Employee Benefits
Employee Benefits
Employee benefits cover remuneration other than basic pay. It includes vacation and sick leaves, medical and hospitalization benefits, meal allowance, transportation
allowance, clothing allowance, etc. and incentive pay for productivity such as commission, overrides, bonuses, and profit-sharing. For the Philippines, the following benefits
are given to employees. (“2015 Philippines Benefits Summary.”)
Vacation pay: Thirteen (13) vacation days, with additional one vacation day every year starting on second year of service and convertible to cash at the end of each year.
Maximum total vacation leave is 18 days.
Sick Leave: Twelve (12) days per year for the first two years of service. With additional one sick leave every year starting on the second year of service. Maximum total sick
leave is 15 days. All unused leave days are convertible to cash in December of the year.
Holiday Pay
National Regular Holidays
January 1, 2021 (Friday) – New Year’s Day
April 1, 2021 (Thursday) – Maundy Thursday
April 2, 2021 (Friday) – Good Friday
April 9, 2021 (Friday) – Araw ng Kagitingan
May 1, 2021 (Saturday) – Labor Day
May 13, 2021 (Thursday) – Eid’l Fitr
June 12, 2021 (Saturday) – Independence Day
July 20, 2021 (Tuesday) – Eid’l Adha
August 30, 2021 (Last Monday of August) – National Heroes’ Day
November 30, 2021 (Tuesday) – Bonifacio Day
December 25, 2021 (Saturday) – Christmas Day
December 30, 2021 (Thursday) – Rizal Day
Nationwide Special (Non-Working) Holidays
February 12, 2021 (Friday) – Chinese New Year
February 25, 2021 (Thursday) – EDSA People Power Revolution
April 3, 2021 (Saturday) – Black Saturday
August 21, 2021 (Saturday) – Ninoy Aquino Day
November 1, 2021 (Monday) – All Saints’ Day
December 8, 2021 (Wednesday) – Feast of the Immaculate Conception of Mary
Special Working Days
November 2, 2021 (Tuesday) – All Souls’ Day
December 24, 2021 (Friday) – Christmas Eve
December 31, 2021 (Friday) – Last Day of the Year
In lieu of vacation pay, Article 95 of the Labor Code provides for service incentive for every employee who has rendered at least one year of service of 5 days with pay.
Some benefits are taxable, just like wages, salaries, commission, royalties, etc. However, some benefits are non-taxable. Under Section 2.79(D)(3)(b) of Revenue
Regulations (RR) No. 02-98, as amended, de minimis benefits are facilities or privileges given or offered by an employer to its employees, provided such facilities or privileges
are of relatively small value and are offered or furnished by the employer merely as a means of promoting the health, goodwill, contentment, or efficiency of its employees.
De minimis benefits are not subject to income tax as well as to withholding tax on compensation income of both managerial and rank-and-file employees. When given to
employees, no deduction for taxes will be made by the employer; thus, the employee profits from the whole amount of the benefit.
Under RR No. 02-98, as amended by RR Nos. 05-11, 01-15, and 11-18, the following are considered de minimis benefits for private employees:
1. Monetized unused vacation leave credits of private employees not exceeding 10 days during the year;
2. Monetized value of vacation and sick leave credits paid to government officials and employees;
3. Medical cash allowance to dependents of employees, not exceeding P1,500 per employee per semester or P250 per month;
4. Rice subsidy of P2,000 or one 50-kg sack of rice per month amounting to not more than P2,000;
5. Uniform and clothing allowance not exceeding P6,000 per annum;
6. Actual medical assistance, e.g., medical allowance to cover medical and healthcare needs, annual medical/executive check-up, maternity assistance, and routine
consultations, not exceeding P10,000 per annum;
7. Laundry allowance not exceeding P300 per month;
8. Employees achievement awards, e.g., for length of service or safety achievement, which must be in the form of a tangible personal property other than cash or gift
certificate, with an annual monetary value not exceeding P10,000, received by the employee under an established written plan which does not discriminate in favor of
highly paid employees;
9. Gifts given during Christmas and major anniversary celebrations not exceeding P5,000 per employee per annum;
10. Daily meal allowance for overtime work and night/graveyard shift not exceeding 25% of the basic minimum wage on a per region basis.
