Labor law

Labor standards

• Basic pay
• Overtime premium
• Night shift differential
• Holiday premium
• 13th month pay
• Leaves
• Service incentive leave
• Maternity leave
• Paternity leave
• Parental leave for solo parent
Basic pay
"Basic Wage" means all remuneration or earnings paid by an employer to a
worker for services rendered on normal working days and hours but does not
include cost-of-living allowances, profit sharing payments, premium payments,
13th month pay or other monetary benefits which are not considered as part of or
integrated into the regular salary of the workers on the date the Act became
effective."

What is Base Pay?

Base pay is the minimum salary paid to an employee. It can also be interpreted
as a fixed amount paid to an employee for a certain job. Base pay is only one
component of an employee’s total compensation and does not include overtime
pay, bonuses, benefits, or insurance. The rate can be stated as an hourly, weekly,
monthly, or annual rate.
Basic pay
CONCEPT
A minimum wage is a legal mandate for employers to pay their employees a
compensation which should not be less than that prescribed by the Regional Tripartite
Wages and Productivity Board (RTWPB) in the different regions.

VIOLATIONS
The employer may be penalized with double indemnity or be required to pay an
amount equivalent to double/twice the unpaid wage owing to the employee.
Notwithstanding payment, the employer may still be held criminally liable for the
violation.
Basic pay
BARANGAY MICRO BUSINESS ENTERPRISES (BMBEs)
Subject to a Certification issued by the Department of Trade and Industry (DTI) as
to their status as Barangay Micro Business Enterprises, these establishments may be
exempted from the coverage of the minimum wage so long as they obtain the
necessary exemption from the RTWPB

KASAMBAHAY’S MINIMUM WAGE

The Kasambahay’s minimum wage is different as it is regulated by the
Kasambahay Law.
Basic pay
WORKERS PAID BY RESULTS
The RTWPB Regional Orders prescribe for the minimum wage of workers paid by
results, such as homeworkers, piece-rate workers, takay, pakyaw, or task basis.

APPRENTICES, LEARNERS
Apprentices and learners shall receive wages which shall not be less than seventy-
five percent (75%) of the minimum wage. The apprenticeship and learnership
agreements should be duly approved by the Technical Education and Skills
Development Authority (TESDA).
Basic pay
PERSONS WITH DISABILITY
There should be no discrimination against persons with disability. They should be
paid the same compensation and benefit as with ordinary employees who are qualified
as able-bodied.

NO INCOME TAX DUE

Minimum wage earners (MWE) are exempt from income tax in relation to their
minimum wage inclusive of cost of living allowance, holiday pay, overtime pay, night
shift differential pay, and hazard pay.
Overtime pay

CONCEPT
Overtime pay is an additional pay of 25% of a covered employee’s hourly rate for
work performed beyond eight (8) hours a day or for overtime work.
Overtime pay
COVERED AND EXCLUDED
The benefit applies to all employees, except:
1. Government employees;
2. Managerial employees, if they meet all of the following conditions:
2.1. Their primary duty is to manage the establishment in which they are
employed or of a department or subdivision thereof;
2.2. They customarily and regularly direct the work of two or more employees
therein; and
2.3. They have the authority to hire or fire other employees of lower rank.
Overtime pay

3. Officers or members of a managerial staff, if they perform

the following duties:
3.1. Primarily perform work directly related to
management policies of their employer;
3.2. Customarily and regularly exercise discretion and
independent judgment;
3.3. (a) Regularly and directly assist a proprietor or
managerial employee in the management of the
establishment or subdivision thereof in which he or she is
employed; or (b) execute, under general supervision, work
along specialized or technical lines requiring special
Overtime pay

4. Kasambahay and persons in the personal service of

another.

5. Workers who are paid by results, including those who are

paid on piece rate, takay, pakyaw, or task basis, and other
non-time work, if their output rates are in accordance with
the standards prescribed in the regulations, or where such
rates have been fixed by the Secretary of Labor and
Employment; and

6. Field personnel, if they regularly perform their duties

 Overtime pay
COMPUTATION

STEPS FORMULA EXAMPLE

1. Determine the employee’s hourly Daily rate / 8 hours = hourly rate Php800 / 8 hours = Php100/hour
rate.
2. To get the hourly overtime pay, Hourly rate x 125% = overtime Php100/hour x 125% =
compute for 25% of the hourly rate hourly rate Php125/hour
of a total of 125%.
3. Multiply the overtime hourly rate Overtime hourly rate x 2 hours of Php125/hour x 2 hours = Php250
against the hours worked (e.g. 2 work = pay with overtime pay
hours)
4. Add pay with overtime pay for Pay with overtime pay + pay for Php250 + Php600 = Php850
ordinary hours rendered (e.g. 6 ordinary hours = day’s wage
hours)
Overtime pay
COLA EXCLUDED
Cost of living allowance is excluded in the computation of overtime pay.

