Chapter 10: Compensation and benefits

Wages and salaries

-The phrases "salary" and "wages" refer to the amount of money paid to an individual for their labor or
services. They may differ according to factors such the type of work, experience, location, and
education. They are typically paid on an hourly, weekly, or monthly basis. Wages are typically related to
paid employment that is hourly or daily, with remuneration determined by the quantity of hours
performed. However, regardless of the quantity of hours worked, jobs that pay wages on a monthly or
annual basis are more frequently linked to salaries.

Incentive Programs
-Organizations use incentive programs to encourage and compensate people or groups for reaching
predetermined targets or desired results. These initiatives are meant to motivate staff members to
reach goals, boost output, enhance quality, and perform at a higher level. There are various types of
incentive programs that organizations can implement, depending on their goals and the nature of their
work. Some common types of incentive programs include:

1. Performance-based incentives: These initiatives pay staff members according to their contributions
as a team or as individuals. Bonuses, commissions, profit-sharing schemes, and performance-based pay
raises are a few examples.

2. Recognition programs: These initiatives emphasize thanking staff members for their accomplishments
and contributions. These may consist of prizes, diplomas, announcements of public acknowledgment, or
staff of the month or year initiatives.

3. Sales incentives: The main goal of these initiatives is to recognize and honor staff members for their
accomplishments and services. These can include employee of the month or year programs, prizes,
certificates, and public recognition.

4. Employee referral programs: Through these initiatives, staff members are encouraged to
recommend suitable applicants for available positions inside the company. Employees that successfully
refer others that result in new jobs are rewarded with incentives such as monetary bonuses or gifts.

5. Wellness incentives: These initiatives support healthy habits and employee well-being. They may
consist of rewards for engaging in wellness pursuits, reaching health-related objectives, or upholding a
healthy way of living. 6. Profit-sharing programs: Under these schemes, workers are entitled to a portion
of the business's profits in accordance with preset standards. Employees may receive an extra financial
incentive as a result to help the business succeed.
Comparable worth
The idea of "comparable worth," which is also referred to as "pay equity" or "equal pay for work of
equal value," promotes equal pay for jobs that demand similar levels of skill, effort, responsibility, and
working conditions, regardless of the workers' gender or other demographic traits. Comparable worth is
the theory that says jobs should be valued on the content they demand and the abilities they require,
not on the basis of the gender or other attributes of the people who do them. It seeks to close the
gender pay gap and guarantee that workers of all genders receive just compensation for the labor they
accomplish. Job evaluation techniques are employed under a similar worth framework to evaluate the
worth and requirements of various employment

Benefits program
A benefits program, also known as an employee benefits program or employee benefits package, refers
to a set of offerings provided by an employer to employees in addition to their regular salary or wages.
These benefits are designed to support the well-being, health, financial security, and overall satisfaction
of employees.

A comprehensive benefits program can include a variety of offerings, which may vary depending on the
organization and the specific needs and priorities of its workforce. Some common components of a
benefits program include:

1. Health insurance: This typically includes medical, dental, and vision coverage, which helps
employees access necessary healthcare services and manage their health expenses.
2. Retirement plans: These programs, such as 401(k) plans, enable employees to save for their
retirement by contributing a portion of their salary, often with employer matching contributions
3. Paid time off: This includes vacation days, sick leave, and holidays, allowing employees to take
time off from work while still receiving their regular pay.
4. Disability insurance: This coverage provides income replacement in the event that an employee
becomes unable to work due to a disability, ensuring financial security during such
circumstances.
5. Life insurance: This benefit provides a financial payout to the designated beneficiaries in the
event of an employee's death, offering support to their loved ones.
6. Wellness programs: These initiatives promote employee well-being and may include gym
memberships, wellness reimbursements, stress management programs, and access to resources
for maintaining a healthy lifestyle.
7. Flexible spending accounts (FSAs) or health savings accounts (HSAs): These accounts allow
employees to set aside pre-tax dollars to cover qualified medical expenses or dependent care
expenses.
8. Employee assistance programs (EAPs): EAPs provide confidential counseling and support
services to employees and their families for personal or work-related issues.
 9. Education and professional development: Some organizations offer tuition reimbursement or
assistance for employees pursuing further education or professional development
opportunities.

