers, and among the most important aspects to consider are the compensation and benefits they provide

Granted, while commissions and special bonuses vary between companies, all employers are still required to cover a number of basics. It is therefore highly recommended to get a good understanding of the wages and compensation, and associated benefits you are entitled to, as mandated in Department of Labor and Employment (DOLE)’s Labor Code, to avoid instances of unfair or under-compensated employment.

Minimum Wage

Save for volunteer work, most jobs are done to make a living, and it is paramount to know how much you should be earning at a minimum to ensure you are being paid fairly for your time and effort. While typically updated to better align with Filipino’s daily expenses, the following are the latest minimum wage rates in the Philippines as of October 2017:

*Househelpers are not included in the above list as a more specific law is in place under the Republic Act (R.A.) No. 10361, or Domestic Workers Act. A minimum monthly salary of P2,500 applies to house helpers in NCR, P2,000 in chartered cities and first-class municipalities, and P1,500 in other municipalities.

The basis of the minimum wage rates prescribed by law shall be the normal working hours of eight (8) hours a day.

Holiday Pay

Holidays official declared are typically days of the work week where you are not required to come to work. Despite not rendering any hours, you are still entitled to the payment of the regular daily wage on those unworked days. As per Article 94, Section C of the Labor Code of the Philippines:

“Every employee covered by the Holiday Pay Rule is entitled to the minimum wage rate (daily basic wage and COLA). This means that the employee is entitled to at least 100% of his/her minimum wage rate even if he/she did not report for work, provided he/she is present or is on leave of absence with pay on the work day immediately preceding the holiday.”

Should you end up working on a scheduled holiday or the company you work does not observe local holidays altogether, expect to be paid not only your regular wage for working those days, but also additional compensation since it is still a holiday. “Work performed on that day merits at least twice (200%) the wage rate of the employee.”

When you work on what happens to be regular holiday as well as your scheduled holiday, expect even higher compensation. “Where the holiday falls on the scheduled rest day of the employee, work performed on said day merits at least an additional 30% of the employee’s regular holiday rate of 200% or a total of at least 260%.”

Premium Pay

This refers to the compensation you are entitled to when you render for eight-hours on non-work days such as scheduled rest days or special days. Unless otherwise modified by law, order, or proclamation, the following are the three  special days officially observed in the country: Ninoy Aquino Day, All Saints’ Day, the last day of the year.

In the event that you are rendering work on these days, you are entitled to an additional compensation of at least thirty percent of the your basic pay, for a total of one hundred thirty percent:

Premium Pay  = Regular Pay + 30%

Premium pay when the special day and your rest days are the same day

If a special day also coincides with your scheduled rest day and you work eight hours that day, you then become entitled to being paid 50-percent more of what you typically receive.

Premium Pay = Regular Pay + 50%

Premium pay when a holiday is the same as your rest day

Should a holiday coincide with your scheduled rest day and your render a full day’s worth of work, you are entitled to as much as twice your regular rate, plus an additional 30-percent of that amount.

Premium Pay = (Regular Pay x 2) + 30% or Regular Pay x 260%

Overtime Pay

You are also entitled to additional compensation when you render work beyond your typical eight-hour schedule. On a regular working day,, this should be equivalent to your regular hourly wage plus at least a 25-percent premium:

OT Pay = [(Daily rate/8) x 125%] x Number of OT hours rendered

OT pay on special holidays and/or scheduled rest days

In the event that the work you render falls on a special day or on your scheduled rest day/s, you are entitled to an additional compensation of the premium pay applicable on holidays plus at least a 30-percent premium:

OT Pay = [(Daily rate/8) x 130% x 130%] x Number of OT hours rendered

If the overtime you render falls on the specific instance that it is both a special day and your scheduled rest day, you are entitled to an additional pay amounting to the premium pay applicable on said days plus a 30-precent premium:

OT Pay = [(Daily rate/8) x 150% x 130%] x Number of OT hours rendered

OT pay on regular holidays and scheduled rest days

Finally, if you end up having to work on a regular holiday, you are entitled to the one of the more substantial amounts of overtime pay, which is typically two times the hourly rate of regular working days plus a premium of at least 30-percent:

OT Pay = [(Daily rate/8) x 200% x 130%] x Number of OT hours rendered

In the rarest event that you render overtime on a holiday that also happens to be your scheduled rest day, the overtime pay you are entitled to is at its largest value, which is over two-and-a-half times your regular rate with an additional premium of at least 30-percent:

OT Pay = (Daily rate/8) x 260% x 130%] x Number of OT hours rendered

Thirteenth-Month Pay

In 1975, former President Ferdinand Marcos issued Presidential Decree No. 851, a law mandating employers to pay all workers whose salaries were below Php1,000 to be given 13th month pay. After the dictator’s ouster, former President Corazon Aquino amended the law, eliminating the Php1,000 cap so more people could benefit from 13th month pay.

As an employee, you are entitled to 13th month pay, and as per P.D. 851, should expect to receive this no later than December 24th of each year. This is provided your position falls in the category of a rank-and-file employee, and you have worked with your company for at least one month in the present calendar year. As per DOLE, 13th month pay can be computed by via the following formula:

Total basic salary earned during the year / 12 months = Proportionate 13th month pay

In the event that you left or were terminated from your position, or were on maternity leave or unpaid sabbatical, before the payment of your 13th month pay, you are still entitled to the monetary benefit in proportion to the length of time you’ve worked during the year.

For example, if you resigned (or went on unpaid leave) two months short of finishing the year and earned Php25,000 per month at the time.

Ending with a 13th pay of Php33,333.33, this would either be paid to you in line with the schedule the your employer follows to pay the benefit, or as part of your back-pay if you have left the company.

Apart from being entitled to receive 13th month pay, you are also entitled to it being being non-taxable. In the past, 13th month payments amounting to Php30,000 had been tax exempt. However, the Bureau of Internal Revenue (BIR) implemented Republic Act No.10653 in March 2018, which effectively raised the tax exemption ceiling to bonuses amounting to as much as Php82,000.

Retirement Pay

If you happen to be an employee that is aged between 60 to 65 years old and have rendered at least five years worth of work for your employer (which is not in government or employs a staff of ten people or less), you are entitled to receive retirement benefits as mandated by law.

At a minimum, the retirement pay you receive should amount to half a month’s salary for every year of service, where a fraction of at least six  months being considered as one whole year. For the computation purposes, DOLE considers the following as part of half a month’s salary:

• 15 days’ salary based on rate prior to retirement
• Cash equivalent of five days of service incentive leave
• One-twelfth of thirteenth-month pay

Combined, half-a-month’s salary is equivalent to 22.5 working days. As such, you can estimate the retirement pay that you are entitled to through the following formula:

Minimum Retirement Pay = Daily Rate x 22.5 days x Number of years in service

As per DOLE, “other benefits may be included in the computation of the retirement pay upon agreement of the employer and the employee or if provided in the Collective Bargaining Agreement (CBA).”

Disclaimer: While a great deal of care and effort had been exerted in the research and writing of this article, in no way does it serve as an official guide to wages and compensation benefits in Philippines.

What has been listed also typically does not apply to certain employees or employers, such as those working in agriculture, house helpers or kasambahays, or those working in retail or service companies employing ten people or less.

As such it is always best to consult directly with the Department of Labor and Employment, or the certified professionals working within your company’s Human Resources department, for greater technical and legal context regarding the benefits you are entitled to.