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A Guide to Employee Rights in the Philippines 🇵🇭

Posted onSeptember 23, 2021byIrina Dzhambazova
employee rights in the philippines

Considering employing someone in the Philippines? To do that compliantly, an employer has a lot of obligations they have to fulfil. One comprehensive and important topic is the set of local employee rights a worker residing in the Philippines is entitled to.

Below is a guide to employee rights in Philippines to help you understand what you need to comply with. (You can read about employee rights in AustraliaBrazil, Canada, Croatia, IrelandFrancethe UKPortugalPolandGermanyThe Netherlands, Lithuania, and New Zealand)

To employ someone in the Philippines, you need to be a registered employer. Alternatively, you can work with an Employer of Record, such as Boundless, which will employ the worker on your behalf locally. That would spare you any registrations and ensure compliance with employment and tax law, all the while assuring harmonised experience for your employees there. 

Regardless of the employment approach, all employees in the Philippines are entitled to the following employee rights.

General employee rights in the Philippines

Employment contract

In the Philippines, employment contracts do not need to be written in order to prove employment. However, it is recommended to provide workers with written employment contracts stating the terms and conditions of employment in local language and the salary in Philippine pesos.

Employers and employees have the freedom to establish the terms and conditions of the employment, with no law stating what terms need to be included. The terms and conditions should be made in good faith and can never be lower than what is statutory by the Labor Code. Statutory labour standards are always deemed to be written into all employment contracts. Any terms or conditions that violate the applicable labour standards are null and void.

A standard employment contract includes the following:

  • Name
  • Role
  • Job status
  • Job description
  • Compensation in Philippine pesos, including salary and any bonuses
  • Benefits, if applicable
  • Intellectual property clauses
  • Confidentiality clauses

13th month salary

Workers employed for more than a month in all roles except senior and managerial positions, commission-based positions, or fixed-term contracts are entitled to one additional month’s base salary annually, excluding any allowances and benefits (unless they are treated as part of the basic salary). Employers can choose to pay it in two instalments, one in May and one in December, or to pay it in full before 24th of December.

Employees who have not worked the full calendar year are entitled to a pro-rata equivalent of the 13th month salary. Employees who are terminated throughout the calendar year are also entitled to a pro-rata equivalent of the bonus based on how many months they worked during the year.

Contract conversion

Casual employees who perform work that is not usually necessary or primarily related to the company’s business become permanent employees of the company after one year of working for the company, whether continuously or not.

Similarly, employees working past their probationary period also have their contracts automatically converted into regular employment.

Magna Carta of Women is a comprehensive woman’s rights law, which aims to eliminate all forms of discrimination against women and ensure equality.

Payslip

Every employee is entitled to receiving their payslip that breaks down the information about the amount that is being paid, worked hours, and deductions. Payslips can be issued as a hard or digital copy. The following information needs to be stated on every payslip:

  • Length of time to be paid for
  • The rate of pay per month, week, day, or hour
  • The amount due for regular work
  • The amount due for overtime work
  • Deductions made from the employee’s wages
  • Amount actually paid

Health and safety

Employers must follow the requirements imposed by the Occupational Safety and Health Standards and provide employees with a hazardous-free environment and working conditions. Employees must receive job safety instructions and get familiar with the environment and any hazards they may be exposed to. Employers have different types of obligations to employees regarding health and safety, depending on the number of staff employed and the type of work and workplace, as follows:

More than 50 but less than 200 employees:

  • Non-hazardous workplace: provide the services of a graduate first-aider or nurse
  • Hazardous workplace: provide the services of a full-time registered nurse

More than 200 but less than 300 employees:

  • Provide a full-time registered nurse, a part-time physician, and a part-time dentist (who both stay on the premises for at least two hours daily). Companies must also provide employees with an emergency clinic on location.

More than 300 employees:

  • Provide a full-time registered nurse, a full-time physician, and a full-time dentist. Companies must also provide a dental clinic and an infirmary or emergency hospital with one-bed capacity for every 100 employees.

Employers are exempt from providing an emergency hospital or dental clinic in the workplace where all of the following factors apply:

  • One is located less than five kilometres from the workplace;
  • Accessible in not more than within 25 minutes’ travel time;
  • The employer has the means to transport a worker to a hospital or dental clinic in cases of emergency.

Protections

Protection from discrimination

Employees have the right not to be discriminated against at the workplace during the recruitment process and selection for promotions as well as upon termination. It is the employer’s responsibility to make sure employees are being respected in the workplace and not discriminated on the following grounds:

  • Age
  • Ethnicity
  • Religion or beliefs
  • Race
  • Disability
  • Mental health condition
  • Gender
  • Sex
  • Civil status
  • Family status
  • Medical condition
  • Union membership status

There are also several laws and regulations in place, which prohibit discrimination against the actual, perceived, or suspected HIV status; indigenous people; single parents; and persons with tuberculosis and hepatitis B.

