COMPENSATION AND BENEFITS
CHAPTER 9
LEARNING OUTCOMES:
• After reading the chapter, the students should be
able to:
1. define compensation and benefits;
2. differentiate incentive programs, comparable
worth and benefits programs;
3. describe, discuss, and explain the laws on wages
and working hours in the Philippines; and
WHAT IS COMPENSATION?
• Compensation is an • Benefits refer to the
organized system form of
that provides compensation paid
monetary by employers over
compensation to and above regular
employees in salary or wages.
exchange for work
performance.
WAGES AND SALARIES
• Wages are typically associated with hourly pay.
They are usually calculated based on the
number of hours worked or tasks completed.
Wage earners often receive overtime pay if they
work beyond the standard work hours.
• Salaries refer to a fixed amount of
compensation paid regularly (usually monthly or
biweekly), regardless of the hours worked.
Differentiate between incentive programs, comparable
worth and benefits programs:
• INCENTIVE PROGRAMS
The term incentive program refers
to an official monetary plan
designed to motivate and recognize
employees [Link]
bonuses are a typical incentive.
COMPARABLE WORTH
Comparable worth is a legal principle or
concept stating that regardless of sex,
employees should be compensated
equally for jobs involving the same
degree of skills, responsibilities, and
effort performed on the job.
BENEFITS PROGRAMS
A growing part of nearly every firm's
compensation system is benefits programs, that
is, compensation other than wages and salaries.
Benefits now often comprise over half a firm's
total compensation budget. Most companies are
required by law to provide worker's compensation,
holiday pay, and insurance contributions. Most
businesses also voluntarily provide extended
health, life, and disability insurance.
LAWS ON WAGES AND WORKING HOURS IN
THE PHILIPPINES
The State shall afford protection to labor, promote full employment,
ensure equal work opportunities regardless of sex, race or creed, and
regulate the relations between workers and employees. The state shall
assure the rights of workers to self-organization, collective bargaining,
security of tenure, and just and humane conditions of work."
The laws that concern the above provisions are the Labor Code of the
Philippines as amended and the other laws that are part of Labor and
Social Legislation in the country, namely, laws related to the Labor Code
like PD 928, as amended on minimum wage, PD 851, as amended on
13th month pay, and PD 525, as amended on emergency allowance, and
social security laws like the Social Security Law, as amended Revised
Government Service Insurance Act and the Philippine Medical Care Act,
as amended.
The Rights of Workers in the Philippines
with Regard to Wages
The International Covenant on Economic, Social, and Cultural
Rights speaks of the right of everyone to just and favorable
conditions of work which ensure, in particular:
Remuneration which provides all workers, as a minimum with:
• fair wages and equal remuneration for work of equal value
without distractions of any kind, women in particular being
guaranteed conditions of work not inferior to those enjoyed by
men, with equal pay for equal work; and
• a decent living for themselves and their families.
The Right of Workers in the Philippines with
Regard to Rest, Working Hours, and
Holidays
The International Covenant on Economic,
Social and Cultural Rights speaks of "the right
to just and favorable conditions of work which
ensure, in particular rest, leisure and
reasonable limitation of working hours and
periodic holidays with pay, as well as
remuneration for public holidays.
THE PHILIPPINE LABOR LAW PROVIDES FOR THE
FOLLOWING RIGHTS:
Considering that the normal hours of work shall not exceed eight hours
a day, the right not to be required to perform overtime work except in
emergency and the right to overtime pay for overtime work.
The right to a meal period.
The right to night shift differential pay.
The right to a weekly rest day.
The right not to be required to work on a rest day, except for emergency
work.
The right to additional compensation for rest day or holiday work.
The right to holiday pay for a regular holiday as differentiated from one
which is not a regular but a special holiday.
The right to a service incentive leave.
Minimum Wage Law
Republic Act 602, known as the Minimum Wage
Law, applies to employees in private enterprises,
be they in agriculture, industry, or trade.
Employees of religious, charitable, and
educational organizations are also covered by
the law. The law covers all employees in the
government service-national, provincial,
municipal, and city, or those in government
owned or controlled corporations.
Meal and Rest Periods
A worker is entitled to not less than one
hour time-off for regular meals, and to rest
periods or coffee breaks of five to twenty
minutes except as provided in the
Implementing Rules and Regulations.
This meal period may be shortened under the
following conditions:
when the work is non-manual in nature or does
not involve strenuous physical exertion;
when there are actual or impending emergencies
or when there is urgent work to be performed in
machinery, equipment or installations to avoid
serious loss which the employer would suffer; and
when the work is necessary to prevent serious
loss of perishable goods.
Night Shift Differential Pay
The Labor Code grants the right to night shift
differential pay in recognition of the discomforts,
disadvantages, and dangers of working at night.
For night performed on ordinary days, a employee
shall be paid not less than 10% of his regular
wage for each hour of night work, i.e. between
6:00 o'clock in the evening to 60'clock in the
morning.
Employees who are denied of receiving nightshift
differential pay are the following:
those in the government and any of its political subdivisions, including
government-owned or controlled corporations;
those of retail and service establishments regularly employing not more
than five workers;
domestic helpers and persons in the personal service of another;
managerial employees:
field personnel and other employees whose time and performance are
unsupervised by the employer, including those who are engaged on a
task or contract basis; and
those who are fully commissioned or who are paid a fixed amount for
performing work irrespective of the time consumed in its performance.
Overtime
A covered employee who works
beyond eight hours on an ordinary
working day shall be paid for
overtime work an amount
equivalent to his regular wage plus,
at least, 25%.