11. Benefits received by an employee by virtue of a Collective Bargaining Agreement (CBA) and productivity incentive schemes, provided the total annual monetary value
received from both CBA and productivity incentive schemes combined do not exceed P10,000 per employee per taxable year.
As further provided under Revenue Regulations No. 15-2011 that has become effective starting the year 2011, all other benefits given by employers which are not included in
the above enumeration shall not be considered “de minimis benefits”, and hence, shall be subject to income tax as well as withholding tax on compensation income. Please
note also of the limitations as to amount because it is material to qualify for exemptions. If you provide more than the limitations, the amount in excess of the limit would be
taxable and subject to withholding tax on compensation, if the recipient employee is a rank-and-file, or fringe benefits tax (FBT) of 32% if a supervisory or managerial
employee. This is however subject to the rule on the P90,000 amount for 13th month pay and other benefits where excess de minimis benefits may not be taxable if the total
of such excess plus the 13th month pay and other benefits within the P90,000 limitation.
Lesson 2: Payroll Deductions
The gross earnings of an employee are not exactly what he or she can take home. The reason for that are the
mandatory benefits, which are part of payroll deductions. And these deductions are necessary to arrive in net
pay or take-home pay.
Normally, employees are assigned to operate for a particular period. They are using timecards to record their in
and out of the company and usually covers an entire payroll period, say May 1 – 15 if payroll is processed
semi-monthly, or May 1 – 7 if the payroll is done weekly.
Deductions may include, among others, the following:
1. Employee’s SSS contribution for private employees
2. Employee’s GSIS contribution for government employees
3. PhilHealth contribution for all employees
4. HDMF contribution for all employees
5. Withholding taxes for all taxable earners
6. Salary advances or temporary values
7. Loans
8. Union dues
Rate of Contribution to SSS
https://mpm.ph/sss-contribution-table-january-2021/
(https://mpm.ph/sss-contribution-table-january-2021/)
All employees of private enterprises are covered by the Social Security System. Self-employed individuals can also become members. The monthly contributions are based
on the compensation of members (gross earnings). The current SSS contribution rate is 11% of the monthly salary credit not exceeding P16, 000.00 and this is being shared
by the employer (7.37%) and the employee (3.63%).
Self-employed and voluntary members pay the 11% of the monthly salary credit (MSC) based on the monthly earnings declared at the time of registration. For OFWs, the
minimum monthly salary credit is pegged at P5, 000.00. For the non-working spouse, the contribution will be based on 50% of the working spouses last posted monthly salary
credit but in no case shall it be lower than P1, 000.00.
Rate of Contribution to PhilHealth
All employees, whether of private or government entities, are to be members of Philippine Health Insurance Corporation. This is basically intended to cover them and their
beneficiaries help in times of sickness.
Employee share represents half of the total monthly premium while the other half is shouldered by the employer.
For a Kasambahay helper receiving a wage of less than Five Thousand Pesos (P5, 000.00) per month, the employer will shoulder both the employee and employer’s share
based on the premium schedule.
Pag-Ibig Fund Contributions
The Home Development Mutual Fund (HDMF), more popularly known as the Pag-Ibig Fund, was established to provide a national savings program and affordable shelter
financing to the Filipino workers. The Fund offers its members short-term loans and access to housing programs. It is mandatory for all SSS and GSIS-covered employees;
uniformed members of the AFP, BFP, BJMP, and PNP; as well as Filipinos employed by foreign-based employees. With the signing of Republic Act No. 9679, membership to
the Fund shall be mandatory for the following:
1. All employees, workers, professionals, officers and companies who are compulsory covered by the SSS and GSIS;
2. Uniformed members of the Armed Forces of the Philippines, the Bureau of Fire Protection, the Bureau of Jail Management and Penology, and the Philippine National
Police;
3. Overseas Filipino Workers (OFWs); and
4. Filipinos employed by foreign-based employers, whether deployed locally or abroad.