8/3/2019 Compen Report Rimel Evaristo http://slidepdf.com/reader/full/compen-report-rimel-evaristo 1/42 Compensation and Legislation in the Philippines Rimel D. Evaristo MS in Psychology major in I/O Psychology Prof. Maria Carla Mole-Ong Academic Year 2010-2011 Term 1
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
What is the present Minimum Wage Fixing System in the country
today?
Since 1989, minimum wage fixing is done on a regional basis. Previously,it was done at the national level through acts of Congress (RA) or byPresidential Decrees (PD) or Executive Orders (EO).
The Regional Boards, located in each of the 16 regions of the country, arethe wage setting bodies established by virtue of Republic Act RA 6727 ,also known as the Wage Rationalization Act issued on 01 July 1989.These Boards set minimum wages for workers in the private sector.
Law composition and implementing bodies and other organizations
related to employee pay and benefits
• The Philippine Congress thru the passage of Republic Act• The Office of the President thru the issuance of EO’s and PD’s • The Department of Labor and Employment
which stands as the national government agency mandated to
formulate policies, implement programs and services, and serveas the policy-coordinating arm of the Executive Branch in the fieldof labor and employment (labor law implementation, guidelines onthe computation of pay rates during special and regular holidays,overtime payrates, etc.)
• The Trade Union Congress of the Philippines (TUCP) - the biggest
confederation of labor federations in the Philippines with members inall sectors and industries (from agriculture to manufacturing toservices) that includes both private and government employees.
• The National Wages and Productivity Commission - mandated to setminimum wage rates and promote productivity at the national,regional and enterprise level
• The Regional Tripartite Wages and Productivity Board - mandated toperiodically assess wage rates and conduct continuing studies in thedetermination of the minimum wage applicable in the region or
industry• National Labor Relations Commission (NLRC) - a commission
organized by the Philippine government to resolve, investigate andsettle disputes between employees and employers
• Bureau of Labor Relations - one of its mandate is to formulateregulatory and developmental policies, standards, guidelines and
programs promoting the right to organize, including collectivebargaining and improvement of the income of workers and theirorganizations
• Bureau of Labor and Employment Statistics - a premier statisticalorganization respected for its integrity and quality products andservices on labor and employment statistics
• Bureau of Working Conditions - a staff bureau of the Department ofLabor and Employment (DOLE) primarily performing policy andprogram development and advisory functions for the Department in
the administration and enforcement of laws relating to workingconditions
• Employees Compensation Commission - mandated by law toprovide meaningful and appropriate compensation to workers
Title I – Working Conditions and Rest PeriodChapter I - Hours of WorkChapter II - Weekly Rest Day PeriodChapter III - Holidays, Service Incentive Leaves and Service Charges
Title II - WagesChapter I - Preliminary Matters
Chapter II - Minimum Wage RatesChapter III - Payment of WagesChapter IV - Prohibitions Regarding WagesChapter V - Wage Studies, Wage Agreements and Wage DeterminationChapter VI - Administration and Enforcement
Title III - Working Conditions for Special Groups of Employees
Chapter I - Employment of WomenChapter II - Employment of MinorsChapter III - Employment of HousehelpersChapter IV - Employment of Homeworkers
Book IV - Health, Safety and Social Welfare Benefits
Title I - Medical, Dental and Occupational SafetyChapter I - Medical and Dental ServicesChapter II - Occupational Health and Safety
Title II - Employees’ Compensation and State Insurance Fund Chapter I - Policy and DefinitionsChapter II - Coverage and Liability
Chapter III - AdministrationChapter IV - ContributionsChapter V - Medical BenefitsChapter VI - Disability BenefitsChapter VII - Death BenefitsChapter VIII - Provisions Common to Income Benefits
Chapter IX - Records, Reports and Penal ProvisionsTitle III - MedicareTitle IV - Adult Education
Title VII - Policy and DefinitionsTitle VII A - Grievance Machinery and Voluntary ArbitrationTitle VIII - Strikes and Lockouts and Foreign Involvement in Trade UnionActivities
Chapter I - Strikes and LockoutsChapter II - Assistance to Labor Relations
Chapter III - Foreign Activities Chapter IV - Penalties for Violation
What are the criteria for Minimum Wage Fixing adopted by the boards?
There are 10 criteria for minimum wage fixing under RA 6727 and oneunder the Rules of Procedures for Minimum Wage Fixing, categorized intofour major groups, namely:
1. Needs of workers and their families
• demand for living wage• wage adjustment vis-à-vis CPI • cost of living and changes therein• needs of workers and their families, and• improvements in standards of living
2. Capacity to pay of employers/industry• fair return on capital invested and to pay of employers, and• productivity
Can the Regional Boards issue a Wage Order even without a petition
for wage increase?
Yes, even in the absence of a filed petition for wage increase, RegionalBoards can, motu proprio , initiate action or inquiry on whether a wageorder should be issued.
A public hearing is required before the Boards can issue a wage order.
Records show that the Boards issued a total of 133 Wage Orders since1990. Of this number, 62% (83) was issued by its own volition , while 38%(50) was issued by virtue of a petition for wage increase.
Can the Regional Boards grant Across-the-Board wage increases?
The wage-setting function of the Regional Boards is confined to minimumwages.