Philippine Labor Laws Overtime Pay
Employee Wages and Benefits
All employees required to work beyond eight hours in one
workday is entitled to overtime pay. The basis of overtime
pay is found in Article 87 of the Labor Code which states:
"Work may be performed beyond eight hours a day provided
that the employee is paid for the overtime work an additional
compensation equivalent to his regular wage plus at least
twenty-five percent thereof. Work performed beyond eight
hours on a holiday or rest day shall be paid an additional
compensation equivalent to the rate for the first eight hours
on a holiday or rest day plus at least 30 percent thereof."
Overtime Pay - Overtime pay is the additional compensation payable to
TERMINOLOGIES
employee for services or work rendered beyond the normal eight hours of
work. It is computed by multiplying the overtime rate with the number of
hours in excess of the regular eight hours of work.
Overtime Work - Any work performed beyond the normal 8 hours of work
in ane workday is considered as overtime work.
Workday - A workday is the consecutive 24-hour period which
commences from the time the employee starts to work and ends at the
same time the following day. To illustrate, if the employee regularly works
from 8 a.m. to 4 p.m., his regular workday is the 24-hour period from 8
a.m. to 8 p.m. of the following day. Workdays do not necessarily
corresponds to calendar days.
Overtime Pay Rates - Overtime pay rates depend upon the day the work
is performed, whether it is ordinary working day, a special day, a holiday,
Computation of Overtime Pay
Assuming that the minimum
wage rate is P250, how much
is the overtime rate per hour?
ON ORDINARY DAYS:
On an ordinary day, the overtime rate per hour is determined as
follows:
First, compute the hourly rate of the employee.
Regular hourly rate = minimum wage rate/8 hours
= ₱250/8 = ₱31.25 per hour
Now to determine overtime rate per hour:
Overtime rate = regular rate + 25% of regular hourly rate
OT rate = ₱31.25+ (25% of ₱31.25) or ₱31.25 x 1.25 = ₱39.06
per hour
On rest days and special days
Compute the hour rate of the employees on rest day or special
day
Hourly rate = 130% of regular hourly rate (₱31.25 x
1.30)=₱40.625 per hour
(Note: The hourly rate on rest day and special day is 130% of
the regular rate.)
To determine overtime rate per hour:
Overtime rate = Hourly rate on rest day +30% Hourly rate on
rest day
=₱40.625 + (30% of ₱40,625) = ₱40.625 x 1.3 =₱52.81 per hour
On rest days which fall on special days
Compute the hourly rate of the employee on a rest day which falls on a special day:
Hourly rate = 150% of regular hourly rate:
=₱31.25 x 1.5 = ₱46.875 per hour
To determine overtime rate per hour:
Overtime rate = Hourly rate + 30% of Hourly rate
₱46.875+ (30% of ₱46.875)
₱46.875 ×1.30 or ₱60.94 per hour
On regular holidays
Compute the hourly rate on regular holiday:
Hourly rate = 200% of Regular hourly rate
₱31.25 × 2 = ₱62.50 per hour
To determine overtime rate per hour:
Overtime rate = Hourly rate + 30% of Hourly rate
₱62.50+ (30% of ₱62.50)
₱62.50 x 1.30 or ₱81.25 per hour
On rest days which fall on regular holidays
Hourly rate = 260% of regular hourly rate
= ₱31.25 × 2.60 = ₱81.25 per hour
Compute the hourly rate:
Hourly rate = 260% of Regular hourly rate
₱31.25 x 2.60 = ₱81.25
To determine overtime rate per hour:
Overtime rate = Hourly rate + 30% of Hourly rate
₱81.25 + (30% of ₱81.25)
₱81.25 x 1.30 = ₱105.625 per hour
Undertime Cannot Be Offset by Overtime
Some employers have the practice of offsetting
undertime and overtime. For example, if an
employee work for only 7 hours on any given
day (one hour undertime), he will be required to
make up for his undertime by requiring him to
render additional one hour work on another day.
This practice is prohibited under Article 87 of the
Labor Code, viz:
Emergency Overtime Work
The exception to this rule, however, is found in Article 89 of the Labor Code. Under
the said article, employees may be compelled to perform overtime work in any of the
following cases:
When the country is at war or under any national or local emergency;
When overtime work is necessary to prevent loss of life or property, or in case of
imminent danger to public safety;
When there is urgent work to be performed on machines, etc., in order to avoid
serious loss or damage to the employer;
When the work is necessary to prevent loss or damage to perishable goods;
When the completion or continuation of work is necessary to prevent serious
obstruction or prejudice to the business; and
When overtime work is necessary to avail of favorable weather or environmental
conditions.
Managerial Employees Not Entitled to Overtime Pay
Article 82 of the Labor Code states that the
provisions of the Labor Code on working conditions
and rest periods shall not apply to managerial
employees. This includes overtime pay for overtime
work. Thus managerial employees are not entitled to
overtime pay for services rendered in excess of eight
hours a day.
Weekly Rest Period
All employees, whether operating for profit or not,
including public utilities operated by private persons,
shall provide their employees with a weekly rest day
as provided in the Labor Code.
As a general rule, the employer may schedule the
rest day of his employees as he sees fit. The
determination of a weekly rest period may be done
through collective bargaining. The preference of the
employee as to his weekly rest day, if based on
religious grounds shall be respected by the employer.
GROUP-8
1 JANICE R. DEGAMO 4 JESSA MAE MONTON
2 AINIE Q. LADARAN 5 JHON LEE REBUTA
3 KIMJAY S. CALAMOHOY
THANK FOR YOUR
ATTENTION!!!
GOD BLESSED ^-^