Magna Carta of Women

The government has created a comprehensive woman’s rights law known as the Magna Carta of Women (Republic Act No. 9710) to eliminate all forms of discrimination against women and ensure equality between men and women in all sectors of life, including the workplace. The Labor Code prohibits discrimination against a female employee with respect to the terms and conditions of employment solely on the basis of her sex (e.g., paying a woman less than a male colleague for doing the same job, or favouring a male employee for promotions, training opportunities, or scholarship grants).

It further prohibits discriminating, or otherwise prejudicing, a female employee merely by reason of her marriage. Companies found guilty of committing discrimination against women will be penalised as recommended by the Commission on Human Rights to the Civil Service Commission and the Department of the Interior and Local Government. The exact amount of the penalty is determined on a case-by-case basis.

Workers employed for more than a month in all roles except senior and managerial positions, commission-based positions, or fixed-term contracts are entitled to one additional month’s base salary annually.

Magna Carta for Disabled Persons

The law (Republic Act No. 7277) guarantees equal opportunity and full participation for individuals with disabilities in regards to employment. Qualified disabled employees are entitled to the same terms and conditions of employment, compensation, privileges, benefits, fringe benefits, incentives or allowances as any other employee.

Protection from harassment

Employees have the right to be protected from any type of physical, psychological, and sexual harassment in the workplace, while employers have the obligation to ensure the safety of their employees, including taking steps to prevent and address harassment.

Work-related sexual harassment is defined as when someone in the workplace demands, requests, or otherwise requires any sexual favour from an employee, regardless if the employee accepts it or not. Employers have the duty to prevent or deter the commission of acts of sexual harassment and to provide the procedures for the resolution, settlement, or prosecution of such acts. Employers must also do the following:

  • Put in place appropriate rules and regulations after consulting employees and gaining their approval. Those are obtained through duly designated representatives
  • Prescribe the procedure for the investigation of sexual harassment cases and the administrative sanctions that should happen after
  • Create an investigation committee of cases on sexual harassment
  • Share a copy of the Republic Act No. 7877 for the information of all concerned

Protection of personal data

The Data Privacy Act regulates the collection, processing, retention and transfer of personal information of all individuals, including employees, whenever any sort of personal information is included on the data. It also establishes the rights and obligations for data subjects and for those collecting and processing personal data. Every individual having their personal information gathered have the right to be informed about their information being processed and notified on the entry of their personal information into the processing system.

Those processing data must, upon demand, provide individuals with reasonable access to matters regarding the data subject’s personal information and correct any inaccuracy or error pointed out by the individual regarding their personal information. In case of information being incomplete, false, out of date, accessed without authorisation or no longer serving its purpose, individuals have the right to request the removal and destruction of the data. If an individual sustains damages as a result of incorrect information, they are entitled to be indemnified.

Employers have the following data protection obligations:

  • Retain personal information necessary only to fulfil the purposes for which it was obtained, and destroy the information once it no longer serves its purpose (employers are required to keep the information for three years from date of last entry).
  • Keep information in a form that permits the identification of data subject.
  • Provide reasonable access to the information for those with information concerns.
  • Correct inaccurate or wrong information immediately.
  • Ensure accessibility to both the new and retracted information and the simultaneous receipt of the new and retracted information by the recipients of that information.
  • Inform, upon a reasonable request of the data subject, the third parties who have had access to the information.
  • Implement reasonable and appropriate organisational, physical, and technical measures intended to protect information against any accidental or unlawful destruction, alteration, unlawful access, misuse, and natural dangers.

Protection in case of a business transfer

In case of a full merger in which there is no express stipulation in the articles of the merger concerning the employees of the entity that does not survive, the employment contracts of the non-surviving entity are automatically assumed by the surviving corporation. Thus, the absorbed employees become regular employees of the surviving corporation on the day the Securities and Exchange Commission approves of the merger.

In transactions involving the acquisition of assets of an ongoing concern, provided that the sale is in good faith, the transferee or buyer has no legal duty to absorb the employees of the seller. An innocent transferee that acquires a business in good faith has no liability in regards to the employees of the transferor and does not have to continue employing them. However, in exercising its prerogative to select and hire employees to fill the vacancies in its facilities, the transferee may give preference to the qualified separated employees.

Whistleblower protection

Although there is no law specifically protecting whistleblowers, the Labour Code prohibits discrimination against any employee who has filed a complaint or a proceeding against their employer. It is unlawful for an employer to also refuse to pay or reduce the wages and benefits of, or dismiss, or in any manner discriminate against any employee who has testified in a proceeding against the employer.

Benefits

Separation pay

Employees whose employment has been terminated due to one of the Labor Code’s recognised reasons or illness are entitled to severance pay. Employees who resign or who are dismissed for just cause are not entitled to this benefit.

Separation pay differs in value depending on the reason for termination, as follows:

  1. Companies that terminate employees to cut costs during financial difficulties, due to closure, bankruptcy, or employee’s illness that takes more than six months to cure, must pay half-month pay for every year of service of the employee.
  2. Companies that terminate employees because of technology replacement (where machines replace workers), redundancy, or excessive manpower (and when it’s impossible to reinstate an employee to their former position) must pay that employee one-month pay for every year of service.