Laws on Wages and Working Hours in the Philippines

the laws on wages and working hours are governed by the Labor Code. Here are some key points:

1. Working Hours: The regular working hours per day in the Philippines is 8 hours, inclusive of a
one-hour break for regular meals and short periods of rest. The normal work week is 40 hours,
typically from Monday to Friday.

2. Overtime Pay: Any work done beyond the regular 8 hours per day is considered overtime.
Employees must be paid their regular rate plus an additional overtime pay of at least 25% of their
regular rate. On rest days and holidays, employees must be paid the prescribed holiday and rest day
rates plus an additional overtime pay of at least 30% of their holiday or rest day rates.

3. Holidays: The Philippines has both regular and special non-working holidays. On regular holidays,
employees are entitled to their full daily rate even if they don't work. If employees are required to
work on regular holidays, they are entitled to double wages. On special non-working holidays,
employees can take the day off without pay, but if they are required to work, they are entitled to
receive an additional payment of at least 30% of their daily rate.

4. Leave Benefits: Employees in the Philippines are entitled to various leave benefits, including
vacation leave, sick leave, maternity leave, paternity leave, and special leave for certain
circumstances. The number of days and conditions for each type of leave may vary.

5. Minimum Employable Age: The minimum employable age for Filipino workers is 15 years old.
Minors aged 15 to 18 years old may be employed, provided that their employment does not
interfere with their schooling and they are not engaged in hazardous or deleterious work.

The Rights of Workers in the Philippines With Regard to Wages

Workers in the Philippines
have certain rights with regard to wages, which are protected by labor laws. Here are some key
rights of workers in the Philippines related to wages:

1. Minimum Wage: The Philippines has a minimum wage law that sets the minimum amount that
employers must pay their workers. The minimum wage varies depending on the region or sector of
employment. The rates are determined by regional wage boards and are periodically adjusted to
ensure fair compensation for workers.
 2. Equal Pay for Equal Work: Workers in the Philippines have the right to receive equal pay for equal
work. This means that employees who perform the same job or jobs of equal value should receive
the same compensation, regardless of their gender, age, or other personal characteristics.

3. Timely Payment: Employers are required to pay their employees on time and in full. Wages
should be paid at regular intervals, such as weekly, biweekly, or monthly, as agreed upon in the
employment contract. Deductions from wages must be lawful and authorized by the employee.

4. Overtime Pay: Workers who work beyond the regular working hours are entitled to overtime
pay. Overtime work refers to work performed beyond 8 hours a day or 40 hours a week. Overtime
pay should be at least 25% higher than the regular hourly rate.

5. Holiday and Rest Day Pay: Employees who work on regular holidays or rest days are entitled to
additional compensation. The rates for holiday and rest day pay are higher than the regular daily
rate and should be at least 200% and 130%, respectively.

6. Wage Deductions: Employers are only allowed to make deductions from wages in specific cases
and under certain conditions, such as deductions for taxes, social security contributions, and
authorized deductions for loans or advances.

7. Wage Increases: Workers may also be entitled to wage increases based on factors such as
productivity, cost of living, and collective bargaining agreements. Wage increases may be
implemented through wage orders or negotiated between employers and employees'
representatives.

The Rights of Workers in the Philippines with Regard to Rest, Working

Hours, and Holidays Workers in the Philippines

have certain rights with regard to rest, working hours, and holidays, which are protected by labor
laws. Here are some key rights of workers in the Philippines related to these areas:

