COUNTRY

Written Agreements

The Labor Code of the Philippines contains no provisions on written contracts. It is not necessary to have a written employment contract to prove that a person is an employee.

The Labor Code requires that employment contracts not provide employment terms that are less favorable than the standards provided by the law. These agreements must include information on wages, termination requirements, and other benefits.

Employment contracts can include restrictive covenants such as non-compete and non-solicitation clauses, however, they must not be not excessive or oppressive, and must not unreasonably restrict trade.

Oral Agreements

The Labor Code of the Philippines recognizes oral employment contracts but contains no provisions on the conditions for the use of such agreements. The Civil Code of the Philippines prohibits the use of oral contracts for work that will be performed in the excess of 1 year.

Implied Agreements

The Labor Code of the Philippines contains no provisions on implied contracts. In the absence of a written or oral agreement, the law will judge the actions of the parties to determine whether a contract exists.

The labor law of the Philippines states that regular hours of work must not exceed 8 per day.

A Compressed Work Week Scheme (CWW) is an arrangement that permits regular work hours to exceed 8 hours but allows a decrease in the number of workdays to less than 6.

Employees under 15 years of age must not be allowed to work for more than 20 hours a week or 4 hours a day. Employees between 15 and 18 years of age are permitted to work for 8 hours a day or 40 hours a week.

Regular Holidays:

New Year’s Day (January 1), Maundy Thursday (date may vary), Good Friday (date may vary), Eidul Fitr (date may vary), Eidul Adha (date may vary), Araw ng Kagi tingan/Bataan and Corregidor Day (Monday nearest April 9).

Nationwide Special Holidays:

Ninoy Aquino Day (Monday nearest August 21), All Saints Day (November 1), Labor Day (Monday nearest May 1), Independence Day (Monday nearest June 12), National Heroes Day (Last Monday of August), Bonifacio Day (Monday nearest November 30), Christmas Day (December 25), Rizal Day (Monday nearest December 30), Last Day of the Year (December 31).

The Philippines' Labor Code provides 5 days of paid mandatory leave to employees who have at least 1 year of service. However, such leave may not be taken by employees who have paid vacation leave of at least 5 days or employees in establishments regularly employing fewer than ten employees. The leave may also not be taken by employees of establishments exempted from granting this benefit by the Secretary of Labor and Employment for reasons related to their viability or financial condition. Employees can also take unpaid vacation leave which is considered a gap in the service.

The Philippines' Labor Code does not contain any provisions on sick leave. It only provides 5 days of paid leave to employees with at least 1 year of service.

An employee who has paid at least 3 monthly Social Security System (SSS) contributions in the 12-month period immediately preceding the trimester of sickness or injury and who is confined for more than 3 days in a hospital or elsewhere with the approval of the SSS is paid a daily sickness benefit equivalent to 90% of their average daily salary by their employer for each day of confinement. However, this allowance will only start being paid after fully paid sick leave from the employer has been exhausted. This benefit is paid for a maximum of 120 days in a year and 240 days in total for any given period of confinement. Employees must inform their employers of their confinement within 5 days of its commencement. The daily benefits paid by employers are fully reimbursed to them by the Social Security System.

A female employee who has performed continuous aggregate service of at least 6 months within the last 12 months is entitled to a special leave benefit of 2 months with full pay based on her gross monthly compensation. This leave is to be used following surgery caused by gynecological disorders.

Maternity leave is addressed through the Social Security System (SSS). Paid leave lasts 105 days. If the mother is a single parent, she is eligible for 120 days of paid maternity leave. Women can avail themselves of an additional leave of 30 days without pay if they provide at least 45 days’ notice to the employer. Maternity leave must begin at least two weeks before childbirth. Paid leave of 60 days is provided in case of miscarriage and emergency termination of pregnancy. 100% of the salary is paid during maternity leave.

Maternity leave with pay is also provided if the childbirth or miscarriage occurs not more than 15 days after employment termination.

The labor laws of the Philippines provide 7 days of paid paternity leave to all married male employees working in the private sector (regardless of employment status) at the birth of their partner's child.

The leave is granted for the first four deliveries of the legitimate spouse with whom the male employee is cohabiting. This leave is also granted in case of miscarriage.

In addition to this leave, a female employee can allocate up to 7 days of paid leave from her maternity leave to the child's father, whether or not they are married.

Minimum Wage

Minimum wage rates for non-agricultural and agricultural employees (as well as those of workers in each region of the country) are prescribed by the Regional Tripartite Wages and Productivity Boards. Under the most recent wage order for the National Capital Region (i.e., metro Manila), the minimum gross basic wage is PHP 573 to 610 (Philippine pesos).

The Philippines has a 2-tiered wage system that maintains the mandatory minimum wage as the first tier and a voluntary productivity-based pay scheme as the second tier.

Wages must be paid at least once every 2 weeks or twice a month at intervals not exceeding 16 days. If on account of force majeure or circumstances beyond the employer’s control, payment of wages on or within the time herein provided cannot be made, the employer is required to pay the wages immediately after such force majeure or circumstances have ceased. No employer must make payment with less frequency than once a month.

