Labor Code Provisions

Ralating to MSMEs

Atty. Luis Gerardo C. Manabat, C.P.A., F.I.C.D.

De La Salle University
The Labor Code
Conditions of Employment
 The Labor Code
Conditions of Employment

To ensure humane working conditions, the labor

code lays down some basic conditions in an
employer-employee relationship that must be
maintained.
The Working Hours:
• Normal working hours should not exceed 8 hours a
day, excluding beaks (Art. 83, Labor Code)
• Hours worked includes:
– All the time during which an employee is required to be
on duty or to be at the prescribed workplace; and
– All time during which an employee is suffered or
permitted to two (Art. 84, Labor Code)
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 The Labor Code
Conditions of Employment

The Working Hours:

• The following rules apply to breaks:
– Meal Periods of at least 60 minutes must be given by the
employer to its employees per workday. (Art. 85, Labor Code)
– Rest periods of short duration during working hours shall
be counted as hours worked (Art. 84, Labor Code)
The Work Week:
• Under the Labor Code, the work week constitutes 6
consecutive days of work.
• There shall be a rest day of 24 hours in each work
week to be determined by the employer subject to
certain rules (Art. 91, Labor Code)
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 The Labor Code
Conditions of Employment

Service Incentive Leaves:

The Labor Code only provides for paid service
incentive leaves for employees of 5 days for every
year of service and no vacation or sick leaves for
employees.
Service incentive leaves are not needed in case:
• The employee already has the benefit of leaves
equal to or in excess of 5 days a year; or
• The number of employees in the establishment is
less than 10; or
• The establishment is exempted (Art. 95, Labor Code)
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 The Labor Code
Conditions of Employment

Maternity Leaves:
There is however the provision of 105 days of leave
for mothers with pay plus an additional 30 days
without pay if a 45 days notice is given to the
employer for the first four deliveries.
Paternity Leaves:
Fathers, on the other hand, has a 7-day paternity leave with full
pay for the first four deliveries of the employee’s wife with whom
he is cohabiting.
Parental Leaves:
For solo parents, the parental leave is 7 days with full
pay if the parent has done 1 year of service. 6
 The Labor Code
Conditions of Employment

Other Leaves:
Other laws provide for leaves for employees.
Transfers of Maternity Leaves:
Mothers can transfer to the fathers 7 days of their 105
days of leaves if she so desires.
Leaves due to domestic violence:
In addition to other paid leaves the violence against
women allows for an additional 10 days of paid leaves.
Leaves due to gynecological disorders:
Women with a total employment service of 6 months
for the last 12 months have up to 2 months paid leaves
following surgery caused by gynecological disorders.7
 The Labor Code
Conditions of Employment

Holidays:
The Labor Code provided for two kinds of holidays
and these are Regular and Special Holidays.
The list of holidays for 2021 as provided by Proc. 986
Regular Holidays Special Non-Working Days
New Year’s Day Araw ng Kagitingan Chinese New Year EDSA People’s Power Day

Maundy Thursday Good Friday Black Saturday Ninoy Aquino Day

Labor Day Independence Day All Saint’s Day Feast of the Immaculate
Conception of Mary
National Heroes Day Bonifacio Day
All Soul’s Day Last day of the year
Christmas Day Rizal Day
Other special non-working holidays may be declared.

Eidul Fitr and Eidul Adha are also listed as regular

holidays
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 The Labor Code
Conditions of Employment

Workplace Safety and Facilities:

Employees are guaranteed by law humane and safe
working areas. The law requires that employers:
1. Furnish its worker a place of employment free from
hazardous conditions that are causing or likely to cause
death, illness or physical harm to the workers;
2. Give complete job safety instructions to all workers including
familiarization with their work environment, hazards to which
the workers are exposed to and the steps taken in case of
emergency;
3. Comply with the requirements of Occupational Safety and
Health Standards; and
4. Use only approved devices and equipment in the workplace.
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 The Labor Code
Conditions of Employment

Workplace Safety and Facilities:

Medical Services:
Health and safety requires that the employers must provide the
appropriate medical services to their employees which includes:
1. Medical checks on employees to determine if they are fit for
duty, prior to and annually during the employment of the
employee. This shall be free of charge.

2. Medical personnel and facilities available to monitor the well

being of the employees and if such employees are injured or
become sick may avail of initial medical attention. These
may take the form of first aid kits, a clinic, trained first aiders,
nurses or doctors, depending on their size.
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 The Labor Code
Conditions of Employment

Other Social Welfare Benefits of Employees:

• Employers are required to register their employees
to the following programs:
1. The Social Security Service
2. Pag-IBIG
3. Philhealth

• Employers are also required to provide for the

retirement of their employees who have served at
least 5 years by paying them a retirement pay of ½
month for every year of service with the employer.
The optional retirement age is 60 but upon reaching
65, retirement is mandatory.
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The Labor Code
Wages and Compensation
 The Labor Code
Wages and Compensation

Wages:
Wages is defined as a payment usually of money for
labor or services usually according to contract and on
an hourly, daily, or piecework basis (Merriam-Webster)

Wages may be referred to as salaries, stipends,

allowances or something similar, but the principles of
wages under the labor code applies just the same.

