REVIEWER IN REGULATORY FRAMEWORK AND LEGAL ISSUES IN BUSINESS

CHAPTER 2
LABOR STANDARDS

BASIC PAY
utilized effectively and gainfully in the
1. RULES IN DETERMINING COMPENSABLE employee’s own interest.
WORKING HOURS
3. TREATMENT ON WAITING TIME
The following shall be considered as compensable hours
A. Waiting time spent by an employee shall be
worked:
considered as working time if waiting is an
A. All time during which an employee is required to integral part of his work or the employee is
be on duty or to be at the employer’s premises required or engaged by the employer to wait.
or to be at a prescribed work place.
B. An employee who is required to remain on call
B. All time during which an employee is suffered or in the employer’s premises or so close thereto
permitted to work. that he cannot use the time effectively and
gainfully for his own purpose shall be
2. PRINCIPLES IN DETERMINING
considered as working while on call.
HOURS WORKED
An employee who is not required to leave word
The following general principles shall govern in at his home or with company officials where he
determining whether the time spent by an employee is may be reached is not working while on call.
considered hours worked:
4. ATTENDANCE AT LECTURES, MEETINGS,
A. All hours are hours worked which the employee TRAINING PROGRAMS, AND OTHER SIMILAR
is required to give his employer, regardless of ACTIVITIES
whether or not such hours are spent in
Attendance at lectures, meetings, training programs,
productive labor or involve physical or mental
and other similar activities shall not be counted as
exertion.
working time if all of the following conditions are met:
B. An employee need not leave the premises of the
work place in order that his rest period shall not A. Attendance is outside of the employee’s regular
be counted, it being enough that he stops working hours.
working, may rest completely and may leave his B. Attendance is in fact voluntary.
work place, to go elsewhere whether within or
C. The employee does not perform any productive
outside the premises of his work place.
work during such attendance.
C. If the work performed was necessary, or it
5. MEAL AND REST PERIODS
benefited the employer, or the employee could
not abandon his work at the end of his normal Every employer shall give his employees, regardless
working hours because he had no replacement, of sex, not less than one (1) hour time-off for
all time spent for such work shall be considered regular meals, except in the following cases when a
as hours worked, if the work was with the meal period of not less than twenty (20) minutes
knowledge of his employer or immediate may be given by the employer provided that such
supervisor. shorter meal period is credited as compensable hours
worked of the employee:
D. The time during which an employee is inactive
by reason of interruptions in his work beyond A. Where the work is non-manual work in nature
his control shall be considered working time or does not involve strenuous physical exertion.
either if the imminence of the resumption of
work requires the employee’s presence at the B. Where the establishment regularly operates not
less than sixteen (16) hours a day.
place of work or if the interval is too brief to be
 C. In case of actual or impending emergencies or On the other hand, work performed on special days
there is urgent work to be performed on merits additional compensation of at least thirty
machineries, equipment or installations to avoid percent (30%) of the basic wage or a total of one
serious loss which the employer would hundred thirty percent (130%). Where the
otherwise suffer. employee works on a special day falling on his rest
day, he or she shall be entitled to an additional
D. Where the work is necessary to prevent serious
compensation of at least fifty percent (50%) of his or
loss of perishable goods.
her basic wage or a total of one hundred fifty percent
Rest periods or coffee breaks running from five (5) to (150%).
twenty (20) minutes shall be considered as
2. COST OF LIVING ALLOWANCE
compensable working time.
o The COLA shall not be included in the
DAILY MINIMUM WAGE RATES
computation of premium pay.
CURRENT DAILY MINIMUM WAGE RATES
The minimum statutory premium pay rates are as
NATIONAL CAPITAL REGION (NCR)
follows:
(Effective: July 16, 2023)
A. For work performed on rest days or on special
days. Plus 30% of the daily basic wage of 100%
or a total of 130%.

SECTORS/INDUSTRY RATE AMOUNT

Non-Agriculture ₱ 610.00 610 x 130% = ₱ 793.00
Retail/Service Est. ₱ 573.00 573 x 130% = ₱ 744.90

B. For work performed on a rest day which is also

PREMIUM PAY a special day. Plus 50% of the daily basic wage
of 100% or a total of 150%.
o Premium Pay – it refers to the additional
compensation for work performed within eight SECTORS/INDUSTRY RATE AMOUNT
(8) hours on non-work days, such as rest days Non-Agriculture ₱ 610.00 610 x 150% = ₱ 915.00
and special days. Retail/Service Est. ₱ 573.00 573 x 150% = ₱ 859.50

