Employment Laws and Regulations
Work Week and Leave
- Maximum Working Week: Employees must receive a weekly rest period of at least 24 consecutive hours after 6 days of work. If they work on their rest day, they get a 30% premium on their basic wage.
- Leave Types:
- Annual Leave: Paid leave as per company policy. The minimum annual leave as per Department of Labor and Employment (DOLE) is 5 days after completion of 1 year service.
- Holiday Pay: Holiday pay refers to the payment of the regular daily wage for any unworked regular holiday. Every employee covered by the Holiday Pay Rule is entitled to his/her daily basic wage. This means that the employee is entitled to at least 100% of his/her basic wage even if he/she did not report for work, provided he/she is present or is on leave of absence with pay on the workday immediately preceding the holiday. Work performed on that day merits at least twice (200%) the basic wage of the employee. Where the holiday falls on the scheduled rest day of the employee, work performed on said day merits at least an additional 30% of the employee’s regular holiday rate of 200% or a total of at least 260%.
Wages
- Payroll & Payment: Typically, workers receive their pay twice a month at a maximum of sixteen-day intervals, or at least once every two weeks. Even in cases when an employee specifically requests it, it is illegal for employers in the Philippines to pay salaries with promissory notes, vouchers, coupons, tokens, tickets, chits, or any other item other than legal currency.
- Employers are also not authorized to impede or interfere with the ability of any employee to dispose of his/her pay. They are not allowed to utilize any store or services owned by the employer or any other individual, or to in any way coerce, compel, or require the employees to buy goods, commodities, or other property from anyone else. (pg15) https://www.peza.gov.ph/sites/default/files/expat_handbook.pdf
- Overtime Pay: For work more than eight hours performed on ordinary working days: Plus 25% of the hourly rate.
- For work more than eight hours performed on a scheduled rest day, a special day, and a regular holiday: Plus 30% of the hourly rate on said days. (pg28)
- Premium Pay: This benefit applies to all employees except, Government employees, whether employed by the National Government or any of its political subdivisions, including those employed in government-owned and/or controlled corporations with original charters or created under special laws
- Workers who are not required or permitted to work on special days are not entitled to any compensation. This, however, is without prejudice to any voluntary practice or provision in the Collective Bargaining Agreement (CBA) providing for payment of wages and other benefits for days declared as special days even if unworked. Pg27
- Thirteenth Month Pay: Employers must provide this to rank-and-file employees who have worked at least one month during the year, paid by December 24. (pg40)
- Night Shift Allowance: Night Shift Differential (NSD) Pay of 10% of the employee’s regular wage for each hour of work performed between 10pm and 6 am.
- Retirement Pay
- After working for the company for at least five years and becoming sixty years of age or older, but not older than sixty-five years, employees will be retired.
- The minimum retirement pay shall be equivalent to one-half (1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one (1) whole year.
The Philippine tax system operates on a progressive tax scale, meaning the percentage of tax increases as the individual’s or business’s taxable income rises. For example, tax rates range from 5% for the lowest income earners to 32% for higher earners. The structure ensures that those earning more contribute a larger proportion of their income to taxes.
Allowable Deductions for Businesses
Business owners or self-employed individuals have the option to reduce their taxable income through deductions. There are two primary methods:
- Optional Standard Deduction (OSD): This option simplifies the process, allowing a flat 40% deduction from gross sales or receipts, regardless of actual expenses. It’s ideal for businesses that prefer simplicity or whose actual expenses are difficult to track.
- Itemized Deductions: This method allows taxpayers to deduct actual business-related expenses. These could include expenses like salaries, rent, supplies, and more. While this option requires more detailed accounting, it may result in larger deductions, especially for businesses with significant expenses.
Filing Requirements
Certain groups are required to file tax returns in the Philippines. These include:
- Resident citizens: Individuals who live in the Philippines and earn income domestically or internationally.
- Non-resident citizens or foreigners engaged in business: Those who do not live in the Philippines but earn income from business or employment within the country.