Overtime, Holiday & Vacation Pay

Work lasting more than 8 hours per day on ordinary working days is considered overtime. For overtime work completed on an ordinary day, an employee is entitled to their regular wage plus an additional 25% of that rate as an overtime premium. If the employee works on a holiday or rest day for less than 8 hours, they receive 30% of their regular wage as premium pay. Work exceeding 8 hours' duration on a holiday or rest day will be paid at the rate of the first 8 hours worked on a holiday or rest day, plus additional compensation of at least 30% percent thereof.

All employees are entitled to their regular wage during regular holidays except in retail and service establishments regularly employing less than 10 persons. If an employee is required to work on a regular holiday, they are entitled to compensation equal to twice their regular wage. If an employee works on a special holiday, they are paid an additional compensation of 30% over their regular wages. If this holiday coincides with a weekly rest day, the increase is 50%.

All employees become eligible to fully paid leave of 5 days after one year of service.

Notice Period

According to the Philippines' Labor Code, notice periods vary according to the substantive reason for the dismissal. An employee can only be lawfully dismissed if both the substantive and the procedural requirements for dismissal are met. The dismissal must not only be for a just or authorized cause (or be related to the employee's ill health or failure to pass the probationary period as provided for by law), but the rudimentary requirements of due process must also be observed.

In case of dismissal due to redundancy, retrenchment to prevent losses, or the closing/cessation of operation of the establishment, a written notice must be given to employees at least one month in advance.

An employee can terminate the employee-employer relationship without just cause by serving a written notice on the employer at least one month in advance.

If an employment relationship is terminated by the completion of a project (or a phase of that project), no prior notice is required.

Severance Benefits

Employees are entitled to severance pay as follows:

• Termination due to installation of labor-saving devices or redundancy - at least one month's salary for every year of service
• Termination due to retrenchment - at least 1/2 month's salary for every year of service
• Termination due to closure or cessation of operations not due to business losses or financial reverses - at least 1/2 month's salary for every year of service
• Termination due to disease - at least 1/2 month's salary for every year of service
• Termination due to just causes - no severance benefits

The minimum severance pay is 1 month's salary.

Pension

In the Philippines, employees may retire upon reaching the retirement age established in the employment contract, collective bargaining agreement, or company policy. If there is no retirement plan or agreement, an employee may retire at age 60 years of age or older but not after 65 years of age, at which point retirement becomes mandatory. Employees become eligible to receive a pension if they have paid at least 120 monthly Social Security contributions.

The monthly pension is calculated according to the Philippines' Social Security System's formula depending on the number of contributions. Dependents' allowance is added to the monthly pension. Pension is paid 13 times a year. An insured employee who is 60 years old at retirement and who does not qualify for pension benefits is entitled to a lump sum benefit equal to the total of the contributions paid by them and on their behalf. Employees also have the option to buy the remaining weeks of contributions to be eligible for a pension.

Both employees and employers pay contributions to the Social Security System.

Dependents/Survivors Benefits

In the Philippines, the death benefit is a cash benefit paid either as a monthly pension or lump sum to beneficiaries of a deceased member who had paid at least 36 monthly contributions before the 6-month period in which the death occurred. Primary beneficiaries include a surviving spouse and up to 5 dependent children under 21 years of age or who are disabled. Where there are no primary beneficiaries, the dependent parents are considered the secondary beneficiaries.

Primary beneficiaries are entitled to the same monthly pension the deceased employee would have been entitled to receive. If a pensioner dies, their pension is transferred to their primary beneficiaries. The monthly pension is paid for no less than 60 months. If the deceased insured member had paid less than 36 monthly contributions, a lump sum benefit is granted to their primary beneficiaries.

*COVID 19 has been included in the ECC List of Occupational and Work-related diseases, supported by diagnostic proof that the infection was caused during work or commuting to and from work.

Monthly benefits are paid by the employer to primary dependents in case of death due to work-related injury or sickness. These payments are covered under the Employees Compensation Program.

Invalidity Benefits

To qualify for a disability pension, the SSS member must be assessed as having a permanent total or partial disability. They must also have at least 36 months of contributions before the six-month period in which the disability began.

The monthly pension is calculated according to the Social Security System's formula, depending on the number of contributions. Dependents' allowance is added to the monthly pension. A supplementary allowance of PHP 500 (Philippine pesos) (USD 9.94) is paid to pensioners with total or partial disability. A pensioner with total disability is also entitled to a 13th-month pension payable every December. For a pensioner with partial disability, a 13th-month pension shall be paid provided that the pension duration is at least 12 months. Both employees and employers pay contributions to the Social Security System.

Benefits for work-related disability are covered by the Employees' Compensation Program and depend on the degree and type of disability. *COVID 19 has been included in the ECC List of Occupational and Work-related diseases, supported by diagnostic proof that the infection was caused during work or commuting to and from work.