1. SPECIAL (NON-WORKING) DAYS C. For work performed on a regular holiday which

is also the employee’s rest day (not applicable to
Pursuant to Proclamation No. 1236, issued on 29 employees who are not covered by the holiday-
October 2021, the following are the six (6) special pay rule). Plus 30% of the regular holiday rate
(non-working) days for the year 2022: of 200% based on his or her daily basic wage
Chinese New Year 01 February (Tuesday) rate or a total of 260%.
EDSA Ppl. Pwr. Rev. Anniv. 25 February (Friday)
SECTORS/INDUSTRY RATE AMOUNT
Black Saturday 16 April (Saturday)
Non-Agriculture ₱ 610.00 610 x 260% = ₱ 1,586.00
Ninoy Aquino Day 21 August (Sunday)
Not covered by holiday
All Saints’ Day 01 November (Wednesday) Retail/Service Est. ₱ 573.00
pay rule.
Feast of Imm. Con. of Mary 08 December (Thursday)

Workers who are not required or permitted to work

on special days are not entitled to any compensation.
This, however, is without prejudice to any voluntary
practice or provision in the Collective Bargaining
Agreement (CBA) providing for payment of wages
and other benefits for days declared as special days
even if unworked.
 HOLIDAY PREMIUM The minimum overtime pays rates vary according to the
day the overtime work is performed, as follows:
1. REGULAR HOLIDAYS
o Every employee covered by the Holiday Pay 1. For work in excess of eight (8) hours
Rule is entitled to the minimum wage rate (daily performed on ordinary working days. Plus 25%
basic wage and COLA). of the hourly rate.
o This means that the employee is entitled to at SECTORS/INDUSTRY RATE AMOUNT
least 100% of his or her minimum wage rate 610/8 = ₱ 76.25 x
Non-Agriculture ₱ 610.00
even if he or she did not report for work, 125% x no. of hrs. OT
provided, he or she is present or is on leave of 573/8 = ₱ 71.625 x
Retail/Service Est. ₱ 573.00
absence with pay on the work day immediately 125% x no. of hrs. OT
preceding the holiday.
2. For work in excess of eight (8) hours performed
o Work performed on that day merits at least on a scheduled rest day or a special day. Plus
twice (200%) the daily wage of the employee. 30% of the hourly rate on said days.
ILLUSTRATION: SECTORS/INDUSTRY RATE AMOUNT
Using the NCR minimum wage of ₱ 610.00 per day for 610/8 = ₱ 76.25 x 130%
Non-Agriculture ₱ 610.00
x 130% x no. of hrs. OT
the non-agricultural sector, effective July 16, 2023
573/8 = ₱ 71.625 x 130%
under Wage Order No. NCR-24 Retail/Service Est. ₱ 573.00
x 130% x no. of hrs. OT
For work within eight (8) hours, plus 100% of the
minimum wage of 100% or a total of 200%. 3. For work in excess of eight (8) hours
performed on a special day which falls on a
SECTORS/INDUSTRY RATE AMOUNT
scheduled rest day. Plus 30% of the hourly rate
Non-Agriculture ₱ 610.00 610 x 200% = ₱ 1,220.00
on said days.
Retail/Service Est. ₱ 573.00 Not covered or exempted.
SECTORS/INDUSTRY RATE AMOUNT
Where the holiday falls on the scheduled rest day of 610/8 = ₱ 76.25 x 150%
Non-Agriculture ₱ 610.00
the employee, work performed on said day merits at x 130% x no. of hrs. OT
least an additional 30% of the employee’s regular
holiday rate of 200% or a total of at least 260%. 4. For work in excess of eight (8) hours
performed on a regular holiday. Plus 30% of the
When Araw ng Kagitingan falls on the same day as hourly rate on said days.
Maundy Thursday or Good Friday, a covered
employee is entitled to at least two hundred percent SECTORS/INDUSTRY RATE AMOUNT
(200%) of his or her daily wage even if said day is 610/8 = ₱ 76.25 x 200%
Non-Agriculture ₱ 610.00
unworked. Where the employee is required to work x 130% x no. of hrs. OT
Not covered by holiday
on that day, he or she is entitled to an additional 100% Retail/Service Est. ₱ 573.00
pay rule.
of the daily wage.

