Philippines Employee Benefits: A Guide for US Employers

There are many reasons to hire employees in the Philippines. But doing so requires you to understand the Philippine labor code.

Following the code means staying compliant, which keeps you out of legal and financial trouble. It also helps you maintain a good relationship with your employees.

This article takes a deep dive into the statutory employee benefits of the Philippines. It’ll also look at some supplemental benefits you can offer to attract top talent.

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Who Should Receive Employee Benefits in the Philippines?

Employee benefits in the Philippines can vary depending on the industry, type of employment, size of the company and the salary of the employee.

For example, companies with less than 10 employees may be exempt from providing certain benefits. But generally, all full-time Filipino employees are entitled to certain statutory benefits.

As always, it’s best to consult an in-country compliance expert for up-to-date information for your industry.

🔍 Read on to discover:
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Types of Statutory Employee Benefits in the Philippines

Here are some of the most common statutory benefits in the Philippines.

Paid time off

Standard working hours in the Philippines are 8 hours per day. This includes short rest periods but excludes a lunch break, which must be a minimum of 60 minutes.¹

Employees who work longer than 8 hours per day are entitled to overtime pay. This is 25% extra on top of their regular hourly wage.

Employees may also work during the night. They’ll be entitled to a night shift differential of no less than 10% of their regular wage per hour. Night shifts are defined as working hours that fall between 10 pm and 6 am.

For every 6 days worked, Filipino employees are entitled to at least one consecutive 24-hour period of rest.

Employers can request employees to work on a rest day for eligible reasons, such as due to urgent situations or emergencies. But you’ll need to reimburse your employees as follows:

• Extra compensation of 30% of regular wages when an employee works on their scheduled rest day

• For industries or jobs where the nature of the work prevents scheduling of regular rest days, employees will automatically be entitled to 30% compensation for work performed on Sundays and during holidays

Employees who have worked for at least one year continuously are entitled to 5 days of paid time off. This is known as service incentive leave.

In terms of holidays, the Philippines distinguish between two different types of holidays. There are regular holidays and special (non-working) days.

Regular holidays can vary from year to year, but typically include:

• New Year’s Day (January 1)
• Maundy Thursday (March 28)
• Good Friday (March 29)
• Araw ng Kagitingan (April 9)
• Labor Day (May 1)
• Independence Day (June 12)
• National Heroes Day (August 26)
• Bonifacio Day (November 30)
• Christmas Day (December 25)
• Rizal Day (December 30)
• Election day (variable)
• Eid Al Fitr/Feast of Ramadan (subject to Islamic calendar)
• Eid Al Adha/Feast of Sacrifice (subject to Islamic calendar)²

Regular holidays are paid, except for retail and service establishments with less than 10 employees. If an employee needs to work during a regular holiday, they’ll be entitled to receive twice their regular wage.

Special (non-working) days can be set by the President, Congress or local government.

Special holidays include:

• Chinese New Year (February 10)
• Black Saturday (March 30)
• Ninoy Aquino Day (August 21)
• All Saints’ Day (November 1)
• All Souls’ Day (November 2)
• Feast of the Immaculate Conception of Mary (December 8)
• Christmas Eve (December 24)
• Last Day of the Year (December 31)

Special holidays are unpaid days off. But if an employee opts to work during a special holiday, they’ll receive 30% compensation on top of their regular wage. If a special holiday coincides with an employee’s scheduled rest day, and they end up working on this day, they’ll be entitled to 50% compensation.

Social Security System (SSS) contributions

In the Philippines, employers and employees need to pay into the Social Security System (SSS) and Employee’s Compensation (EC) programs.

These programs offer employees compensation and benefits including:

• Disability benefit
• Maternity leave benefit
• Funeral benefit
• Sickness benefit
• Pension
• Death benefit
• Unemployment benefit
• Workers’ compensation benefit

Employers need to pay a percentage equivalent of the employee’s salary in monthly contributions. Generally, the contribution rate is set at 14%. The employer contributes 9.5% while the employee contributes 4.5%. But this is expected to rise in 2025.³

All full-time Filipino employees under the age of 60 need to make SSS and EC contributions.⁴

For employees earning a monthly salary of 20,000 PHP or more, contributions to a provident retirement fund are required. This is known as the Workers’ Investment and Savings Program (WISP) which is managed by the SSS. This guarantees retirees additional savings.

Both employees and employers contribute to this fund. Employers have a higher contribution rate than employees.⁵

Let’s look at some of the main benefits offered by the SSS in more detail.

Sickness benefit

Service incentive leave of 5 days per year can be used either to cover sick days or vacation days. That means employers have no legal obligation to provide additional paid sick leave days.

Employees can claim up to 90% of their regular salary for up to 120 days per year through the SSS.⁶ To be eligible, employees need to have made at least three months worth of contributions within the previous 12 months.

This benefit kicks in once the employee has used up all other available paid sick days and has been sick for at least 4 days. The employer will pay the sick days but will be reimbursed by the SSS.

The sickness benefit can be paid for a maximum cumulative time of 240 days. If the sickness exceeds this limit, the disability benefit will kick in.

Disability benefit

In the event of a disability that prevents an employee from working, they’ll be granted a disability benefit from the SSS.⁷

To receive a monthly disability pension, employees need to have made a minimum of 36 monthly contributions. Otherwise, they’ll receive a lump sum disability benefit instead.

The minimum monthly disability pension is:

• 1,000 PHP for employees with less than 10 credited years of service
• Employees with between 10 and 19 credited years of service receive 1,200 PHP
• Employees with 20 or more years of credited service receive 2,400 PHP

Employees will also receive a supplemental monthly allowance of 1,000 PHP.