Retirement pay

Employees who reach the retirement age of 60-65 and who have worked for the same employer for a minimum of five years are entitled to retirement pay, which is equivalent to 22.5 days per year of employment to at least half a month’s salary for every year of employment (with a fraction of at least six months being considered one whole year), paid by the employer.

The retirement pay includes:

  • Pay for 15 days based on the latest salary
  • Five days service incentive leave cash equivalent
  • The 13th-month pay

Workers compensation insurance

Employees younger than 60 years of age are entitled to the government’s employee compensation program, which requires companies to register employees with the State Insurance Fund (SIF). The compensation package is provided to employees in the event of work-related sickness, injury, disability leading to the loss of income or death.

Unemployment funds

Employees who are dismissed through no fault of their own — that is, due to an authorized cause — are entitled to the unemployment benefit from the Social Security System (SSS). Employees who resign or are dismissed for just cause are not entitled to the benefit.

To qualify, the individual must not be over the age of 60 at the time of dismissal (those older may claim their pension if they are qualified) and must have made at least 36 months of contributions to the Social Security System. Twelve of those months should be in the 18-month period immediately preceding the month of involuntary separation. The benefit fund is a one-time payment equivalent to 50% of the employee’s average monthly salary credit (AMSC) for two months, capped at PHP 20,000.

Diminution of benefits

Employers are prohibited from eliminating or cutting back on employee benefits once they have offered them. Conversely, benefits may be reduced for as long as the consent of the covered employees is obtained. Companies cannot unilaterally revoke benefits that they have voluntarily given to employees. The benefit must meet the following criteria for this non-diminution right to apply:

  • The benefit is consistent and deliberate.
  • The benefit is not originated from an error in the construction or application of a doubtful or difficult question of law.
  • The grant of the benefit is based on an express policy of the employer or has ripened into a practice over a long period.

Job Security

Security of tenure

Every permanent employee (also known as regular employee) has the right to security of tenure, which gives them protection from being dismissed by their employers without a just or authorised reason and without following the correct grievance procedure.

In the case of fixed-term or project-based contracts, the employees are entitled to job security for the duration of the agreed period or project they were hired for. Probationary employees also have the right to limited security of tenure, which includes termination for failing to meet the standards for regularization of employment made known at the beginning of the engagement.

Employees have the right to challenge the legality of their dismissal before the National Labor Relations Commission (NLRC). Employees who are deemed to have been unfairly dismissed are entitled to an indemnity sum of up to PHP 30,000 in just cause terminations and of up to PHP 50,000 in authorised causes dismissals paid by the employer, plus full back pay, reinstatement with all previous benefits and seniority or, in lieu of reinstatement, a separation pay of one month’s wage for every year of service. Employees may also be entitled to moral damages and attorney’s fees.

Labour relations

Employees have the right to self-organise; strike in accordance with the law; and to form, join, or assist labour unions for purposes of collective bargaining. However, managerial and confidential employees are not allowed to be associated with unions, while supervisory employees are not eligible for membership in the collective bargaining of regular (rank-and-file) employees.

Labour unions are regulated, must be registered with the Department of Labour and Employment (“DOLE”) to be recognised, and are not allowed to restrain or coerce employees in the exercise of their right to self-organisation, causing or attempting to cause an employer to discriminate against an employee and asking for or accepting negotiation fees from the employer as part of the settlement of any issue in collective bargaining.

The Labor Code also allows the formation of labour-management councils in private companies to provide a venue for labour and management representatives to discuss company and personnel policies.

Want to employ someone in the Philippines?

Adhering to employment law and employee rights in the Philippines will require a commitment to learning and working with a lot of local regulations. We are here to help you on that journey and take the time to make sense of complex legislative information, which we turn into easy to understand resources and comprehensive country guides.

However, staying on top of Philippine employment law may not be a top priority for you right now. That doesn’t mean you should give up on employing your next remote worker out of the Philippines or opt for hiring them as an independent contractor instead (which is a bad idea). 

Boundless can help you employ anyone in the Philippines legally and hassle-free. Through the Employer of Record model, we act as the legal employer to your remote workers and take care of the many obligations that come with adhering to these employee rights in the Philippines. Learn more.

The making available of information to you on this site by Boundless shall not create a legal, confidential or other relationship between you and Boundless and does not constitute the provision of legal, tax, commercial or other professional advice by Boundless. You acknowledge and agree that any information on this site has not been prepared with your specific circumstances in mind, may not be suitable for use in your business, and does not constitute advice intended for reliance. You assume all risk and liability that may result from any such reliance on the information and you should seek independent advice from a lawyer or tax professional in the relevant jurisdiction(s) before doing so.
Written by Irina Dzhambazova

Irina Dzhambazova is the editor of this publication and leads many of the marketing efforts behind Boundless. Previously she crafted stories at SaaStock and Dublin Globe and travelled the world capturing case studies of companies using the Kanban Method. Throughout this experience, she was almost always "the remote worker" and knows a thing or two about the potential and challenges of this way of working.

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