5. For work in excess of eight (8) hours

performed on a regular holiday which falls on a
OVERTIME PREMIUM scheduled rest day. Plus 30% of the hourly rate
o Overtime Pay – it refers to the additional on said days.
compensation for work performed beyond eight SECTORS/INDUSTRY RATE AMOUNT
(8) hours a day. 610/8 = ₱ 76.25 x 260%
Non-Agriculture ₱ 610.00
x 130% x no. of hrs. OT
o The COLA shall not be included in the
Not covered by holiday
computation of overtime pay. Retail/Service Est. ₱ 573.00
pay rule.
NIGHT SHIFT DIFFERENTIAL The above distinction shall be used as guide for the
purpose of determining who are rank-and-file
o Night Shift Differential (NSD) – it refers to the
employees entitled to the 13th month pay.
additional compensation of ten percent (10%)
of an employee’s regular wage for each hour of 2. FORMULA AND COMPUTATION OF
work performed between 10 PM and 6 AM. 13TH MONTH PAY

o The minimum night shift pays rates vary Annual Basic Salary
according to the day the night shift work is 12 Months
performed. ILLUSTRATION:
SECTORS/INDUSTRY RATE AMOUNT Using the basic wage in the NCR at ₱610.00 per day
610/8 = ₱ 76.25 x and a six-day workweek or an equivalent Monthly
Non-Agriculture ₱ 610.00 610 𝑋 313
110% x no. of hrs. work Basic Salary of 12
= ₱ 15,910.83 .
573/8 = ₱ 71.625 x
Retail/Service Est. ₱ 573.00 January No Absence ₱ 15,910.83
110% x no. of hrs. work
February No Absence ₱ 15,910.83
March No Absence ₱ 15,910.83
13TH MONTH PAY April Company Shutdown No Salary
May Company Shutdown No Salary
1. COVERAGE June 5 Days Leave w/ Pay ₱ 15,910.83
July Company Shutdown No Salary
All employers are required to pay their rank-and-file
August Company Shutdown No Salary
employees 13th month pay, regardless of the nature of
September 10 Days Leave w/o Pay ₱ 9,810.83
their employment and irrespective of the methods by
October No Absence ₱ 15,910.83
which their wages are paid, provided they worked for
November 1 Day Leave w/o Pay ₱ 15, 300.83
at least one (1) month during a calendar year.
December No Absence ₱ 15,910.83
The thirteenth-month pay should be given to the TOTAL ANNUAL BASIC SALARY ₱ 120, 576.64
employees not later than December 24 of every year.

