EMPLOYEE BENEFITS

LEGALLY REQUIRED BENEFITS IN PHILIPPINES

Wage and Compensation Benefits
- Republic Act No. 6727 (also known as the “Wage Rationalization Act”) mandates the fixing of the
minimum wages applicable to different industrial sectors, namely, non-agriculture, agriculture
plantation, and non-plantation, cottage/handicraft, and retail/service, depending on the number of
workers or capitalization or annual gross sales in some sectors.
A. Minimum Wage
Workers that render services for a total of 40 hours per week (8 hours per day, 5 days per
week) are entitled to receive at least the daily minimum wage.
 B. Overtime Pay
The employee who renders overtime will be given additional compensation equivalent to his
regular wage plus at least 25% premium.
Overtime pay for a holiday or rest day shall be paid an additional compensation from the rate
of the first eight hours on a holiday or rest day plus at least 30%.
On a Special Non-Working day or rest day, an additional compensation of 30% premium will
be paid in addition to the rate of the first eight hours of holiday or rest day.

C. Premium Pay
Premium pay is awarded to employees who work on rest days and regular/special non-working
holidays. It is equivalent to 130% of the employee’s daily wage – the rate of the first 8 hours of work,
plus a premium of at least a 30%.
If work is rendered on a special holiday that falls on a scheduled rest day, the premium
increases to at least 50% of the regular daily wage.
D. Night-shift Differential
Applies to employees who work between 10:00 p.m. and 6:00 a.m., where an additional 10%
premium is applied for every hour at work.
 E. 13th Month Pay
It is a form of monetary benefit given to every rank-and-file employee payable before the end
of every year as stipulated by the Department of Labor and Employment (DOLE). These employees
must have worked for at least one month in a year. Basically, the amount of the 13th month pay is
1/12 of the employee’s annual salary.
The 13th month pay covers only the basic salary of the employee, which does not include
allowances and monetary benefits that are not considered or integrated as part of the employee’s
regular compensation.
F. Separation Pay
An employee can claim separation pay if their tenure with the company is ended under
reasonable conditions. Employees terminated due to misconduct, breach of contract, or any illegal
activity are ineligible to receive a separation pay.
G. Retirement Pay
Upon the age of 60 years or higher, the employee who has served a company for at least five
years may be granted a retirement pay equivalent to at least one-half month of salary for every year
of service. A fraction of at least six months is considered as one whole year.
The “one-half month salary” includes:
a. 15 days salary based on the latest salary rate
b. Cash equivalent of 5 days of service incentive leave (SIL)
c. One-twelfth (1/12) of the 13th month pay

LEGALLY REQUIRED BENEFITS

LEAVE BENEFITS
While sick leave and vacation leave benefits are not specifically stated under the law, it
stipulates that private employees are allowed to provide employees a yearly Service Incentive Leave
of five days with pay. This applies to employees with work tenure of at least one year within the
company.
A. Maternity Leave
Pregnant employees will be granted 100 days of maternity leave. This is applicable to
employees in the government and private sector, regardless of the type of delivery.
B. Paternity Leave
The R.A No. 8187, or Paternity Leave Act of 1996, grants seven days of fully paid leave to
married fathers. This is effective up to the first four deliveries of the legitimate spouse.
The paternity leave allows married fathers up to 7 days off with pay.
Solo parents are provided with 7 leave days with pay if they have been with the company for at
least a year.
C. Regular Meal and Break Periods
Employers must give employees a minimum of 60 minutes per day for their regular meals.
Break times are not included in the prescribed 8-hour daily work period.
D. Service Incentive Leaves
Employees who have worked with the company for at least one year are entitled to a minimum
of 5 days with pay. These can be used as sick leaves or vacation leaves.
E. Special Leaves for Females
This entitles women who underwent surgery due to gynecological disorders to two months’
leave with full pay, as stipulated in R.A. 9710 or the Magna Carta of Women. This applies to
employees who have rendered at least six months of service with the company.
On the other hand, victims of violence against women, as stipulated in R.A. 9262 or the Anti-
Violence Against Women and Their Children Act of 2004, is entitled to 10 days leave with full pay.