- Married individuals: Couples have the option to file their taxes separately, depending on their financial arrangements. Each spouse’s taxable income must be computed individually if filing separately.
Different tax forms are available for various taxpayer categories, and filing deadlines must be adhered to avoid penalties.
Source: https://efps.bir.gov.ph/efps-war/EFPSWeb_war/help/help1701_v2.html
Under the new SSS law, the contribution rate and the Minimum and Maximum Salary Credit (MSC) will be increased as mandated. These adjustments are essential for the government to secure the sustainability of the SSS Fund, ensuring that the system remains financially sound and capable of providing reliable social security benefits.
| Year of Implementation | Contribution Rate | Share | Monthly Salary Credit | ||
| Employer | Employee | Minimum | Maximum | ||
| 2019 | 12% | 8% | 4% | ₱2,000.00 | ₱20,000.00 |
| 2020 | 12% | 8% | 4% | ₱2,000.00 | ₱20,000.00 |
| 2021 | 13% | 8.5% | 4.5% | ₱3,000.00 | ₱25,000.00 |
| 2022 | 13% | 8.5% | 4.5% | ₱3,000.00 | ₱25,000.00 |
| 2023 | 14% | 9.5% | 4.5% | ₱4,000.00 | ₱30,000.00 |
| 2024 | 14% | 9.5% | 4.5% | ₱4,000.00 | ₱30,000.00 |
| 2025 | 15% | 10% | 5% | ₱5,000.00 | ₱35,000.00 |
*The maximum amount that can be used to determine Social Security Fund premiums and benefits is ₱20,000. The required Provident Fund receives any MSC-corresponding contributions over ₱20,000 but below the maximum MSC.
The minimum MSC for overseas Filipino workers (OFWs) is eight thousand pesos (₱8,000.00), or whatever the Commission decides. Employers and SSS members who are required to be covered and whose monthly income is either higher than the maximum MSC or lower than the minimum MSC are required to pay payments based on the current minimum MSC or maximum MSC, respectively.
Source: https://www.asean-ssa.org/files/Organisation%20Profiles/SSS-Profile.pdf
Termination of Employment
Termination for Misconduct (Art. 297):
An employer can fire an employee for serious misconduct, such as deliberately disobeying work-related orders, repeatedly neglecting their duties, committing fraud, or breaking the trust placed in them by the employer. This also applies if the employee commits a crime against the employer, their family, or representatives. Any similar severe offenses are also valid reasons for dismissal.
Termination Due to Business Reasons (Art. 298):
Employers can terminate employees due to business needs, such as introducing machines that reduce the need for workers, eliminating redundant positions, or cutting staff to avoid financial losses. If the business is shutting down or ceasing operations (as long as it’s not to evade labor laws), the employer must give employees and the Ministry of Labor at least one month’s notice. In these cases, employees are entitled to severance pay, usually at least one month’s salary or more, depending on how long they’ve been employed.
Termination for Health Reasons (Art. 299):
If an employee is diagnosed with a disease that makes it unsafe for them or others to continue working, the employer may end their employment. In such cases, the employee is entitled to severance pay, calculated based on their time with the company, with the minimum being one month’s salary or one-half month’s pay for every year of service.
Source: https://library.laborlaw.ph/p-d-442-labor-code-book-6/
Philippines’s Statutory Holidays
| Public Holidays | Date (2025) |
|---|---|
| New Year’s Day | 1 January |
| Chinese New Year | 29 January |
| People Power Revolution Anniversary | 25 February |
| Eid’l Fitr (tentative) | 31 March |
| The Day of Valor | 9 April |
| Maundy Thursday | 17 April |
| Good Friday | 18 April |
| Black Saturday | 19 April |
| Labor Day | 1 May |
| Eidul Adha (tentative) | 6 June |
| Independence Day | 12 June |
| Ninoy Aquino Day | 21 August |
| National Heroes’ Day | 25 August |
| All Saints’ Day | 1 November |
| Bonifacio Day | 30 November |
| Immaculate Conception Day | 8 December |
| Christmas Day | 25 December |
| Rizal Day | 30 December |
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