The law mandates a minimum wage for every 8 hours

of work of an employee. This is determined by the
Regional Tripartite Wage and Productivity Board.
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 The Labor Code
Wages and Compensation

Wages:
Wages is defined as a payment usually of money for
labor or services usually according to contract and on
an hourly, daily, or piecework basis (Merriam-Webster)

Wages may be referred to as salaries, stipends,

allowances or something similar, but the principles of
wages under the labor code applies just the same.

The law mandates a minimum wage for every 8 hours

of work of an employee. This is determined by the
Regional Tripartite Wage and Productivity Board. (Art. 99)
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 The Labor Code
Wages and Compensation

Wages:
Some important rules on wages:
• Wages should be paid in legal tender and cannot be
paid using coupons, chits, tokens or similar forms.
• If paid in checks or money order, the employee must
be allowed to be able to encash the same and it
would be considered hours worked. (Art. 102, Labor Code)

• Wages must be paid at least twice a month at intervals

not exceeding 16 days. But in no case can wages be
paid less frequently than once a month. (Art. 103, Labor Code)
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 The Labor Code
Wages and Compensation

Wages:
• The employer is not allowed to eliminate or in any
way diminish supplements, or other benefits that are
already being enjoyed by employees. (Art. 100)

• If paid in checks or money order, the employee must

be allowed to be able to encash the same and it
would be considered hours worked. (Art. 102, Labor Code)

• Wages must be paid at least twice a month at intervals

not exceeding 16 days. But in no case can wages be
paid less frequently than once a month. (Art. 103, Labor Code)
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 The Labor Code
Wages and Compensation

Wages:
• The place of payment must be made as much as
possible at or near the place of the workplace. The
exception is if it would not be safe. (Art. 104, Labor Code)

• The payment of wages must be made directly to the

employee to whom the wages are due. (Art. 105, Labor Code)

• The basic wage is paid to employees for work done by

the employee for the 8 hours of work a day. “No work,
no pay” rule applies unless there are leave benefits.
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 The Labor Code
Wages and Compensation

Overtime pay and how to compute it:

An employee may be required by the employer to
work in excess of the 8 hours per day or to work
during a rest day or holiday, but the employer must
pay the employee the appropriate overtime pay.
The amount of overtime pay that an employee would
receive would depend on the circumstances present at
the time the overtime work was rendered.
But the base of each computation is on the daily rate or
the Monthly pay divided by 30 (if rest days are paid) or
24 if the rest days are not paid.
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 The Labor Code
Wages and Compensation

Overtime pay and how to compute it:

Circumstances Regular Day Special Holiday* Regular Holiday*

Did not work

NO WORK NO PAY NO WORK NO PAY Daily Rate

Did work
Daily Rate Daily Rate x 1.3 Daily Rate x 2

Did overtime work Daily Rate + (1.25 x Hourly (Daily Rate + (1.3 x Hourly ((Daily Rate + (1.3 x Hourly
Rate of Overtime) Rate of Overtime)) x 1.3 Rate of Overtime)) x 2
Worked on a rest day
Daily Rate x 1.3 Daily Rate x 1.5 (Daily Rate x 1.3) x 2

Overtime on a rest day (Daily Rate + (1.3 of Hourly (Daily Rate + (1.5 x Hourly ((Daily Rate x 1.3)+(1.5 x
Rate of Overtime)) x 1.3 Rate of Overtime) x 1.5 Hourly Rate of Overtime)) x 2

*Employees are entitled to the Holiday Pay only if they were not absent, or if
they were absent they were on paid leave, on the day prior to the holiday.
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 The Labor Code
Wages and Compensation

Other rules on hours of work:

• Night Shift Differential: There is a 10% premium for
work of an employee that would be done between
10 p.m. and 6 a.m. Note that this may stack on
whatever overtime pay there is. (Art. 86, Labor Code)
Overtime

Undertime • Overtime work of an employee cannot be offset with

any undertime an employee incurs. (Art. 88, Labor Code)
• An employee cannot be required by the employer to
render overtime unless authorized by law (Art. 89, Labor Code)
however, one must note that it may be considered in
the performance evaluation of the employee.
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 The Labor Code
Wages and Compensation

The 13th Month Pay:

• Presidential Decree No. 851 requires employers to
pay its rank-and-file employees who have rendered
at least 1 month of work during the calendar year.

• While often referred to as the Christmas bonus, the

13th month pay does not necessarily have to be paid
on December, so long as it is paid.

• The 13th month pay is computed by dividing the basic

pay received by the employee during the year by 12.

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 End of Module 4

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