TALENT MANAGEMENT
An organization's attempts to recruit, keep, and train the most gifted and highest quality staff
members that they can find, afford and hire.
As the name itself suggests is managing the ability, competency and power of employees within
an organization. The concept is not restricted to recruiting the right candidate at the right time but it
extends to exploring the hidden and unusual qualities of your employees and developing and
nurturing them to get the desired results. Hiring the best talent from the industry may be a big
concern for the organizations today but retaining them and most importantly, transitioning them
according to the culture of the organization and getting the best out of them is a much bigger concern.
Talent Management Strategy
Executives and HR management have always been focused on basic talent management—
acquiring, hiring and retaining talented employees. But, to drive optimal levels of success, business
leaders need engaged, high-performing employees.
1. Align Individual Goals with Corporate Strategy
The best talent management plan is closely aligned with the company’s strategic plan
and overall business needs. Goal alignment is a powerful management tool that not only
clarifies job roles for individual employees, but also demonstrates ongoing value of your
employees to the organization.
 To achieve "goal alignment" in your organization, you must first clearly communicate
your strategic business objectives across the entire company. Essentially, goal alignment
strengthens your leadership and creates organizational agility by allowing managers to:

 Focus employees’ efforts on your company's most important goals;

 Understand more clearly all responsibilities associated with specific goals; and
 Strengthen accountability by assigning measurable and clearly articulated goals that are visible
company-wide.

2. Create Highly-Skilled Internal Talent Pools

Strategically minded organizations are able to change ahead of the curve when it
comes to planning and developing a workforce with the right competencies. They have deeper
strategic insight into their employees, and use that insight to proactively put the right
workforces in place to effectively respond to urgent marketplace needs.
3. Break Down Information Silos and Develop Collaboration
In order to cultivate a collaborative atmosphere, management needs to align the metrics
for success—if success is based only on individual performance, you will be sending mixed
messages to your employees. Beyond simply encouraging collaboration, organizations need to
provide the tools to facilitate easier collaborative efforts. To drive better collaboration across an
organization, employees and management need access to rich employee data, including
experience, interests and special skills, such as language abilities.
4. Create a Pay-for-Performance Culture
In a pay-for-performance culture, managers gain easy access to all the information they
need to reward individuals for actual performance—360 degree feedback, goal alignment
metrics, review data and performance notes taken throughout the year. This leads to greater
job satisfaction, improved morale and employee retention because your organization is staffed
with a workforce of people who are highly productive, skilled and committed to doing their very
best.
Employee Benefits Package
Employers of choice provide a comprehensive employee benefits package to attract
and retain employees. In addition to a competitive salary, an employee benefits package is a
standard – and expected - part of an employee total compensation package.
1. Health Insurance Is the Foundation of a Comprehensive Employee Benefits Package
Health insurance is the foundation of any comprehensive employee benefits package
that employees want and need. Health insurance is the preferred employee benefit of the
majority of people who work.
2. Paid Time Off From Work
No comprehensive employee benefits package would be complete without employer
paid time off from work. Is a policy in some employee handbooks that provides a bank of hours
in which the employer pools sick days, vacation days, and personal days that allows
employees to use as the need or desire arises.
3. Short Term Disability Insurance Enhances Benefits
 Short term disability insurance ensures that an employee will still receive a percentage
of income if they cannot work due to sickness or a disabling injury. Short term disability
insurance, as part of a comprehensive employee benefits package is recommended.
4. Long Term Disability Insurance Provides a Safety Net for Employees
Long term disability insurance is one of the most significant components of an employee
benefits package. Long term disability insurance (LTD) is an insurance policy that protects an
employee from loss of income in the event that he or she is unable to work due to illness,
injury, or accident for a long period of time.
5. Dental Insurance Is a Component in an Employee Benefits Package
Dental insurance plans are designed to help cover the costs employees experience in
obtaining necessary dental care, both preventative and emergency.
6. Vision Insurance
Vision insurance is a lower cost addition to a comprehensive employee benefits
package that is provided by employers. Vision insurance pays for employees to have regular
vision examinations and pays for a percentage of the cost of corrective equipment.

7. Life Insurance Adds Value to Employer Provided Employee Benefits

Life insurance is a contract between an insurer and a policyholder in which the insurer
guarantees payment of a death benefit to named beneficiaries upon the death of the insured.
The insurance company promises a death benefit in consideration of the payment of premium
by the insured.
DESIGNING BENEFIT PLANS
Managing employee benefits is an important and costly endeavor for employers. Due to
the employer cost investment and the importance of employee benefits in recruiting and
retaining, employers should have a well-thought-out benefits plan design that meets both
employee needs and employer objectives.
1. Identify the Organization's Benefits Objectives and Budget
An important first step in designing an employee benefits program is to identify its
objectives. This will provide overall guidance in establishing the selection and design of the
benefits program. Generally, this process does not result in a list of specific benefits offered
but rather provides an overview of the organization's objectives of offering benefits that reflect
both the employer and employee needs.
2. Conduct a Needs Assessment
A needs assessment should be conducted to determine the best benefits selection and
design based on the needs and wants of the employees. But a more recent trend is to take a
market research approach to employee benefits planning. Common market research
techniques include employee inquiries in the form of personal interviews, simplified
questionnaires or sophisticated research methods.
3. Formulate a Benefits Plan Program
 Once the needs assessment and gap analysis are complete, the employer will need to
formulate the new benefits plan design. This step is complex and may take many factors into
consideration: Can changes be made to the current plan design to induce cost savings? Can
benefits that are underused or not valued by employees be eliminated? What are the
administrative costs for the benefits? What cost-containment features can be put in place? Will
employees have to contribute, and how much? Are there resources to administer in-house, or
will a third-party administrator and broker be necessary for certain plans?
4. Communicate the Benefits Plan to Employees
The communication strategy is a critical component to the benefits planning and
management. Some resources and samples are available to assist employers. Good benefits
communication objectives should include:

