Income and security are the fundamental issues of a career choice for every employee. Statutory benefits are not only those simply the minimum of what the government expects the employers to operate within, but a direct manifestation of how the company is expected to take good care of its employees.
This article will assist in comprehending the benefits system in the Philippines, which is governed by the statute, and present reference material to employees and employers alike.
Disclaimer: This article provides general information only and does not constitute legal or professional advice. Users should exercise their own judgment and seek qualified professional guidance.
Statutory Benefits Meaning
Statutory benefits are the simple compensation and protection schemes that the government requires employers to give workforce as per the law. They form the most basic and unparalleled aspect of the employment relationship.
To the employees, statutory benefits provide a buffer that keeps the basic standards of living and assists in risk management. To employers, they are the basis of legal conformity and the establishment of employer credibility.
Statutory Benefits vs Discretionary Benefits
The compensation system in a company will contain both statutory benefits that are stipulated by the government and other discretionary benefits that are set by the company.
These are the combined benefits that make up the entire employee compensation package. Nevertheless, the nature, source, and implementation are distinctly different.
| Comparison Dimension | Statutory Benefits | Discretionary Benefits |
|---|---|---|
| Legal Basis | Mandated by the Labor Code and government regulations | Determined by the company based on business conditions and strategy |
| Implementation | Must be provided; failure constitutes a legal violation | Optional; provided at the company’s discretion |
| Main Components | SSS, PhilHealth, Pag-IBIG, 13th-month pay, paid leaves, etc. | Additional commercial insurance, company car, meal allowance, flexible work arrangements, etc. |
| Flexibility | Set by the government; companies cannot modify | Can be designed and adjusted flexibly according to company needs |
Overall, statutory benefits are duties that firms should satisfy. Other benefits to increase the attractiveness of the company are discretionary benefits. Their combination forms a full value proposition to employees.
Statutory Benefits Philippines for Employees
The Labour Code and other special laws are the main governing bodies of the statutory benefits system in the Philippines. It is applicable to all workers in formal employment relations, both full-time and part-time, local and foreign, because they are working within the Philippines. The relevant protections are to be given to all employees. （Presidential Decree No. 442, Labor Code of the Philippines）
Wage and Compensation Benefits
Wage and compensation benefits are aimed at ensuring a minimum level of income and fair compensation of labour.
- Minimum wage: Minimum wages are determined by the tripartite wage boards in the respective regions, depending on the cost of living and economic conditions in the area. These are not homogeneous across the country, and standards differ across regions and industries. Check Cebu City minimum wage to read more.
- 13th-month compensation: The 13th-month payment is one of the most peculiar statutory benefits in the Philippines. It should be given by the employers ahead of December 24th every year and should not be lower than a twelfth of the total annual salary of the employee.
- Holiday pay: Workers on regular holidays have to receive a salary that is 200 per cent of the usual salary. Special non-working days paymentis 130 per cent of the daily wage. These rates are added with overtime on holidays.
- Overtime compensation and night shift allowance: Overtime compensation can be paid at 125 per cent of the usual rate of work above eight hours. Night shift work, which is 10 PM-6 AM, is remunerated at a 110 per cent night shift allowance. If time is spent during the night shifts, then both rates will be applicable.
- Retirement benefits: The retirement benefits can be given based on the Labour Code or company retirement plans. Benefits can be given to the employees when they have attained the stipulated age of retirement or when they have fulfilled the necessary years of service.
- Back pay: Back pay can be described as the accumulated wages, the unused conversion of leave and other amounts owed to an employee when he/she resigns. Punctual payment is also important towards compliance and usually within 30 days following separation.
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Social Security
The government’s compulsory social security benefits involve the input of both the employer and the employee. They are offering a variety of coverage, such as medical, housing and retirement.
- SSS: Social Security System encompasses the workers of the private sector and offers them benefits of retirement, disability, death, sickness and childbirth.
- PhilHealth: PhilHealth provides basic healthcare coverage for employees and their dependents.
- Pag-IBIG: The Home Development Mutual Fund assists employees with housing loans and other related benefits.
Leave Benefits
The leaves are meant to provide adequate time for employees to rest and care about their families when they are not at work.
- Annual leaves: An employee with one year of service is eligible for at least five days of annual paid leave, which may be carried over to the following year.
- Maternity and paternity leave: According to the Expanded Maternity Leave Law, female employees have the right to take 105-day paid maternity leave, and 15 days of paid paternity leave to single mothers. The male employees are allowed to take seven days of paid paternity leave when the child of a legitimate spouse is born.
- Sick leave: Paid sick leave is five days at least, and is normally accompanied by a medical certificate. Other businesses also offer internal leave benefits that are higher than the requirements of the law, e.g. extra sick leave or family care leave.
There are also companies that provide internal leave benefits that are not required by law.
Do Small Companies Provide Statutory Benefits?
All companies, irrespective of size, are required by law to provide statutory benefits. In reality, however, cost pressures might make small companies experience compliance difficulties. They are only able to offer the bare minimum or postpone social security payments.
However, this requires detailed statutory benefits in order to attract and retain talent. Interviewees should ask questions about benefits during interviews. Compliant companies ought to take the initiative to demonstrate their benefits to win the trust of the employees.
Conclusion
The benefits in the Philippines are provided through statutory provisions to guard the lives and security of employees and assist companies to work within the law and draw talents.
To the employer, statutory benefits might not be adequate to attract the best talent. Employers can register on Bossjob to showcase their benefits packages and employer brand. Job seekers can view high-quality job postings on Bossjob and filter for positions with ideal compensation.
FAQs
Are project-based employees entitled to statutory benefits?
Yes, project-based employees are also entitled to statutory benefits, including social security contributions, 13th-month pay, and paid leave, provided there is an employer-employee relationship.
Can a statutory benefit be offset?
No. Statutory benefits are the minimum legal protections and cannot be substituted or offset by other benefits or allowances.
What happens to statutory benefits when an employee resigns?
When an employee resigns, the employer must settle all statutory benefits due, including proportionate 13th-month pay, unused leave conversion, and back pay.
What happens to statutory benefits during company closure or retrenchment?
Employees are still entitled to all statutory benefits up to the termination date, including proportionate 13th-month pay and social security contributions for the last month of employment.
What penalties apply if an employer fails to provide statutory benefits?
Employers who fail to provide statutory benefits may face administrative penalties, fines, and potential criminal liability. They are also required to pay all outstanding benefits with applicable interest.
