1.1 Key statutes
The key statute regulating employment law in the Philippines is the Labor Code, which is divided into 7 ‘Books’. The Department of Labor and Employment (DOLE) issues Implementing Rules and Regulations for each Book of the Labor Code, which also have the force of law.
Other laws that impact upon employment matters include:
- the Civil Code;
- the Social Security Act;
- the 13th Month Pay Law;
- the Anti-Sexual Harassment Law; and
- the Migrant Workers and Overseas Filipinos Act.
1.2 Probationary period
The Labor Code specifically contemplates the use of probationary periods for the employer to determine whether the employee is qualified for permanent employment. A probationary period will only be valid if the employer has informed the employee of the probationary period at the time of hire and advised the employee of the standards that they will be required to meet in order to qualify as a permanent employee.
Generally, a probationary period is limited to a maximum of 6 months. However, the employer and employee may agree to a longer period if:
- a longer period is justified by the nature of the work being performed by the employee; or
- the employee is being given a ‘second chance’ to meet the qualifying conditions that he/she failed to meet during the initial probationary period.
1.3 Minimum wage
Minimum wage rates in various regions are prescribed by the various Regional Tripartite Wages and Productivity Boards. Wage Orders are implemented periodically following a tripartite study involving government, employer and employee representatives.
1.4 Remuneration structure
The Labor Code recognises that wages due to an employee may include a fair and reasonable value towards board, lodging or other facilities customarily furnished by the employer to the employee. Implementing Rules provide that the acceptance of such facilities by an employee must be voluntary, and set out the standards to determine the value of facilities deductible from an employee’s wage.
In addition to wages, a mandatory ‘13th Month Pay’ applies in respect of rank-and-file employees who have worked for an employer for at least one month in a calendar year. The Labor Code distinguishes a rank-and-file employee from a managerial employee. It provides that a managerial employee is one who is vested with powers to lay down and execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees, or to effectively recommend such actions.
The 13th Month Pay entitlement of rank-and-file employees is calculated based on one twelfth of the total basic salary earned by the employee in a calendar year, and must be paid no later than 24 December each year.
1.5 Working hours
Hours of work
In general, the normal hours of work of any employee may not exceed 8 hours per day.
Rest periods
Employees are generally entitled to a 60 minute break for regular meal times.
An employee is entitled to a rest period of at least 24 hours after 6 consecutive normal work days.
Overtime
Work may be performed beyond 8 hours per day, provided that the employee is paid for the overtime work at a rate of at least 125% of the regular wage rate.
Where an employee is required or permitted to work on a rest day, they are entitled to payment at the rate of 130% of the regular wage rate for all hours worked on that day.
1.6 Public holidays
In the Philippines, a distinction is made between ‘regular holidays’ and ‘special holidays’.
There are 11 prescribed regular holidays. Employees are entitled to a day off with full pay on regular holidays. If an employee is required to work on a regular holiday, they are entitled to pay at the rate of 200% of the regular wage rate. If the employee works on a regular holiday that is also the employee’s rest day, the employee is entitled to pay at the rate of 260% of the regular wage rate.
There are 3 prescribed special holidays. Employees are entitled to an unpaid day off on special holidays. If an employee works on a special holiday, they are entitled to pay at the rate of 130% of the regular wage rate. If the employee works on a special holiday that is also the employee’s rest day, the employee is entitled to pay at the rate of 150% of the regular wage rate.
1.7 Paid annual leave
There is no legal obligation to provide paid annual leave to employees.
1.8 Other types of leave
Service incentive leave
In general, after one year of service, employees are entitled to 5 days per annum paid service incentive leave. An employee may use this for a variety of personal reasons, including sickness or vacation. Any unused leave at the end of the year must be cashed out.
Sick leave
An employee who is confined to hospital for more than 3 days, and who has made at least 3 monthly premium contributions to the Social Security System (SSS) in the previous 12 months, is entitled to a sickness benefit at the rate of 90% of his average daily salary credit, up to a maximum of 120 days per calendar year. The employer advances the sickness benefit and may claim reimbursement of this benefit from the SSS.
Maternity leave
A female employee who has paid at least 3 monthly premium contributions to the SSS in the previous 12 months is entitled to maternity leave pay equivalent to 100% of her average daily salary credit for 60 days, or 78 days in the case of caesarean delivery. The employer advances the benefit and may claim reimbursement of this benefit from the SSS. The maternity leave benefit is only payable in respect of the employee’s first 4 deliveries or miscarriages.
Paternity leave
A married male employee is entitled to 7 days’ paternity leave on full pay for the first 4 deliveries by his lawful spouse. Paternity leave benefits must be granted to the qualified employee after the delivery by his wife, without prejudice to an employer allowing an employee to avail of the benefit before or during the delivery, provided that the total number of days shall not exceed 7 days for each delivery. If the paternity leave benefit is not availed of, it is not convertible to cash.
Parental (solo parent) leave
An employee who is a solo parent with at least one year’s service is entitled to 7 working days of paid leave per annum.