Compensation &
Laws on Wages
Cristina Teresa N. Lim PhD
Associate Professorial Lecturer
Department of Decision Sciences and Innovation
RVR College of Business
Compensation
• Combination of salaries,
wages and benefits that
employees receive in
exchange for them doing a
particular job
• Can include an annual salary
or hourly wages combined
with bonus payments,
benefits, and incentives
Prepared by: Dr. Cristina Teresa Lim
• All firms must be competitive
in wage and salary levels in
order to attract and maintain
qualified personnel.
• Payments made to employees
are based on increments of
time - such as an hour, a day,
a week, or a month – or vary
with the output of the
employees.
Prepared by: Dr. Cristina Teresa Lim
• Adequate compensation for
the responsibilities assumed
FAIR and qualifications held by job
holder
• Same compensation is paid to
those who perform work of
equal value
EQUITABLE • Recognizes seniority and
merit as only reasons for pay
differentials
JUST • Legally compliant
Prepared by: Dr. Cristina Teresa Lim
The Rights of Workers in the
Philippines With Regards to
Wages
The Rights of Workers in the Philippines With Regards to
Wages
Statutory Minimum Fair and Reasonable
Wage Wage Rates
(Art. 99, PD 928; PD 1364 & (Art. 101)
PD 1389) • Regulate wages by results
• Lowest wage permitted such as piecework or
by law other non-time work
Prepared by: Dr. Cristina Teresa Lim
The Rights of Workers in the Philippines With
Regards to Wages
Service Charge at Hotels, Restaurants, Paid Directly
and Similar Establishments (Art. 105)
(Art. 96) • Wages shall be paid directly to
• Shall be distributed at 85% for all covered the workers to whom they are
employees and 15% for management due
• Share of the employees shall be equally
distributed among them
Prepared by: Dr. Cristina Teresa Lim
The Rights of Workers in the Philippines With Regards to
Wages
Emergency Allowance Claim Unpaid Wages From Direct and First Preference as Regards Unpaid
(PD 525) Indirect Employer Wages
• Enable workers to cope with (Art. 106) (Art. 110)
the rising cost of living in • Employers and contractors are liable • In the event of bankruptcy or
various circumstances to pay the wages of the employees liquidation, the workers shall enjoy
to the extent of work performed first preference as regards their
under the contract. wages and other monetary claims.
Prepared by: Dr. Cristina Teresa Lim
The Rights of Workers in the Philippines With
Regards to Wages
Against Deductions From Wages
(Art. 113)
Dispose of Wages Without Any Limitation • No employer shall make any
(Art. 112) deduction from the wages of his
• No employer shall limit or otherwise interfere employees
with the freedom of any employee to dispose of
his wages
Prepared by: Dr. Cristina Teresa Lim
The Rights of Workers in the
Philippines With Regards 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 Rights of Workers in the Philippines With
Regards to Rest, Working Hours, and Holidays
Work Period Meal Period Night-Shift Differential Pay
• Normal work hours is 8 hours (Art. 83) (Art. 85) (Art. 86)
• Employees are not required to do • Employers are required to • Not less than 10% of regular
overtime except in emergency (Art. 89) give their employees not wage for each hour of work
• Workers have the right to overtime pay less than 60 minutes time- performed between 10:00 PM
for overtime work (Art. 87) off for their regular meals and 6:00 AM
Prepared by: Dr. Cristina Teresa Lim
The Rights of Workers in the Philippines With
Regards to Rest, Working Hours, and Holidays
Additional Compensation
Not Required to Work on Rest Day
(Art. 91)
(Art. 92)
• Workers are entitled to
• Employees are not required to work on a rest day
additional compensation for
except for emergency work (e.g. calamities,
rest day or holiday work
urgent work, prevent loss or damage to
perishable goods)
Prepared by: Dr. Cristina Teresa Lim
The Rights of Workers in the Philippines With
Regards to Rest, Working Hours, and Holidays
Holiday Pay Service Incentive Leave
(Art. 94) (Art. 95)
• Workers shall be paid their regular daily • Every employee who has rendered
wage during regular holidays, except in at least 1 year of service shall be
retail and service establishments entitled to a yearly service
regularly employing less than 10 incentive leave of 5 days with pay
workers
Prepared by: Dr. Cristina Teresa Lim
House Bill 6537 • PHP 100,000 – Payroll master fails to disburse
wages when funds are available
• PHP 200,000 – Payroll master fails to inform
• Penalize employers who employer about absence of funds to pay wages
repeatedly fail to pay their and salaries
employees’ compensation • PHP 500,000 and 30 Days Suspension – First
offense of failure to pay wages and salaries
on the agreed date and without justifiable reason
time without justifiable • PHP 1 Million and 90 Days Cessation – Second
reasons. offense
• PHP 3 Million and Perpetual Cessation – Third
offense
Prepared by: Dr. Cristina Teresa Lim
Non-Diminution of Benefits Rule
Benefits given to employees cannot be
taken back or reduced unilaterally by the
employer because the benefit has become
part of the employment contract, written
or unwritten. (Art. 100)
Prepared by: Dr. Cristina Teresa Lim
LABOR CODE OF THE PHILIPPINES
The State shall afford full
protection to Labor,
promote full
employment, ensure
equal work
opportunities regardless
of sex, race, or creed
and regulate relations
between workers and
employees.