1. Working Hours: The regular working hours in the Philippines are 8 hours per day, and the
normal work week is 40 hours. Any work performed beyond the regular working hours is
considered overtime. Overtime work should be compensated with additional pay, which is at
least 25% higher than the regular hourly rate.
2. Rest Periods: Workers are entitled to rest periods during the workday. After every 4 hours of
continuous work, employees are entitled to a 1-hour meal break. This break is not counted as
part of the working hours and should be provided by the employer.
3. Rest Days: Workers are entitled to at least one day off per week, which is known as the rest
day. The rest day should be granted to employees after 6 consecutive workdays. If employees
are required to work on their rest day, they should be compensated with additional pay, which
is at least 130% of their regular daily rate.
 4. Holidays: The Philippines has both regular and special non-working holidays. Regular holidays,
such as New Year's Day, Labor Day, and Christmas Day, are paid holidays. If employees are
required to work on regular holidays, they should receive double pay. Special non-working
holidays, such as Independence Day and National Heroes Day, are not mandatory paid holidays,
but employees who work on these days are entitled to additional compensation, which is at
least 30% of their daily rate.
5. Night Shift Differential: Employees who work between 10:00 PM and 6:00 AM are entitled to a
night shift differential. This differential is an additional pay on top of the regular hourly rate and
should be at least 10% of the regular rate
6. Overtime on Rest Days and Holidays: If employees are required to work on their rest days or
holidays, they are entitled to additional compensation. Overtime work on rest days should be
compensated with at least 30% higher pay, while overtime work on holidays should be
compensated with at least 30% or 50% higher pay, depending on the type of holiday.

Minimum wage law

The minimum wage law in the Philippines sets the minimum amount that employers must
pay their workers. The law aims to provide a basic level of income to workers and ensure fair
compensation for their labor.

Here are some key points about the minimum wage law in the Philippines:
1. Regional Wage Boards: The minimum wage rates in the Philippines are determined by regional
wage boards. These boards are composed of representatives from labor, employers, and the
government. They assess the economic conditions and factors specific to each region to
determine the appropriate minimum wage rates
2. Minimum Wage Rates: The minimum wage rates vary across different regions in the Philippines.
Each region has its own minimum wage levels, which are periodically reviewed and adjusted by
the regional wage boards. The rates take into account factors such as the cost of living,
productivity, and economic conditions in the region.
3. Wage Classification: The minimum wage rates are typically classified into different categories
based on geographic areas or sectors of employment. For example, there may be separate
minimum wage rates for Metro Manila, other cities, non-agricultural sectors, agricultural sectors,
and more. The rates may also vary based on the size of the establishment or the type of
employment.
4. Compliance and Enforcement: Employers are legally obligated to comply with the minimum
wage law and pay their employees at least the prescribed minimum wage rates. The Department
of Labor and Employment (DOLE) is responsible for enforcing compliance with the minimum
wage law. Workers who believe that their employers are not paying them the minimum wage can
file complaints with the DOLE or seek assistance from labor organizations.
5. Exemptions and Exceptions: There may be certain exemptions or exceptions to the minimum
wage law for specific types of employment, such as apprenticeships, learnerships, or certain
 types of family businesses. However, these exemptions are subject to specific conditions and
regulations.

Meal and rest periods

Employees are entitled to meal and rest periods during their workday. These periods are provided
to ensure that employees have adequate time for meals, rest, and personal needs. Here are some
key points regarding meal and rest periods in the Philippines:

1. Meal Break: Employees who work for more than 8 hours in a day are entitled to a one-hour
meal break. This break is typically unpaid and is provided to allow employees to have their
regular meals. The meal break is not included in the total working hours for the day.
2. Rest Periods: In addition to the meal break, employees are also entitled to rest periods during
the workday. After every 4 hours of continuous work, employees are entitled to a rest period of
at least 10 minutes. These rest periods are typically paid and are intended to provide employees
with short breaks for rest and relaxation.
3. Scheduling of Breaks: The scheduling of meal and rest periods may vary depending on the
nature of the work and the agreement between the employer and the employee. Employers are
responsible for ensuring that employees have sufficient time for their meal breaks and rest
periods.
4. Exceptions: There may be certain exceptions to the meal and rest period requirements for
specific industries or types of work. For example, employees in certain industries such as
healthcare, transportation, or security may have different arrangements for meal and rest
periods due to the nature of their work. However, these exceptions should still provide for
reasonable breaks and comply with labor laws.