EMPLOYMENT CONTRACT, COMPANY POLICIES, CBA

The previous discussion may be superseded by any stipulation favorable to the
employee via an employment contract, company policies, collective bargaining
agreement, or analogous thereto.
Night shift differential

CONCEPT
Night shift differential is an additional pay of not less than ten percent (10%) for
every hour of work done between 10:00 o’clock in the evening to 6:00 o’clock in the
morning the following day.
Night shift differential
COVERED AND EXCLUDED:
The benefit applies to all employees, except:
1. Government employees;

2. Those of retail and service establishments regularly employing not more than five (5)
workers;

3. Kasambahay and persons in the personal service of another;

Night shift differential
4. Managerial employees, if they meet all of the following conditions:
4.1. Their primary duty is to manage the establishment in which they are employed or
of a department or subdivision thereof;
4.2. They customarily and regularly direct the work of two or more employees
therein; and
4.3. They have the authority to hire or fire other employees of lower rank.

5. Officers or members of a managerial staff, if they perform the following duties:

5.1. Primarily perform work directly related to management policies of their employer
Night shift differential

5.2. Customarily and regularly exercise discretion and independent judgment

5.3. (a) Regularly and directly assist a proprietor or managerial employee in the
management of the establishment or subdivision thereof in which he or she is
employed; or (b) execute, under general supervision, work along specialized or
technical lines requiring special training, experience, or knowledge; or (c) execute,
under general supervision, special assignments and tasks; and
5.4. Do not devote more than twenty percent (20%) of their hours worked in a
workweek to activities which are not directly and closely related to the performance of
the work described in paragraphs 5.1, 5.2, and 5.3 above.

6. Field personnel and those whose time and performance are unsupervised by the
employer.
 Night shift differential
COMPUTATION

STEPS EXAMPLE

1. Determine the employee’s hourly Daily rate / 8 hours = hourly rate Php800 / 8 hours = Php100/hour
rate.
2. To get the night shift hourly rate, Hourly rate x 110% = night shift Php100/hour x 110% =
compute for 10% of the hourly rate hourly rate Php110/hour
or a total of 110%.
3. Multiply the night shift hourly rate Night shift hourly rate x 2 hours of Php110/hour x 2 hours = Php240
against the hours worked (e.g. 2 work = pay with night shift
hours) differential
4. Add pay with night shift Pay with night shift differential + Php240 + Php600 = Php840
differential to pay for ordinary hours pay for ordinary hours = day’s
rendered (e.g. 6 hours) wage
Night shift differential
COLA EXCLUDED
Cost of living allowance is not included in the computation.

EMPLOYMENT CONTRACT, COMPANY POLICIES, CBA

The previous discussion may be superseded by any stipulation favorable to the
employee via an employment contract, company policies, collective bargaining
agreement, or analogous thereto.
Holiday pay
CONCEPT
Holiday pay is an additional pay of 100% of the basic wage of a covered employee
on a regular holiday even if that employee does not work.
If the covered employee renders work on a regular holiday, he/she receives his
holiday pay (100% of his basic wage) plus his day’s wage.
If the covered employee renders work on a double holiday, he/she receives his two
holiday pays (200% of his basic wage) plus his day’s wage.
The day’s wage is subject to his actual hours of work rendered on that day. If
he/she only renders work for six (6) hours, then he/she is entitled only to pay for the
equivalent of the time worked.
Holiday pay
COVERED AND EXCLUDED:
The benefit applies to all employees, except:
1. Government employees;

2. Those of retail and service establishments regularly employing not more than five (5)
workers;

3. Kasambahay and persons in the personal service of another;

Holiday pay
4. Managerial employees, if they meet all of the following conditions:
4.1. Their primary duty is to manage the establishment in which they are
employed or of a department or subdivision thereof;
4.2. They customarily and regularly direct the work of two or more employees
therein; and
4.3. They have the authority to hire or fire other employees of lower rank.
Holiday pay

5. Officers or members of a managerial staff, if they perform

the following duties:
5.1. Primarily perform work directly related to
management policies of their employer
5.2. Customarily and regularly exercise discretion and
independent judgment
5.3. (a) Regularly and directly assist a proprietor or
managerial employee in the management of the
establishment or subdivision thereof in which he or she is
employed; or (b) execute, under general supervision, work
along specialized or technical lines requiring special
Holiday pay
6. Field personnel and other employees whose time and performance is unsupervised
by the employer, including those who are engaged on task or contract basis, purely
commission basis or those who are paid a fixed amount for performing work
irrespective of the time consumed in the performance thereof.