• 537/ 8 = P67.13 i s t he w age per
FOR WORK IN EXCESS OF ho ur
8 HOURS PERFORMED ON • P67.13* 1.25 = P83.91 i s t he
o vert i me rat e per ho ur
ORDINARY WORKING • Assumi ng emplo yee rendered
t hree (3) ho urs o f o vert i me
DAYS: PLUS 25% OF THE
w o rk:
HOURLY RATE (Art. 87) ⚬ P 83.91* 3 ho urs = P251.73 i s
t he o v ert i me p ay
⚬ P 537 + P 251.73 = P788.73 i s
t he emp lo y ee’s t ak e ho me
p ay fo r w o rk i n g 8 ho urs p lus
t hree (3) ho urs o v ert i me o n a
regular day
Prepared by: Dr. Cristina Teresa Lim
Sample Computation on Compensation for Special Holiday
PLUS 30% OF THE PLUS 50% OF THE
DAILY RATE DAILY RATE
(Art. 93) (Art. 93)
• P537*1.30 = • P537*1.50 =
P698.10 is the P805. 50 is the
employee’s tak e employee’s tak e
home pay for home pay for
working on a rest work ing on a
day or special special holiday
holiday. which falls on a
rest day.
Prepared by: Dr. Cristina Teresa Lim
Sample Computation on Compensation for Regular Holiday
PLUS 100% OF THE PLUS 160% OF THE
DAILY RATE DAILY RATE
(Art. 94) (Art. 93 & Art. 94 )
• P537*2 = • P537*2.6 =
P1,074.00 is the P1,396.20 is the
employee’s take employee’s take
home pay for home pay for
working on a working on a
regular holiday. regular holiday
which also falls
on his/her
scheduled rest
day.
Prepared by: Dr. Cristina Teresa Lim
SAMPLE • P537/8 = P67.13 wage per hour
COMPUTATIONFOR • P67.13*1.10 = P73.84 hourly wage with
night differential
NIGHT DIFFERENTIAL • Ex. Employee worked from 8 PM -5 AM
(10 PM-6 AM): PLUS ⚬ P67.13*2 hours (8 PM -10 PM) =
10% OF THE HOURLY P134.26 wage without ND
RATE (Art. 86) ⚬ P73.84*6 hours (10 PM -12 MN; 1 AM-5
AM) = P443.04 wage with ND
⚬ P134.26 + P443.04 = P577.30 take
home pay ND for 6 hours
⚬ Note: Night shift differential
percentage changes depending on
when the night shift duty is rendered.
(for ex. 43% for RD/SH, 120% for RH)
Prepared by: Dr. Cristina Teresa Lim
The government provides Filipinos social welfare
services through the Social Security System (SSS),
the Government Service Insurance System
(GSIS), the Home Development Mutual Fund
(Pag-IBIG), and the Philippine Health Insurance
Corporation (PhilHealth).
What is EC contribution?
The employees' compensation
benefit (or disability benefit) is a
compensation package for
public and private sector
employees and their
dependents in the event of
work-related injury, sickness,
disability or death. EC is a purely
employer-based contribution
benefit.
Prepared by: Dr. Cristina Teresa Lim
If you're earning ₱10,000 per month, for example, your
Pag-IBIG monthly contribution is ₱100, which is the
maximum currently allowed. Your employer's share is
₱100.
...
Pag-IBIG Contribution Table for 2021.
Monthly Employee Share Employer Share
Compensation
Over ₱1,500 2% 2%
Prepared by: Dr. Cristina Teresa Lim
Industry Pay
Position Salary Range Average Salary
Bank Teller 137,000-325,000 158,729
Credit Analyst 224,000-1,000,000 382,830
Assistant Branch 321,000-894,000 453,000
Manager
Branch Manager 319,000-1,000,000 606,055
Prepared by: Dr. Cristina Teresa Lim
Scan this QR!
Or go to:
[Link]
om/watch?v=ksJwaBSx
DJc
15.10 mins
Prepared by: Dr. Cristina Teresa Lim
In Summary
01 02 03 04
The four-fold test Not all employees Basic rights of Employers cannot
determines if there are governed by the an employee take away the
exists an same rights (e.g. are mandated benefits that they
employee- government by the law have given to their
employer employees : civil and are non- employees due to
relationship. service rules, negotiable. the non-diminution
domestic helpers : rule.
kasambahay act).
Prepared by: Dr. Cristina Teresa Lim
Laws on
Wages and
Compensation
The End.
Cristina Teresa N. Lim PhD
Associate Professorial Lecturer
Department of Decision Sciences and Innovation
RVR College of Business