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Mandatory Employee Benefits and Contributions in the Philippines

Benefits
  1. Wages and compensation

Philippine labor laws require employers to provide their employees with the following compensation benefits:

  • Minimum wage

Workers that render services for a total of 40 hours per week (8 hours per day, 5 days per week) are entitled to receive at least the daily minimum wage.

For companies operating within the National Capital Region, the minimum wage is Php 491. The Department of Labor and Employment’s guide to the minimum wage rates per region can be found here.

  • Overtime pay

Employees who render work beyond than the prescribed daily work hours are entitled to additional compensation. For regular work days, the overtime rate is equal to the regular wage plus at least a 25% premium.

  • Premium pay

Premium pay is awarded to employees who work on rest days and regular/special non-working holidays. It is equivalent to 130% of the employee’s daily wage – the rate of the first 8 hours of work, plus a premium of at least a 30%.

If work is rendered on a special holiday that falls on a scheduled rest day, the premium increases to at least 50% of the regular daily wage.

  • Night shift differential (NSD)

The NSD is a 10% premium added to the regular wage for each hour of work done between 10 p.m. and 6 a.m.

  • 13th month pay

Rank-and-file employees are entitled to an extra month’s basic wages which they must receive before December 24 of every year. An employee who resigns from the company before the release of the 13th month pay is still entitled to a pro-rated amount based on the number of months the employee worked since the start of the calendar year.

  • Separation pay

An employee can claim separation pay if their tenure with the company is ended under reasonable conditions. Employees terminated due to misconduct, breach of contract, or any illegal activity are ineligible to receive a separation pay.

  • Retirement pay

Employees aged 60 to 65 who have served the company for at least 5 years will receive compensation upon their retirement. The amount should be at least half a month’s salary for every year of service. (A fraction of at least 6 months worked is considered a whole year.)

  1. Leave benefits

In addition to compensation, labor laws protect the rights of employees to take breaks and request leaves of absence as needed.

  • Regular meal and break periods

Employers must give employees a minimum of 60 minutes per day for their regular meals. Break times are not included in the prescribed 8-hour daily work period.

  • Service incentive leave

Employees who have worked with the company for at least one year are entitled to a minimum of 5 days with pay. These can be used as sick leaves or vacation leaves.

  • Parental leaves

The Labor Code defines conditions for maternity, paternity, and solo-parent leaves.

The maternity leave provides up to 80 days for private sector employees for the employee’s first four deliveries.

The paternity leave allows married fathers up to 7 days off with pay.

Solo parents are provided with 7 leave days with pay if they have been with the company for at least a year.

  • Special leaves for female employees

Philippine law grants female employees the following special leave benefits:

  • Up to 2 months with full pay for women who undergo surgery to treat gynecological disorders

  • Up to 10 days with full pay for victims of violence against women and their children 

Contributions 

Employees contribute to the government’s social welfare benefits programs via deductions from each employee’s gross monthly salary. 

  1. Social Security System (SSS)

SSS benefits cover illness, maternity needs, retirement, disability, death, and pensions. The current contribution rate is 11% of the monthly salary capped at Php 16,000. Employers contribute 7.37% of the amount each month; employees cover the remaining 3.63%. 

  1. Home Development Mutual Fund (HDMF/Pag-IBIG)

Pag-IBIG benefits provide employees with housing, calamity, and multipurpose loans. A maximum of Php 100 is deducted from an employee’s salary every month.

  1. Philippine Health Insurance Corporation (PhilHealth)

PhilHealth covers the inpatient and outpatient needs of their members. Monthly PhilHealth premiums range from Php 175 to Php 875 based on the salary of the employee.