Employees who are not excluded are referred to as “covered employees”.

Holiday pay

REGULAR HOLIDAYS 11. Christmas Day – December 25

1. January 1 – New Year’s Day 12. Rizal Day – December 30
2. Maundy Thursday – (movable date)
3. Good Friday – (movable date)
4. April 9 – Araw ng Kagitingan
5. May 1 – Labor Day
6. June 12 – Independence Day
7. National Heroes’ Day – Last Monday of
August

8. Eid’l Fitr – (movable date)

9. Eid’l Adha – (movable date)
10. Bonifacio Day – November 30
 Holiday pay
COMPUTATION

STEPS EXAMPLE

1. If there is no work on a regular holiday, a 100% holiday pay + day’s wage Php1,000 + 0 = Php1,000
covered employee is entitled to a holiday pay = day’s wage with holiday pay
of 100% daily wage
2. If there is work performed on a regular 100% holiday pay + day’s wage Php1,000 + Php1,000 =
holiday, a covered employee is entitled to a = day’s wage with holiday pay Php2,000
holiday pay of 100% daily wage plus his wage
for that day.
3. If there is work performed on a double 200% holiday pay + 1 day’s Php2,000 + Php1,000 =
holiday, a covered employee is entitled to a wage = day’s wage with holiday Php3,000
holiday pay of 200% daily wage plus his wage pay
for that day.
Holiday pay
RULES ON ABSENCES
If an absent employee is paid the workday immediately preceding a regular holiday,
then he/she is entitled to holiday pay.
Conversely if an absent employee is not paid the workday immediately preceding a
regular holiday, he/she is not entitled to holiday pay.
An absent employee is paid if he applied his leave credits for the day’s absence
and the same was approved by the management. If there is no applied leave credit, an
absent employee is not paid.
Holiday pay
ABSENCE DURING SUCCESSIVE REGULAR HOLIDAYS
The same rule on absences apply for successive regular holidays or two/more
holidays lining up after another.
However, if an absent employee is not paid the workday immediately preceding a
regular holiday, but performs work on the first regular holiday, then he/she is entitled to
the holiday pay for the next holiday/s without having to work. The rules on absences
will apply for the next successive holidays after the first regular holiday when he
worked.
Case Monday Tuesday Wednesday Thursday Friday
Workday Workday Workday Maundy Thursday Good Friday
1 ✓ ✓ ✖ ✖ ✖
2 ✓ ✓ ✖ (w/ leave credit) ✖ ✖
3 ✓ ✓ ✓ ✖ ✖
4 ✓ ✓ ✖ ✓ ✖
Holiday pay
WORK SUSPENSION OR TEMPORARY/PERIODIC SHUTDOWN
The employer is required to pay the holiday and observe the rules on holiday pay
for days/period when there is work suspension or temporary/periodic shutdown.

PIECE-RATE WORKERS
They are entitled to holiday pay which shall not be less than his/her average daily
earnings for the last seven (7) actual days of work immediately preceding the regular
holiday. The holiday pay should not be less than applicable statutory minimum wage
rate.
Holiday pay

SEASONAL WORKERS
They are not entitled to holiday pay for regular holidays
during off-season.

WORKERS WITHOUT REGULAR WORKDAYS

They are entitled to holiday pay. Workers without regular
holidays include stevedores.

EMPLOYMENT CONTRACT, COMPANY POLICIES, CBA

The previous discussion may be superseded by any
13th month pay
CONCEPT
13th month pay is an additional pay given to rank-and-file employees, regardless of
the nature of their employment and irrespective of the methods by which their wages
are paid, provided they worked for atleast one (1) month during a calendar year.
The 13th month pay should be given to the employees not later than December 24
of every year.
13th month pay
EXEMPTED EMPLOYERS
The following employers are exempted:
1. The government;

2. Employers who are already paying their employees thirteenth-month pay or more in
a calendar year or its equivalent at the time of the issuance of P.D. 851
‘equivalent’ – includes Christmas bonus, midyear bonus, cash bonuses, and other
payments amounting to not less than one-twelfth (1/12) of the basic salary but shall not
include cash and stock dividends, COLA, and all other allowances regularly enjoyed by
the employee, as well as non-monetary benefits.
13th month pay
3. Persons in the personal service of another in relation to such workers; and