Night shift differential pay

Night shift differential pay is an additional compensation provided to employees who work during the
night shift. It is intended to recognize and compensate employees for the inconvenience and potential
health effects of working during nighttime hours. Here are some key points regarding night shift
differential pay:

1. Definition of Night Shift: Night shift typically refers to work performed between 10:00 PM and
6:00 AM the following day. The specific time range may vary depending on the company or
industry.
2. Night Shift Differential Rate: The night shift differential rate is an additional percentage of the
employee's regular hourly rate. As of May 8, 2018, the night shift differential rate in the
Philippines is at least 10% of the regular hourly rate. This means that employees who work
during the night shift are entitled to receive at least 110% of their regular hourly rate for each
hour worked during the night shift.
3. Calculation of Night Shift Differential Pay: Night shift differential pay is calculated based on the
number of hours worked during the night shift. If an employee works a combination of day and
 night shift hours within a workday, the night shift differential pay is only applicable to the hours
worked during the night shift.
4. Exemptions and Exceptions: Some industries or types of work may have different rules or rates
for night shift differential pay. For example, certain sectors such as healthcare, transportation,
and security may have specific regulations or collective bargaining agreements that govern night
shift differential pay.

Philippine Labor Laws – Overtime Pay, Employee Wages and Benefits

Terminology
Philippine labor laws encompass various aspects of employment, including overtime pay, employee
wages, and benefits. Here are some key terminologies related to these areas:

1. Overtime Pay: Overtime refers to work performed beyond the regular working hours. In the
Philippines, employees who work beyond 8 hours a day are entitled to overtime pay. Overtime
pay should be at least 25% higher than the regular hourly rate. On rest days and special non-
working holidays, employees are entitled to additional overtime pay of at least 30% of their
hourly rate.
2. Regular Rate: The regular rate refers to the basic hourly rate of pay for an employee. It is the
basis for calculating overtime pay, night shift differential, and other related payments.
3. Night Shift Differential: Night shift differential is an additional compensation provided to
employees who work during the night shift. It is intended to recognize the inconvenience and
potential health effects of working during nighttime hours. The night shift differential rate is at
least 10% of the employee's regular hourly rate.
4. Basic Salary/Wage: The basic salary or wage is the fixed amount of money that an employee
receives for performing their regular duties and responsibilities. It does not include additional
payments such as overtime, allowances, or bonuses.
5. Allowances: are additional payments provided to employees to cover specific expenses or costs
related to their work. Examples include transportation allowances, meal allowances, and
housing allowances.
6. Benefits: refer to additional forms of compensation or privileges provided to employees beyond
their basic salary or wage. These may include health insurance, retirement plans, paid time off
(vacation and sick leave), maternity/paternity leave, and other welfare benefits.
7. Statutory Deductions: Statutory deductions are mandatory deductions from an employee's
wages or salary as required by law. These deductions may include taxes, social security
contributions, and health insurance premiums.
8. 13th Month Pay: The 13th month pay is a mandatory benefit in the Philippines. It is an
additional payment equivalent to one-twelfth (1/12) of an employee's total basic salary earned
during the calendar year. It is typically paid in December.
Computation of overtime pay
The computation of overtime pay in the Philippines is based on the provisions of the Labor Code and
related regulations. Here is a general guide on how overtime pay is calculated:

1. Regular Overtime Pay: For work performed beyond the regular 8 hours a day, employees are
entitled to overtime pay. The overtime pay rate should be at least 25% higher than the regular
hourly rate.
2. Overtime Pay on Rest Days and Special Non-Working Holidays: When employees work on their
rest days or special non-working holidays, they are entitled to additional compensation. The
overtime pay rate for work on rest days and special non-working holidays should be at least 30%
higher than the regular hourly rate.

Work Need Not be Continuous

According to the Philippine Labor Code, work need not be continuous for it to be considered as
compensable working hours. This means that even if work is not performed continuously or in one
continuous shift, it may still be considered as part of the total working hours for the purpose of
compensation. The Labor Code recognizes that work may be interrupted or may involve non-
working intervals due to the nature of the job or other factors. For example, if an employee is
required to perform work in separate shifts or in nonconsecutive periods throughout the day, each
period of work may still be considered as compensable working hours. The key factor in determining
whether work is compensable is whether the employee is under the control and direction of the
employer and is engaged in productive work. If the employee is required to be present and available
for work during these non-continuous periods, it is generally considered as part of the total working
hours.

