9 Employee Benefits in the Philippines: All You Need to Know

Employee benefits are no longer just about compliance—they're a key factor in building a competitive and appealing workplace in the Philippines. As businesses increasingly focus on creating supportive environments, benefits packages play a pivotal role in employee retention and satisfaction. HR managers and C-level executives must be well-versed in both the mandatory and supplementary benefits to not only comply with labor laws but also attract top talent. 

Understanding the intricacies of employee benefits can help businesses manage their workforce more effectively, enhance employee engagement, and strengthen the company’s reputation. Let’s dive into the key benefits every business in the Philippines should provide and how these benefits contribute to a motivated, loyal workforce.

Who is Entitled to Benefits in the Philippines?

In the Philippines, all regular employees—whether they work in the private or public sector—are entitled to certain legally mandated benefits. These benefits are designed to provide social security, health coverage, housing assistance, and financial support. Even probationary or contractual employees may qualify for some of these benefits after completing a specific tenure with the company.

Employers must ensure compliance with these requirements to avoid penalties and legal repercussions. Understanding who is eligible for which benefits ensures fair treatment and helps businesses maintain a compliant and productive workforce.

Overview of Mandatory Employee Benefits in the Philippines

The Philippine government mandates several key employee benefits that every company must provide. These benefits are designed to protect the welfare of workers and ensure they have access to healthcare, financial assistance, and housing. Below is a comprehensive overview of the statutory benefits that HR managers must incorporate into their company's policies.

1. Social Security System (SSS)

The Social Security System (SSS) is a social insurance program that provides financial protection to workers in case of retirement, disability, sickness, maternity, and death. Both the employer and the employee contribute to the fund, with the contribution rate set by the government based on the employee's monthly salary.

SSS also covers the minimum monthly pension that workers are entitled to receive upon retirement, disability, or death. Employers are required to ensure timely submission of monthly contributions and accurate reporting to avoid penalties.

For HR professionals, it’s important to ensure that the correct contributions are made on time, as failure to do so can result in penalties. Regular compliance with SSS benefits not only protects the company from legal action but also ensures that employees have a financial safety net for life's uncertainties. These can supplement government-mandated programs, ensuring employees have sufficient funds for their post-employment years.

2. PhilHealth (National Health Insurance)

PhilHealth, the national health insurance program, aims to provide affordable healthcare to all Filipino workers. Employers are required to contribute a portion of their employee’s monthly salary to PhilHealth, which in turn helps employees cover medical costs. This program is administered by the Philippine Health Insurance Corporation, ensuring that employees have access to a wide range of health services.

PhilHealth coverage includes inpatient and outpatient care, catastrophic coverage, and the Z Benefits package, which addresses costly medical conditions. Additionally, it supports preventive health services, maternal and child health services, and provides financial assistance for major surgeries and treatments. Employers and HR managers must ensure that all contributions are accurate and timely, as this not only fulfills legal obligations but also enhances employee satisfaction and well-being.

PhilHealth benefits include hospitalization, consultations, and certain medical procedures, which can significantly reduce the financial burden on employees. HR managers must ensure employees are properly enrolled and contributions are up-to-date, as health benefits are often among the most valued by employees.

3. Home Development Mutual Fund (HDMF) / Pag-IBIG Fund

The Home Development Mutual Fund, more commonly known as the Pag-IBIG Fund, supports employees in saving for housing needs. Contributions to the Pag-IBIG Fund are mandatory for all workers earning above a certain threshold, and both employers and employees are required to contribute.

The fund allows employees to avail of affordable housing loans, helping them to purchase homes or finance housing projects. HR teams should help employees understand the benefits of Pag-IBIG and assist them in accessing this valuable resource for homeownership.

4. 13th-Month Pay

The 13th-month pay is a legally mandated bonus given to employees before the end of each calendar year. It is equivalent to one-twelfth of an employee's annual salary and must be paid no later than December 24 each year. For many Filipino employees, this extra month of pay is a critical financial boost, especially during the holiday season. Employers must ensure timely distribution of the 13th-month pay, as delays or underpayment can lead to disputes and penalties.

