Employee benefits in the Philippines
On my previous post, I discussed the average salaries of traditional jobs in the Philippines. I also mentioned on that post that those figures don’t include other benefits that companies offer on top of the regular salaries employees receive.
So what are the benefits that are required by the Philippine government to be given to working Filipinos? To give a short run down, the following are government-mandated benefits: Social Security System (SSS) contributions, Philippine Health Insurance (PhilHealth) contributions, Home Development Mutual Fund (Pag-ibig Fund) contributions, 13th month pay, service incentive leave, meal and rest periods, overtime pay, special holiday/rest day rates, and night shift differentials. Other more common benefits that are not mandated but are given by a lot of companies are: holiday bonus, mid-year bonus, and paid holiday and vacation leaves.
- Social Security Sytem (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. When a female member gives birth, SSS gives the employee 2 months worth of salary to compensate for the time she will be off from work due to childbirth. The SSS also serves as a pension plan for its members as SSS returns members’ monthly contributions after they retire from work.The amount of SSS monthly contribution is determined from the actual monthly salary an employee receives. 30% of total monthly contribution is deducted from an employee’s salary, while 70% is subsidized by the employer.
- 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.
- 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.
All the benefits mentioned above, that are enjoyed by Filipino employees, are what “sweetens the deal” more than the regular salaries that they receive. When faced with a choice between two jobs that pay more or less the same in terms of salary, an employee will always consider company benefits in order to make a sound decision. These benefits are equivalent to 30-50% of an employee’s yearly wage, sometimes more. In the end, companies who know how to take good care of their employees will have a lower employee turn-over rate than those that give no more than government-required benefits.
Freelancers can opt to enroll themselves to SSS, PhilHealth, and HDMF as self-employed individuals to avail of the benefits these institutions offer. However, if they’d wish to become members, they would have to shoulder the entire contribution themselves to cover for both employee contribution and employer subsidy. The amount of the contribution will depend upon the income that freelancers will declare, and of course, benefits will also vary based on the amount of monthly contributions.
On my next post, I will discuss the difference between full time jobs and part-time jobs.