4. Employers of those who are paid on purely commission, boundary or task basis, and
those who are paid a fixed amount for performing specific work, irrespective of the time
consumed in the performance thereof (except those workers who are paid on piece-
rate basis, in which case their employer shall grant them thirteenth-month pay)

COMPUTATION
Total basic salary earned during the year / 12 months = proportionate 13th month
pay
13th month pay
CONDITIONS FOR ENTITLEMENT
The only condition for entitlement: the rank-and-file employee should have atleast
thirty (30) calendar days of service

CERTAIN TYPES OF EMPLOYEES

13th month pay is required to be paid to employees who are paid on a piece-rate,
those paid a fixed or guaranteed wage plus commission (based on earning during the
calendar year), those with multiple employers.
13th month pay

NOT INCLUDED AS REGULAR WAGE

13th month pay is not included as regular wage for
purposes of determining overtime and premium payment,
fringe benefits, contributions to the State Insurance Fund,
SSS, National Health Insurance Program, and private
retirement plans.

NONTAXABLE IF TOTAL BONUSES DO NOT EXCEED

LIMIT
Threshold – Php90,000
Service Incentive Leave

• Service Incentive Leave are given to employee who may want to take a leave from
work and still may get paid on their absences.
• There are five (5) service incentive leave credit given to an employee who has
rendered at least twelve months of service.
• The leave credit may be used for whatever reason.
• The employer is required to pay the cash equivalent of the unused leave credit at
the end of the year or upon termination with just cause.
• Service incentive leave credits replenish yearly.
Service Incentive Leave
COVERED AND EXCLUDED
The benefit applies to all employees except:
1. Government employees, including GOCC with original charters or created under
special laws.
2. Person in the personal service of another.
3. Managerial employee, if they meet all the following conditions:
3.. Primary duty is to manage establishments
3.2. They customarily and regularly direct the work of two or more employees
3.3. They have the authority to hire and fire other employees of lower rank
Service Incentive Leave

4. Field personnel and those whose time and performance are unsupervised by the
employer.

5. Those already enjoying this benefit.

6. Those enjoying vacation leave with pay of at least five (5) days.

7. Those employed in establishments regularly employing less than ten (10)

employees.
Service Incentive Leave

EMPLOYMENT CONTRACT, COMPANY POLICIES, CBA

The above discussion may be superseded by any stipulation favorable to the
employee via an employment contract, company policies, or collective bargaining
agreement.
Maternity Leave
• Maternity leave benefits are given to female employees to be used during or after
pregnancy.
• The benefits is consist of one hundred five (105) days of leave credits with full pay,
with an option to extend an additional thirty (30) fays without pay.
• A female solo parent has an additional fifteen (15) days of leave credit with full pay.
• For cases of miscarriage or emergency termination pf pregnancy pf female
employeeis given sixty (60) days of leave credit with full pay.
• Availing of maternity is without limitation as to frequency.
• Benefit is non-convertible to cash.
• Benefit is non- cumulative.
Maternity Leave
COMPUTATION

• The leave credit is equal to basic salary, including mandatory and/ or

integrated allowances. The pay shall not be less than the minimum wage.

• The employer shall advance the full payment with in thirty days from the filing
of maternity leave application.
Maternity Leave
CONDITIONS FOR ENTITLEMENT

• She is a SSS member who has paid at least three (3) monthly contribution in
the twelve month period immediately preceding the semester of her child
birth, miscarriage or emergency termination of pregnancy.

• She shall have notified her employer of her pregnancy and the probable dat
of her child birth, which notice shall be transmitted to the SSS in accordance
with the rules and regulations it may provide.
Maternity Leave
FOR FEMALE EMPLOYEE WORKING IN THE PUBLIC SECTOR
Any pregnant female worker in the government service, regardless of
employment status and length of service, in National Government Agencies
(NGAs), Local Government Units (LGUs), Government-Owned or Controlled
Corporations (GOCCs), State Universities and Colleges (SUCs) or Local
Universities and Colleges (LUCs).
Maternity Leave
The following documents shall be submitted to the agency to enjoy maternity leave:
• Accomplished Application for Leave (Civil Service Form No. 6);
• Medical Certificate issued by a government or private physician, as proof of
pregnancy and estimated date of delivery;
• Accomplished Clearance Form (Civil Service Form No. 7)
• Solo Parent I.D., for solo parents who want to avail of the additional maternity leave
of 15 days
Maternity Leave
FOR SELF-EMPLOYED/VOLUNTARY/OFW SSS MEMBERS
• Maternity benefits shall cover all married and unmarried women, including female
workers in the informal economy. Female workers in the informal economy are
entitled to maternity leave benefits if they have remitted to the SSS at least three (3)
monthly contributions in the twelve (12)-month period immediately preceding the
semester of her childbirth, miscarriage, or emergency termination of pregnancy.
Self-employed female SSS members, including those in the informal economy,
OFWs and voluntary SSS members may give notice directly to the SSS.
Maternity Leave
EMPLOYER RESPONSIBLE FOR SALARY DIFFERENTIAL
• Employer shall be responsible for payment of the salary differential between actual
cash benefits received from SSS, and their regular wages for the entire duration of
maternity leave, with the following exceptions, subject to the guidelines to be issued
by DOLE:
• Those operating distress establishments
• Those establishments employing not more than ten (10) workers
• Those considered micro- business enterprises and engaged in the production,
processing, or manufacturing of products and commodities including agro-
processing, trading and services, whose total assets are not more than 3,000,000.
• Those who are already providing similar or more than the benefits therein.
Paternity leave

