Let’s talk about the Philippine labor law (for full-time employees). I know some leads are still confused about this. We were asked this several times: “Why do I need to pay an additional month’s salary?” Yes, the lead is talking about the 13th month’s pay benefit.

The Labor Code of the Philippines is the law governing labor relations in the Philippines. Since its introduction in 1947, it has undergone numerous amendments, the most recent of which was in January 2022. On October 24, 2022, the present Labor Code was passed, and it became effective on January 1, 2023. On September 28, 2022, President Cynthia Santos-Flores signed Republic Act 10361 (RA 10361), which had been approved by Congress on September 21.

The following are some of the key provisions of the new code:

Minimum Wage: Employees’ minimum wage will be set at 1,000php per day or 40php per hour. The hourly rate includes premium pay and overtime pay; however, it does not include any other benefits such as service incentive leave (SIL); rest day holiday pay; 13th-month pay; night shift differential pay; hazard pay; field allowance; productivity incentive bonus; or quality incentive bonus.

Overtime Pay: Employees who work beyond 8 hours a day shall be paid an additional 30% of their regular daily rate of compensation. Those who work beyond 12 hours a day shall be paid an additional 50% of their daily

Premium Pay: Employees shall be paid premium pay of not less than 10% of the basic wage for work performed during the holidays and Sundays. In addition, they will also receive an additional compensation equivalent to their regular daily rate of pay for hours worked on a rest day or a special non-working holiday. Employees who are required to work on holidays shall be paid an additional compensation equivalent to their regular daily rate of pay.

Overtime Pay: Employees who work beyond 8 hours a day shall be paid an additional 30% of their regular daily rate of compensation. Those who work beyond 12 hours a day shall be paid an additional 50% of their daily compensation. Premium Pay: Employees shall be paid premium pay of not less than 10% of the basic wage for work performed during the holidays and Sundays.

Compensatory Leave: Employees shall be granted compensatory leave of not less than one day with pay for each day of work performed during holidays and Sundays.

Overtime Rate: Employees shall be paid overtime pay of not less than 30% of their regular daily rate of pay for work performed on Saturdays, Sundays, and holidays.

Rest Day: Employees shall be granted a rest day every week, preferably on Sundays. If a rest day falls on a holiday, it shall be moved to another day of the week by mutual agreement between employer and employee.

Paid Vacation Leave: Employees shall be granted a paid vacation leave of not less than one week with pay.

Holidays: Employees shall be granted holidays with pay of not less than one day per month. Service Incentive Leave: Employees who have rendered continuous service of at least one year and up to five years shall be granted an additional day of annual leave with pay for every year of such service.

The 13-month pay: A law that was passed by the Philippine Congress in 1947. The law states that all employees, who have been working for more than one year, shall be paid 13th-month pay. According to the Labor Code, all employees who have rendered at least one year of service are entitled to receive an additional month’s salary as their 13th month’s pay. The law applies to both government and private sector employees. The 13-month pay is not included in the basic salary of an employee. Thus, it is considered part of the benefits given by the employer to its employees.

Conclusion:

The Philippine labor law provides guidelines on how to deal with a labor dispute. The solution is not only beneficial to employees and employers as they both know their rights, but also to the business world in general as a measure of social protection is being provided.

To find the complete list of the Philippine labor law, click here.