Maternity leave benefit

As long as an employee has made 3 months worth of SSS contributions within the previous 12 months, they’ll be entitled to maternity leave benefits.⁸

Mothers can receive up to 105 fully paid days of maternity leave. In the case of single mothers, they can receive up to 120 fully paid days of maternity leave.

In the event of miscarriages or early terminations of pregnancy, female employees will still be eligible for up to 60 days of paid leave.

Employers will be required to make these payments but will receive full reimbursement from the SSS.

Pension benefit

The SSS provides eligible employees with a pension. The pension can vary widely based on the number of years worked, industry and the number of contributions made.

The minimum monthly pension begins at 1,200 PHP and has a maximum limit of 2,400 PHP.⁹

Voluntary retirement begins at 60 while technical retirement is from age 65.

To receive the maximum pension, employees need to have made 120 monthly contributions or have 20 years of credited service.

13th month pay

All rank-and-file employees are entitled to 13th month pay if they’ve worked for more than one month continuously. Rank-and-file employees are those in non-managerial positions.

The full amount must be equal to at least one twelfth of the employee’s annual basic salary. For employees who have worked more than one month but less than one year, the bonus will be calculated on a prorata basis.

The 13th month pay must be paid by December 24, although some employees may opt to have it paid in biannual installments.¹⁰

Health insurance

Philhealth is responsible for the provision of health insurance in the Philippines.

Philhealth covers you for a range of treatments such as:

• Z benefits for certain severe illnesses, such as specific cancers
• SDG (Sustainable Development Goals) benefits for Malaria, HIV-AIDS and Rabies
• Inpatient benefits
• Outpatient benefits¹¹

Health insurance contributions are mandatory for both employees and employers.

The contribution rate for 2024 to 2025 is set at 5% and split equally between both employer and employee. The monthly premium is between 500 to 5,000 PHP depending on your employees’ salary and job classification.

Home development mutual fund (HDMF)

The Pag-IBIG Fund is responsible for providing affordable house financing to Filippinos. This can help your employees become homeowners.

Employers need to contribute 2% of employees’ monthly salary. Employees contribute between 1% to 2%. For employees earning less than 1,500 PHP per month, the contribution rate is 1%. For employees earning more than 1,500 PHP per month, the contribution rate is 2%.¹²

The maximum contribution limit is set to 5,000 PHP per month but is expected to increase during 2024 to 2025 to 10,000 PHP per month.¹³

Leave for victims of violence

Women are entitled to up to 10 days of paid leave per year in cases of violence against themselves or their children. This could include threats or physical, sexual or economic abuse.¹⁴

Leave for gynecological surgery

Under the Magna Carta of Women (MCW), female employees are entitled to 2 months of fully paid leave following gynecological surgery.

As long as they’ve worked for a minimum of 6 months, they’ll be entitled to this benefit.¹⁵

Additional Employee Benefits in Philippines You May Offer to Attract Talent

Offering the bare minimum won’t always attract top talent. You’ll need to consider supplemental benefits to secure loyal employees.

Here are some of the best supplemental benefits to offer your Filipino employees.

Additional paid time off

Most companies offer paid time off beyond the minimum service incentive leave. Typically, companies offer at least 15 days paid vacation and 15 days sick leave per year.

Extended parental leave

Offering extended maternity or paternity leave can help attract top talent.

The Philippine labor code excludes paternity leave as a statutory benefit. So you could gain employee loyalty by offering new fathers paid time off.

Mid-year bonus

Many companies offer an additional bonus equivalent to one month of salary in the middle of the year. This incentive can boost productivity and loyalty.

Private health insurance

Offering your employees a private health insurance plan can give you the edge. This can give them coverage for certain paramedical services, dental, vision or prescription drugs.

Personal Equity Retirement Account (PERA)

In addition to the pension offered through the SSS, you may want to offer your employees a Personal Equity Retirement Account (PERA). This is similar to a 401(k).

The account is a voluntary contribution scheme that includes both employee and employer contributions. Annual contributions have a much higher maximum limit and returns are tax-free.

Rice subsidies

Given that rice is a staple in the Filipino diet, some companies offer a quarterly subsidy that covers the cost of rice. This can protect workers against inflation.

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With no monthly fees, Wise Business could make managing your employee payments in the Philippines one step easier (and cheaper).

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Sources:

1. Conditions of Employment
2. Proclamation No. 368: Declaring the Regular Holidays and Special (Non-Working) Days for the Year 2024
3. Changes to Phl Statutory Contributions in 2024 - KPMG Philippines
4. Health, Safety and Social Welfare
5. SSS Monthly Contribution Table Guide in the Philippines | Digido
6. A daily cash allowance paid for the number of days a member is unable to work due to sickness or injury.
7. Disability Benefit
8. Maternity Benefit
9. Summary of SSS Benefits
10. REVISED GUIDELINES ON THE IMPLEMENTATION OF THE 13TH MONTH PAY LAW - CHAN ROBLES VIRTUAL LAW LIBRARY
11. 2024 to 2025
12. HDMF Circular No. 274 - Revised Guidelines on Pag-IBIG Fund Membership.pdf
13. Pag IBIG Increase Contribution 2024 - P200 Rise and Benefits! - NCBlpc
14. VAWC Leave - Labor Law PH
15. Magna Carta of Women (MCW) Special Leave or the Gynecological Leave for Women

All sources checked February 2024.