5. Leaves and Vacation

Employees are entitled to various types of leaves, including vacation leaves, sick leaves, and special leaves like maternity or paternity leave. Under the Philippine Labor Code, female employees are entitled to at least 105 days of paid maternity leave, while male employees are entitled to 7 days of paternity leave.

Additionally, companies may offer other leave benefits, such as bereavement leave or additional vacation days, to boost employee morale. Proper leave management ensures compliance and prevents burnout, which can lead to increased productivity.

6. Working Hours and Holidays

In the Philippines, the standard workweek consists of 8-hour days, 5 days a week, totaling 40 hours. Employees who work beyond these hours are entitled to overtime pay. Additionally, employees are entitled to holiday pay for public holidays, and those who work during holidays should be compensated accordingly. HR managers need to track working hours accurately to ensure compliance with labor laws and avoid penalties related to unpaid overtime or incorrect holiday pay.

7. Private Health Insurance

While PhilHealth provides basic health coverage, many companies in the Philippines offer private health insurance as an additional benefit. Private health insurance provides broader coverage, including specialist consultations, dental care, mental health support, and higher hospitalization limits.

8. Service Incentive Leave

Service Incentive Leave (SIL) is a legally mandated benefit under the Philippine Labor Code that grants eligible employees at least five (5) days of paid leave per year. This benefit is designed to provide employees with flexibility for rest, personal matters, or emergency situations.

9. Additional Benefits

While the benefits mentioned above are mandatory, many companies offer supplementary benefits to enhance their employee value proposition. These benefits include health and wellness programs, performance-based bonuses, and flexible working arrangements. In a competitive job market, these supplementary benefits are often the deciding factor for top talent when choosing an employer.

In conclusion, providing a robust employee benefits package is essential for compliance, employee satisfaction, and overall company success. In the Philippines, both mandatory and supplementary benefits play a critical role in retaining employees, improving productivity, and building a positive company culture. By understanding and implementing these benefits, HR managers and business leaders can ensure they are creating a supportive and attractive work environment.

Why Employee Benefits in the Philippines Are Important?

Employee benefits in the Philippines play a crucial role in shaping a positive work environment, ensuring compliance with labor laws, and enhancing employee satisfaction. Offering competitive benefits not only helps attract and retain top talent but also boosts productivity, motivation, and overall workplace morale. Below are the key reasons why employee benefits are essential:

1. Improves Employee Retention

Providing comprehensive employee benefits significantly reduces turnover rates. Employees are more likely to stay with a company that offers health insurance, retirement plans, and additional perks. Retaining skilled employees reduces recruitment costs and ensures workforce stability.

2. Increases Productivity and Engagement

When employees feel secure in their jobs and receive adequate benefits, they are more engaged and motivated. Access to healthcare, paid leaves, and financial assistance programs helps employees focus on their work without worrying about personal financial or health concerns.

3. Ensures Compliance with Labor Laws

Employers in the Philippines are required by law to provide mandatory benefits such as SSS, PhilHealth, Pag-IBIG, and 13th-month pay. Compliance with these regulations helps businesses avoid legal penalties and fosters a fair and ethical work environment.

4. Enhances Company Reputation and Employer Branding

Companies that offer competitive employee benefits are more attractive to job seekers. A strong benefits package improves employer branding, positioning the company as an ideal workplace. This helps attract top talent and build a positive reputation in the industry.

Offer Employee Benefits through Earned Wage Access (EWA) Program

Beyond traditional benefits, modern employers are now adopting Earned Wage Access (EWA) schemes to further support their workforce. It allows your employees to access a portion of their earned wages before payday, giving them financial flexibility. 

As the leading Earned Wage Access service provider, Paywatch provides EWA Solution for a business willing to run a flexible payroll strategy. Our service is a reliable and secure platform that seamlessly integrates with the company's payroll system to offer EWA services to employees, ensuring compliance and efficiency in the process.

Ready to take your employee benefits to the next level? Get in touch with us today and discover how Paywatch can transform financial well-being in your workplace!