Undertime cannot be offset by Over Time

According to the Philippine Labor Code, undertime cannot be offset by overtime. Undertime refers
to the period when an employee fails to complete the full regular working hours for a particular day.
Under the law, employees are required to render the full regular working hours unless there are
valid reasons or circumstances that justify a shorter work period. If an employee incurs undertime,
the employer has the right to deduct the corresponding proportionate salary or wage for the time
not worked. On the other hand, overtime refers to work performed beyond the regular working
hours. Overtime work is generally compensated at a higher rate than the regular hourly rate, as
stipulated by labor laws. It is important to note that undertime and overtime are distinct concepts
and should be treated separately. Undertime cannot be used to offset or compensate for overtime
hours worked. Each should be calculated and compensated accordingly based on their respective
provisions in the Labor Code

.
Emergency over time work
Emergency overtime work refers to work performed by employees beyond their regular working
hours in emergency situations. These situations may include unforeseen events, urgent tasks, or
circumstances that require immediate attention or response to protect life, property, or public
welfare. Emergency overtime work is subject to specific regulations and provisions under the Labor
Code. Here are some key points regarding emergency overtime work:

1. Definition: Emergency overtime work is work performed in situations that involve imminent
danger to public safety, health, or welfare, or in cases of actual or impending emergencies
caused by serious accidents, natural disasters, or other similar circumstances.
2. . Compensation: Employees who are required to perform emergency overtime work are entitled
to additional compensation. The overtime work should be compensated at a rate higher than
the regular hourly rate. The specific rate may be determined through collective bargaining
agreements, company policies, or industry practices.
3. . Duration: Emergency overtime work is typically performed for a limited duration until the
emergency situation is resolved or under control. The duration may vary depending on the
nature of the emergency and the tasks that need to be performed.
4. Prior Notice: In emergency situations, it may not always be feasible to provide prior notice to
employees about the need for overtime work. However, employers should make reasonable
efforts to inform employees as soon as possible about the emergency situation and the
requirement for overtime work.
5. Health and Safety: Employers have a responsibility to ensure the health and safety of
employees performing emergency overtime work. Adequate measures should be taken to
provide a safe working environment and address any potential risks or hazards associated with
the emergency situation.

Managerial Employees Not Entitled to Over Time Pay

managerial employees are generally not entitled to overtime pay. Managerial employees are those
who primarily perform managerial functions and have the authority to hire, promote, transfer,
suspend, or dismiss employees.

The exemption from overtime pay for managerial employees is based on the assumption that they
have a higher level of responsibility and discretion in managing their work hours. They are expected
to work beyond the regular working hours, if necessary, without additional compensation. However,
it's important to note that not all employees with the title of "manager" are automatically exempt
from overtime pay.

The exemption is determined based on the actual duties and responsibilities of the employee, rather
than their job title alone. If an employee with the title of "manager" does not perform managerial
functions or exercises independent judgment and discretion, they may still be entitled to overtime
pay.
Weekly Rest Period
Employees are entitled to a weekly rest period. The weekly rest period is a day of rest given to
employees after six consecutive workdays. Here are some key points regarding the weekly rest
period:

1. Duration: The weekly rest period is typically one day off after six consecutive workdays. It
provides employees with a break from work and an opportunity to rest, relax, and attend to
personal matters.
2. Calculation: The calculation of the weekly rest period is based on a continuous workweek. A
continuous workweek is a fixed and regularly recurring period of seven consecutive days, which
may begin on any day and at any hour chosen by the employer.
3. Rest Day: The day of the week designated as the rest day may vary depending on the
employer's policies, industry practices, or collective bargaining agreements. It is generally a day
when employees are not required to report to work and are free from work-related obligations.
4. Compensation: Employees who are required to work on their designated rest day are entitled
to additional compensation. The additional compensation should be at least 130% of their
regular daily rate. If the employee works overtime on their rest day, they are entitled to
additional compensation of at least 150% of their regular hourly rate for the overtime hours
worked.
5. Exceptions: There may be exceptions to the weekly rest period requirement for certain
industries or types of work. For example, industries that operate on a continuous or shifting
schedule, such as healthcare, transportation, or security, may have different arrangements for
the weekly rest period. However, even in these cases, employees should still be provided with
regular rest days or equivalent rest period