 Creating awareness and appreciation of the new or existing benefits and improving
employee financial security.
 Providing a high level of understanding of the benefits offered.
 Encouraging wise use of benefits.

5. Develop a Periodic Evaluation Process to Determine Effectiveness of Benefits

The benefits program must be assessed on a regular basis to determine if it is meeting
the organization's objectives and employees' needs. Changes in the business climate, the
economy, the regulatory environment and workforce demographics all create dynamics that
affect benefits offerings.
PREPARING FOR RETIREMENT
Retirement planning is one of the issues that commonly leads clients to consult financial
advisers. One of its essential aspects is creating a plan to save and invest in order to provide a
comfortable retirement income. The older we get, the more important this distinction between
planning and preparing becomes. Too many life-changing things can happen without regard to our
best-laid plans. Because the bottom line is that you can't plan for all the things that might happen
as you age, but you can prepare to deal with them. One of the most useful tools to cope with
those contingencies is having enough money.
STEPS IN PREPARING FOR RETIREMENT

 Set your Retirement Goals

Arrange your goals into short, medium and long-term goals.

 Assess your Current Financial Position

To help you achieve your retirement goals, you need to take stock of where you are
today. You must also assess your retirement budget needs. Preparing a retirement cash flow
statement (budget) is a very important task.

 Identify Retirement Income Sources

Retirement income may come from a variety of sources and the percentage of each
may change over time. These sources may include a pension, Social Security, IRA accounts
and other savings, and even part-time work.

 Evaluate Retirement Risks

 You must consider the risks that affect your retirement income. Inflation will erode the
purchasing power of your income over time. The various investment markets may occasionally
falter.

 Understand Health Care Issues

Retirement usually brings a change in health care insurance coverage. If you retire
before age 65, you may need to secure health insurance on your own. After 65, Medicare is
available, though you may wish to consider Medigap insurance to cover the cost between your
doctors’ fees and what Medicare pays.

 Invest your Retirement Assets

With goals identified and portfolio withdrawals requirements defined, develop a written
investment policy that will govern your investment approach. The investment policy statement
is your retirement investments road map. An asset allocation (the mix of stock, bonds and cash
in your portfolio) should be clearly stated. The policy should also provide diversity of
investments, be appropriate for your goals and time frame, and be in line with your risk
tolerance. Only then should specific mutual funds, bonds or exchange-traded funds be
selected and purchased to reflect your investment policy decisions. Within the various
retirement sources, understanding the character of the asset is important. Some income, such
as wages and interest, may be taxed at ordinary tax rates, while dividend income and long-
term capital gains may be taxed at reduced rates. Always take into account the tax
consequences of asset purchases and sales. (DELETAN MO NALANG PU)

 Manage your Retirement Income

While in the working world, we are accustomed to getting income from our employer or
from our business. With the onset of retirement, however, the paycheck ceases. Now income
has to come from a number of different sources. Properly managing these retirement income
sources requires planning and monitoring.
You probably know that the size of your Social Security payment depends on when you
start collecting benefits. The longer you wait, the larger your monthly payment. Determine the
optimum time to commence Social Security payments based on your specific circumstances.
At age 70-1/2, IRS rules require that certain amounts be withdrawn from your IRAs.
Required minimum distributions (RMDs) are based on several factors including your age and
the amount in your portfolio at the prior year end. Failure to withdraw the minimum amount
results in a 50% tax penalty on the amount that was not timely withdrawn. Calculate the
required minimum distribution and then ensure that the amount is properly distributed to you
each year. (ITO RIN)

 Monitor your Retirement Assets

It is important to conduct periodic reviews of your financial situation. By monitoring your
portfolio withdrawal rate, you can assure yourself that you will have sufficient assets to fully
fund your retirement. A quarterly review of your portfolio performance is important to detect
early signs of inappropriate asset allocation.
In summary, retirement income planning is a complex task and cannot be left to chance.