While across-the-board (ATB) wage increases have been granted in thepast, current policy discourages the Boards from granting ATB
adjustments as they create more distortions in the labor market which inturn affect adversely the incomes and standard of living of workers andthier families. Specifically:
• ATB wage increases have greater impact on inflation• ATB wage increases are disincentives to trade unionism
• ATB increases are not consistent with minimum wage fixingmandate of the Boards
How is the estimated equivalent monthly rate (EEMR) of the monthly-
paid and daily-paid employees computed?
Under the Labor Code, private sector workers should receive theapplicable minimum wages not lower than those prescribed by theRegional Boards under existing wage orders. At present, the prescribedminimum wages are for normal working hours, which shall not exceed
eight hours per day.
Two pay classifications of employees:1. Monthly paid2. Daily paid
The factor 365 days in a year is used in determining the equivalentannual salary of monthly-paid employees. To compute their EEMR,the procedure is as follows:
EEMR = Applicable Daily Rate x 365 days
12
Where 365 days = 298 days - Ordinary working days52 days - Sundays/Rest days12 days - Regular Holidays3 days - Special days
The following formula may be used in computing the EMR of differentgroups of daily-paid employees for purposes of entitlement tominimum wages and allied benefits under existing laws:
1. For those who are required to work everyday including Sundays
or rest days, special days and regular holidays.
EEMR = Applicable Daily Rate x 393.5 days12
Where 393.5 days = 298.0 days - Ordinary working days
24.0 days - 12 Regular holidays x 200%67.6 days - 52 rest days x 130%
How long does it take the boards to issue a wage order?
In general, the Boards can issue a wage order within 90 days, given theprocedural requirements under the Rules of Procedures for MinimumWage Fixing. The Boards are specifically required to issue a wage orderwithin 30 days from date of the last public hearing. Thereafter, a WageOrder becomes effective 15 days after it has been published in a
newspaper of general circulation in the area of jurisdiction.
In general, the Boards can issue a Wage Order only once in a given year.
Within the 12-month period from effectivity of the wage order, no petitionfor wage increase may be entertained, except when there is asupervening condition, such as an extraordinary increase in prices of
petroleum products and basic goods and services.
The existence of supervening condition is to be determined by the Boardsand confirmed by the NWPC.
Should disputes arise as a result of wage distortion, RA 6727 provides forcorrecting the distortions as follows:
• In organized firms, the employer and the union shall negotiateto correct the distortion using the grievance procedures in the
CBA or, if the dispute remains unresolved, through voluntaryarbitration.
• In unorganized firms, the employers and workers endeavorto correct the distortion. Any dispute is settled byconciliation through the National Conciliation and Mediation
Board, or if it remains unresolved, by compulsory arbitrationthrough the National Labor Relations Commission.
This provision for correcting wage distortions is also stipulated in all WageOrders being issued by the Regional Boards.
Who are covered by wage orders issued by the boards?
Wage Orders issued by the Boards cover only private sector workers,except for household helpers and persons in the personal employ ofanother, including family drivers.
What are the criteria and requirements to qualify for exemption?
Sections 3 and 4 of the Rules on Exemption list down the specific criteriaand requirements to qualify for exemption, namely:
Distressed Establishments
1. For Stock Corporations/Cooperatives
• registers a deficit of 20% or more of the paid up capital asof last accounting period and interim period immediatelypreceding the effectivity of the Wage Order.
• registers capital deficiency/negative stockholders' equity
as of the last full accounting period or interim periodimmediately preceding the effectivity of the Wage Order.
2. For Single Proprietorships/Partnerships/Non-stock,Non-profit
Organization
• registers a deficit of 20% or more of the total investedcapital as of the 2 accounting periods and interim periodimmediately preceding the effectivity of the Wage Order.
• registers capital deficiency/negative net worth as of the last
full accounting period or interim period immediately precedingthe effectivity of the Wage Order
3. For Banks and Quasi-banks
• under receivership/liquidation certified by the Bangko Sentral
ng Pilipinas• under controllership/conservatorship
• NBEs established outside the NCR and outside Export Zoneswithin 2 years from the effectivity of the Wage Order, classified asagricultural establishments or establishments with total assets of 5Mand below.
Retail/Service Establishments Regularly Employing Not More Than TenEmployees
• engaged in the retail sale of goods/services to end users, and• employing not more than ten workers
In the case of contracts for construction projects and for security, janitorialand similar services, the increase prescribed in this Order shall be borneby the principals or clients of the construction/service contractors and thecontract shall be deemed amended accordingly.
Liability
In the event, however, that the principals or clients fail to pay theprescribed wage rates, the construction/service contractor shall be jointlyand severally liable with his principal or client.
The share of covered workers and employees in the increase in tuitionfees for School Year 2010-2011 shall be considered as compliance withthe wage increase.
Shortfall
Private educational institutions which have not increased their tuition feesfor School Year 2010-2011 may defer compliance with the minimum wageprescribed herein until the beginning of School Year 2011-2012.
All workers paid by result, including those who are paid on piecework,“takay”, “pakyaw” or task basis, shall be entitled to receive the prescribed
Minimum Wage per eight (8) hours work a day, or a proportion thereof forworking less than eight (8) hours.
Wages of special groups of workers
Wages of apprentices and learners shall in no case be less than seventy-five percent (75%) of the applicable minimum wage rates prescribed inthis Order.
Wages of handicapped workers
All qualified handicapped workers shall receive the full amount of theminimum wage rate prescribed herein pursuant to Republic Act No. 7277,otherwise known as the Magna Carta for Disabled Persons.