• Paternity leave benefits are given to married male employees whose legal wife
underwent delivery or miscarriage.
• The benefits applies to all male employee regardless of employment status.
• Benefit is consist of seven (7) days of leave credits with full pay. ( Calendar days,
not working days )
• The married male employee is required to be cohabiting with his legal wife unless
there is a justifying circumstances.
• The benefit is non-convertible to cash.
• The benefit is non- cumulative.
Paternity leave
COMPUTATION
The leave credit is equal to the basic salary, including mandatory and/or
integrated allowances. The pay shall not be less than minimum wage.

USAGE
The paternity leave benefit is used after the delivery or miscarriage of his
wife.
Paternity leave
CONDITIONS FOR ENTITLEMENT
• He is an employee at the time of delivery.
• He is cohabiting with his spouse at the time she gives birth or suffers
miscarriage.
• He has applied for paternity leave with his employer within a reasonable
period of time from the expected date of delivery by his pregnant spouse, or
within such period as may be provided by company rules and regulations, or
by collective bargaining agreement
• His wife has given birth or suffered a miscarriage.
Solo Parent Leave
• Solo parent leave benefits are given to employees left alone with the
responsibility of parenthood.
• The benefits applies to all solo parents
• The benefits consist of seven (7) working days of leave credits with full pay.
• The employee is required to obtain a Solo Parental ID from the DSWD.
• The benefit is non- convertible to cash.
Solo Parent Leave
SOLO PARENT
Under the law, solo parents are:
1. Woman who gives birth as a result of rape and other crimes against chastity even
without final conviction of the offenders; Provided, that the mother keeps and raises the
child
2. Parent left alone with the responsibility of parenthood due to death of spouse
3. Parent left alone with the responsibility of parenthood while the spouse is detained
or is serving sentence for criminal conviction for at least one year.
4. Due to physical and/or mental incapacity of spouse as certified by a public medical
practitioner.
Solo Parent Leave
5. Due to legal separation or de facto separation from spouse for atleast one
year, as long as he /she is entrusted with the custody of the children.
6. Due to declaration of nullity or annulment of marriage as decreed by a court
or by church as long as he / she is entrusted with custody of the children.
7. Due to abandonment of spouse for atleast one year
8. Unmarried mother/ father who has preferred to keep and raise her/ his
children instead of having others care for them or give them up to a welfare
institution.
Solo Parent Leave
9. Any other person who solely provides parental care and support to children.
10. Any family member who assumes the responsibility of head of the family as
a result of the death, abandonment, disappearance, or prolonged absence of
the parents or solo parent.
Solo Parent Leave
CHILDREN
The law defines children as those living with and dependent upon a solo
parent for support, and who are unmarried, unemployed, and not more than 18
years of age.

PARENTAL LEAVE shall mean leave benefits granted to a solo parent to

enable him/her to perform parental duties and responsibilities where physical
presence is required.
Solo Parent Leave
FLEXIBLE WORK SCHEDULE
Solo parent employees have the right to ask a flexible working schedule from their
employer so long as it does not affect individual and the company productivity, as well
as the core work hours as defined by the employer.

COMPUTATION
• Leave credit is equal to the basic salary, including mandatory and/ or integrated
allowances. The pay shall not be less than the minimum wage.
Solo Parent Leave
CONDITIONS FOR ENTITLEMENT
• He / she rendered at least one year of service.
• He/ she notified his/ her employer that he/ she will avail of it, within a reasonable
period of time
• He/she has presented to his/ her employer a Solo Parental ID.

IF NO LONGER A SOLO PARENT

The benefit will be terminated if the employee loses his status as solo parent.
End

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