Know Your Mandatory Wages and Benefits as an Employee

Being an employee working in the Philippines entitles you to mandatory wages and benefits, thanks to prevailing labor laws. It’s a must for any Philippine-based worker to read and understand the fine print that govern these wages and benefits. If you’re a fresh graduate aiming to land your first job, or a seasoned professional who wants to make sure that your next company follows the law-mandated benefits, this guide can help you out with your company research.

Minimum wage

Majority of workers in the Philippines are earning the lowest acceptable pay mandated by law called the minimum wage. The minimum wage is the lowest daily rate for every Philippine-based worker. Every region in the country vary in their respective minimum wages, which is why we’re illustrating these variations on the following table that’s updated as of June 2019.

Region	Non-agriculture	Agriculture
		Plantation	Non-plantation
NCR	500.00 – 537.00	500.00	500.00
CAR	300.00 – 320.00	300.00 – 320.00	300.00 – 320.00
I	273.00 – 340.00	295.00	282.00
II	360.00	340.00	340.00
III	349.00 – 400.00	334.00 – 370.00	322.00 – 354.00
IV-A	317.00 – 400.00	303.00 – 370.00	303.00 – 356.00
IV-B	294.00 – 320.00	294.00 – 320.00	294.00 – 320.00
V	310.00	310.00	310.00
VI	295.00 – 365.00	365.00	365.00
VII	318.00 – 386.00	313.00 – 368.00	313.00 – 368.00
VIII	305.00	275.00	275.00
IX	316.00	303.00	303.00
X	343.00 – 365.00	331.00 – 353.00	331.00 – 353.00
XI	396.00	391.00	391.00
XII	311.00	290.00	290.00
Caraga	320.00	320.00	320.00
ARMM	280.00	270.00	270.00

Overtime pay

If your company lets you render overtime, you’re entitled to get paid for the hours you’ve worked beyond your normal working hours. When doing overtime on a regular working day, the standard overtime pay rate is 25% on top of your hourly rate, multiplied by the number of excess hours you’ve rendered. To illustrate:

Standard overtime pay = Hourly rate x 1.25 x Number of hours worked in excess

Working overtime on special holidays and rest days are also eligible for overtime pay. For working overtime on your scheduled rest day or on a special holiday, an overtime premium of 30% is given on top of the hourly rate.

Rest day or special holiday overtime pay = Hourly rate x 1.30 x Number of hours worked in excess

If you worked on your scheduled rest day and it’s a special holiday, you’ll earn an additional 50% on top of the 30% premium for the overtime hours you’ve worked. In short, you are eligible to earn 95% of your hourly rate for the excess hours you’ve rendered.

Rest day and special holiday overtime pay = Hourly rate x 1.50 x 1.30 x Number of hours worked in excess

Working overtime on a regular holiday entitles you to a much higher overtime pay, which is twice your hourly rate plus another 30% premium on top of the excess hours worked. To illustrate:

Regular holiday overtime pay = Hourly rate x 2.00 x 1.30 x Number of hours worked in excess

There are times that you may be asked to work overtime on your scheduled rest day which also happens to be a regular holiday. In this case, you’ll get the highest overtime pay rate equivalent to 260% on top of the 30% premium on excess hours rendered.

Rest day and regular holiday overtime pay = Hourly rate x 2.60 x 1.30 x Number of hours worked in excess

Premium pay

Philippine labor laws also qualifies employees who work on scheduled rest days or special holidays for a mandatory benefit called premium pay. If you’re working on either your scheduled rest day or a special day, you’ll get 30% premium pay on top of your regular rate.

In the event that you’re working on your scheduled rest day and it’s also a special holiday, you’ll get an additional 50% on top of your regular rate. For working on a regular holiday that coincides with your scheduled rest day, you’re entitled to get up to twice of your regular rate plus an additional 30% on top of that amount.

Holiday pay

If you’re not asked to work on a Philippine holiday, you’re still eligible to get paid the full amount equal to your daily rate for that day, given that you were present on the day before the holiday or you filed for a paid leave before the holiday. If you work on a regular holiday, you’ll get paid twice your daily rate. For working on a regular holiday that’s also your scheduled rest day, you are entitled to receive another 30% on top of the double daily pay.

13th month pay

Perhaps the most-awaited government-mandated perk of the year, the 13th month pay is the bonus pay given to rank-and-file employees equivalent to not less than one-twelfth (1/12) of the prorated annual basic pay for the year. Rank-and-file employees who haven’t rendered at least 1 month worth of work on or before 24 December aren’t entitled to receive 13th month pay.

To better understand how the 13th month pay is computed, here are some examples.

• If you were hired last year and you want to know your 13th month pay for this year, provided that you’re still in the company by the end of the current year, you’re entitled to get your entire month’s basic salary as 13th month pay.

 

• If you left the company on the same year you were hired, you’re still entitled for a prorated amount of your basic monthly salary as your 13th month pay. The computation is prorated from the month you were hired up to your last working month with your employer.
  

 

• If you were hired before January 1 of the current year and left the company before you could complete the entire work year, you’re also entitled for a prorated amount of your basic monthly salary as your 13th month pay. The computation is prorated from January 1 up to your last working month with your employer.

The 13th month pay is given to active rank-and-file employees not later than 24 December of each year, and it isn’t taxable if it’s equal to or below the Php 82,000 tax exemption ceiling. If you’ve already resigned before the year ends, your 13th month pay will be given as part of your back pay or final pay.

Retirement pay

Philippine-based workers aged 60 to 65 and has worked for at least five years from the time they turned 60 to 65 years old are eligible to receive retirement pay.

By law, retirement pay must be equal to at least half of the monthly basic salary multiplied by the number of years in service, where a fraction of a year that’s at least six months is considered a full year. The Department of Labor and Employment (DOLE) defines a retiree’s half-month salary as the sum of a) the retiree’s 15 days’ worth of pay based on the pre-retirement rate, b) the cash equivalent of five days’ worth of service incentive leave, and c) one-twelfth of the retiree’s 13th month pay. If the retiree’s company has a collective bargaining agreement (CBA), benefits given under the CBA may be included in the retirement pay.

To sum up what comprises the half-month salary for the computation of retirement pay, it is roughly equal to 22.5 working days. Put together, this formula can be used to compute the retirement pay:

Retirement pay = Daily rate x 22.5 x Number of years worked

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While this guide has been made to describe mandatory wages and benefits for anyone who works in the Philippines, the accuracy of computations may vary depending on your company’s payroll policies. Getting payroll runs right can be tough for companies who still do manual payroll processing, which is why payroll systems like Sprout Payroll can simplify payroll processing by automating payroll runs with support for all 32 pay rates.

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