An employer, however, may give to his or her 13th MONTH PAY

employees one-half (1/2) of the 13th month pay ₱ 120, 576.64
before the opening of the regular school year and the = ₱ 10,048.05
12 Months
remaining half on or before December 24 of every
year. The frequency of payment of this monetary
benefit may be the subject of an agreement between SERVICE INCENTIVE LEAVE
the employer and the recognized or collective
1. COVERAGE
bargaining agent of the employees.
Every employee who has rendered at least one (1)
o Rank-and-File Employees – the Labor Code, as year of service is entitled to Service Incentive Leave
amended, distinguishes a rank-and-file employee (SIL) of five (5) days with pay.
from a managerial employee.
o One Year of Service – it means service within
o Managerial Employee – is the one who is vested twelve (12) months, whether continuous or
with powers or prerogatives to lay down and broken, reckoned from the date the employee
execute management policies and/or to hire, started working.
transfer, suspend, layoff, recall, discharge, assign, o The period includes authorized absences,
or discipline employees, or to effectively unworked weekly rest days, and paid regular
recommend such managerial actions. holidays. If through individual or collective
agreement, company practice or policy, the
» All employees not falling within this definition period of the working days is less than twelve
are considered rank-and-file employees. (12) months, said period shall be considered as
 one year for the purpose of determining the miscarriage, or emergency termination of pregnancy,
entitlement to the service incentive leave. and she shall have notified her employer of her
pregnancy and the probable date of her childbirth,
2. USAGE/CONVERSION TO CASH which notice shall be transmitted to SSS in accordance
its rules and regulations.
The service incentive leave may be used for sick and
vacation leave purposes. The unused service incentive 4. SALARY DIFFERENTIAL
leave is commutable to its money equivalent at the end
of the year. In computing, the basis shall be the salary The employer shall pay for the difference between the
rate at the date of conversion. full salary and the actual cash benefits received from
the SSS.
The use and conversion of this benefit may be on a pro
rata basis.
ILLUSTRATION: PATERNITY LEAVE
An employee was hired on January 1, 2000 and 1. COVERAGE
resigned on March 1, 2001. Assuming that he or she o Paternity Leave – it is granted to all married
has not used or commuted any of his or her accrued male employees in the private sector, regardless
SIL, he or she is entitled to the conversion of his or her of their employment status.
accrued SIL, upon his or her resignation, as follows:
o Government employees are also entitled to the
SIL earned as of December 31, 2000 5.000 days paternity leave benefit. They shall be governed by
Proportionate SIL for January and the Civil Service rules.
0.833 day
February 2001 (2/12) x 5 days The purpose of this benefit is to allow the husband to
Total accrued SIL as of March 1, 2001 5.833 days lend support to his wife during her period of recovery
and/or in nursing her newborn child.
2. BENEFIT
MATERNITY LEAVE Paternity leave benefit shall apply to the first four (4)
deliveries of the employee's lawful wife with whom he
1. COVERAGE
is cohabiting.
This benefit applies to all covered female employees,
o Cohabiting – it means the obligation of the
regardless of civil status, employment status, and the
husband and wife to live together.
legitimacy of her child.
If the spouses are not physically living together
2. BENEFIT
because of the workstation or occupation, the male
The maternity leave benefit shall be for one hundred employee is still entitled to the paternity leave benefit.
five (105) days with full pay and additional fifteen
The paternity leave shall be for seven (7) calendar
(15) days with full pay in case the female employee
days, with full pay, consisting of basic salary and
qualifies as a solo parent under Republic Act No.
mandatory allowances fixed by the Regional Wage
8972, or the “Solo Parents' Welfare Act of 2000”. In
Board, if any, provided, that his pay shall not be less
case of miscarriage or emergency termination of
than the mandated minimum wage.
pregnancy, the maternity leave shall be for sixty (60)
days with full pay. Usage of the paternity leave shall be after the delivery,
without prejudice to an employer's policy of allowing
In cases of live childbirth, an additional maternity
the employee to avail of the benefit before or during
leave of thirty (30) days without pay, can be availed
the delivery, provided, that the total number of days
of, at the option of the female employee, provided, that
shall not be more than seven (7) calendar days for
the employer shall be given due notice.
each covered delivery.
3. ELIGIBILITY
To qualify for the maternity leave benefit, the female
employee must have at least three-monthly
contributions to the SSS in the twelve-month period
immediately preceding the semester of childbirth,
 » Provided, that such abandonment,
PARENTAL LEAVE FOR SOLO PARENT
disappearance, or prolonged absence lasts for
o Parental Leave – it means leave benefits granted at least one (1) year.
to a solo parent to enable him or her to perform B. CONDITIONS FOR ENTITLEMENT
parental duties and responsibilities where
physical presence is required. A solo parent employee shall be entitled to the parental
leave, provided that:
o Child – it refers to a person living with and
dependent on the solo parent for support. 1. He or she has rendered at least one (1) year
o He or she is unmarried, unemployed, and below of service, whether continuous or broken.
eighteen (18) years of age, or even eighteen 2. He or she has notified his or her employer that
(18) years old and above but is incapable of self- he or she will avail himself or herself of it,
support because he or she is mentally and or within a reasonable period of time.
physically-challenged.
3. He or she has presented to his or her employer
A. COVERAGE a Solo Parent Identification Card, which may
Parental leave for solo parents is granted to any solo, be obtained from the DSWD office of the city
alone with the responsibility of parenthood due to: or municipality where he or she resides.
C. NON-CONVERSION TO CASH
1. Giving birth as a result of rape, or as used by the
law, other crimes against chastity. In the event that the parental leave is not availed of, it
2. Death of spouse. shall not be convertible to cash, unless specifically
agreed on previously.
3. Spouse is detained or is serving sentence for a
criminal conviction for at least one (1) year. D. CREDITING OF EXISTING LEAVE
4. Physical and/or mental incapacity of spouse as If there is an existing or similar benefit under a
certified by a public medical practitioner. company policy or a collective bargaining agreement,
5. Legal separation or de facto separation from the same shall be credited as such. If the same is
spouse for at least one (1) year. greater than the seven (7) days provided for in
Republic Act No. 8972, the greater benefit shall
» Provided, that he or she is entrusted with the prevail.
custody of the children.
Emergency or contingency leave provided under a
6. Declaration of nullity or annulment of marriage
company policy or a collective bargaining agreement
as decreed by a court or by a church.
shall not be credited as compliance with the parental
» Provided, that he or she is entrusted with the leave provided for under Republic Act No. 8972.
custody of the children.
7. Abandonment of spouse for at least one (1)
year.
8. Unmarried father or mother who has preferred
to keep and rear his or her child or children,
instead of having others care for them or give
them up to a welfare institution.
9. Any other person who solely provides parental
care and support to a child or children.
» Provided, that he or she is duly licensed as a
foster parent by the Department of Social
Welfare and Development (DSWD) or duly
appointed legal guardian by the court.

10. Any family member who assumes the

responsibility of head of family, as a result of the
death, abandonment, disappearance, or
prolonged absence of the parents or solo parent.