Employment Laws in the Philippines: A Guide for Employers

Philippine employment laws serve as the foundation for fair and just employment practices within the country, designed to balance the needs and rights of workers and employers alike. These laws define the legal standards for employment, including wages, working conditions, hours, and benefits, ensuring that workers are treated with dignity and respect while providing employers with a framework for legal compliance and dispute resolution.

Employment Laws: The Labor Code of the Philippines 

In the Philippines, many laws govern employment practices. What can be considered as the backbone, however, is the Presidential Decree No. 442 also known as the Labor Code of the Philippines. It was enacted in 1974 and has long undergone various changes to accommodate the evolving landscape of employment. 

The Labor Code of the Philippines is a legal code that establishes labour practices and employment standards within the country. It details the provisions for the recruitment and placement of workers, working conditions, benefits, and penalties for unmet labour requirements.

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Below are some of the key provisions in the Labor Code:

Recruitment and Placement

Only Filipino citizens OR corporations, partnerships, or entities where Filipino citizens own and control at least 75% of the authorised and voting capital stock are allowed to partake in recruitment and placement activities locally or abroad. 

If an organisation wishes to bring in foreign workers, they must first obtain an employment permit from the Department of Labor and Employment (DOLE). Learn more about work permits in the Philippines here. 

Conditions of Employment

The conditions of employment cover many aspects of being employed in the country. Below are some of the key provisions: 

Working Hours: Employees typically work 8 hours per day, 5 days per week. Clinical personnel may be required to work 6 hours per week or 48 hours per week under certain conditions. In such cases, they must be compensated accordingly. Likewise, an employee may work beyond 8 hours daily provided that they are paid at an overtime rate. 

Meal Periods: Employers have to provide employees with at least 60 minutes of meal period (non-compensable). 

Rest Periods: Employers are required to give their employees at least 24 consecutive hours of rest after 6 consecutive working days. 

Paid Holidays: The country recognises several regular and special holidays where the employees need not report for work but still receive their regular daily pay. 

Wage/Salary: Philippine labour laws require employers to pay employees at least the minimum wage. Currently, for non-agricultural industry, it’s 610 PHP daily in Metro Manila. Other regions have different minimum wages. Note that working overtime, on the established rest day, and on approved paid holidays, warrant just compensation as dictated by the law (usually at a higher rate).

Service Incentive Leaves: An employee who has rendered a year of service in the company should receive at least 5 years of paid incentive leaves. 

Maternity Leave: In the past, pregnant employees who have rendered at least 6 months of service in the past 12 months shall be granted at least 2 weeks of paid maternity leave before giving birth and another 4 weeks after. The government has passed a separate law in 2019, extending the paid maternity leave to 105 days.

13th Month Pay: The employer is required by the Philippine employment laws to pay 13th month pay equivalent to 1 month of the employee’s salary (provided they have worked the full year). This must be paid on or before the 24th of December. 

Health and Safety

Employment laws in the Philippines, particularly the Labour Code, outline the provisions to ensure employee health and safety. The employer must ensure that their employees have access to emergency medical and dental services and that their working conditions adhere to the health and safety standards. 

The Labor Code also ensures that employees promptly receive benefits in work-related disability or death. 

Termination of Employment

A regular employee has security of tenure, which means he or she cannot be terminated without just cause. Under the employment laws, an employer can only terminate an employee for:

• Fraud or deliberate violation of trust by the employee towards the employer or the employer's authorised representative
• Gross or habitual neglect of duties
• Serious misconduct or intentional defiance by the employee of the employer's legal instructions related to work
• Committing a crime or offence against the employer, their immediate family, or authorised representatives  

In the case of retirement, the employee is entitled to receive his benefits he earned under the existing legislation. If there’s no retirement plan, the employee, upon reaching the age of 60 (or 65, which is the compulsory retirement age), shall receive ½ of their monthly salary per year of service provided that they have stayed in the company for at least 5 years.  Note that a fraction of at least 6 months is considered 1 year of service. 

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Additional Employment Laws in the Philippines

Besides The Labor Code, the following acts also govern employment in the Philippines:

Anti-Discrimination

Although The Labor Code already prohibits discrimination against women and people who make complaints about their wages, joined a registered union, or made testimony under the Code, there’s a separate act called the Anti-Age Discrimination in Employment Act or Republic Act 10911. 

This law: 

• Encourages the hiring of individuals based on their abilities, knowledge, skills, and qualifications instead of their age.
• Prohibits random age restrictions in employment.
• Supports the principle that all employees and workers should receive equal treatment in terms of salary, benefits, promotion, training, and other job opportunities, without regard to age.

Employment Laws on Compulsory Contributions and Benefits

The following acts have the provision for the compulsory contributions and benefits for employees:

• Republic Act 8282 - Also known as the Social Security Act of 1997, states that the social security contributions can provide unemployment, maternity, injury, sickness, and disability benefits to private employees. This also serves as the employee’s retirement plan. 
• Republic Act No. 9679 - Otherwise known as Home Development Mutual Fund Law which pertains to the PAG-IBIG Fund contributions and benefits. This gives employees access to low-interest housing loans and other investment opportunities. 
• Republic Act No 10606 - Also known as the National Health Insurance Act of 1995, the contributions ensure access to healthcare services for all employed persons and their dependents. 

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Note that under these employment laws, the employers also have to match their employee’s contributions (in some cases they have to pay more). 

Anti-Sexual Harassment Act of 1995

This law protects employees from sexual harassment in the workplace, setting guidelines for the prevention and resolution of such complaints.

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Under this act, the employer is obligated to prevent sexual harassment acts and to have a system in place for resolution, settlement, or prosecution of sexual harassment. 

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As violations to this law can lead to fines and imprisonment, the employer has the responsibility to vet their employees through necessary measures, including background checks. 

Telecommuting Act 

Also known as Republic Act No. 11165, this employment law recognises telecommuting as a legitimate work arrangement, prescribing guidelines to ensure fair treatment of telecommuting employees in terms of pay, benefits, and career development opportunities.

Data Privacy Act of 2012

The Philippine Data Privacy Act, officially known as Republic Act No. 10173, is a landmark legislation enacted in 2012 to protect individual personal data in information and communications systems in both the government and private sector. It establishes a comprehensive and strict privacy and security framework for the management of personal information, aligning with international standards on data protection.

As companies process employee information (eg. during background checks), it’s imperative that they are knowledgeable about this law. Learn more about the provisions of the Data Privacy Act here. 

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Due Diligence is a Crucial Part of Following the Philippine Employment Laws

The Philippines, with its comprehensive set of employment laws, mandates strict adherence to regulations related to hiring practices, wage standards, working conditions, labour relations, health and safety, and employee benefits. These employment laws are designed to protect workers from exploitation, ensure fair treatment in the workplace, and promote social justice.

Following job laws in the Philippines requires employers to perform their due diligence. Organisations must ensure that they interpret the provisions correctly and are abreast with the development. For this, having or consulting a team of legal experts is helpful. 

Vetting the individuals you wish to hire is also a part of following the laws. Conducting background checks, after all, helps streamline the process of getting the permit for foreign workers. Likewise, background screening helps reduce the risk of gross misconduct that may result in costly termination and re-hiring, or worse, court battles. 

Veremark can be your trusted partner for your background check needs. With no lock-in period, strong legal compliance, and 24/7 customer support, we can help you vet the candidates to streamline the hiring process and avoid running into legal problems. Learn more about our background checks here.