The Philippines is well resourced in timber, gold, copper, nickel, cobalt, petroleum, silver, and salt. 41 percent of its land is for agricultural use and 26 percent is forested. The islands are continually battered by tsunamis, cyclones, volcanoes, landslides, and earthquakes. Politically, the Philippines have faced a number of administrative coups and corruption allegations, as well as terrorist threats from Maoist-inspired groups, ISIS-Philippines terrorists, the Moro groups, and “tension with China over disputed territorial and maritime claims in the South China Sea.”. The country has seen a growth in GDP per capita from an estimated $7900 in 2016 to $8300 in 2017. Services are the biggest economic sector in the Philippines with about 60 percent GDP share, followed by industry at 30 percent and agriculture at 10 percent. In 2017 Philippines came in third, after China and Vietnam, in regional economic growth. However, it dropped 0.2 points from 2016’s 6.9 percent growth rate. Exports increased, and it was able to pass its first tax reforms in 2017, which are estimated to generate an added $1.53 billion.
According to the Labor Code of the Philippines, employees hired to perform activities that are usually necessary or desirable for the employer's usual business are considered to be regular or permanent employees. If an employee has worked for more than one year with the same employer and in the same role, whether continuously or intermittently, they are considered to be a regular employee. If an employee is hired for probation and continues to work after probation, they become a regular employee.
The employer must not terminate the services of a regular employee unless it is for just cause.
The Labor Code of the Philippines contains no provisions on written contracts. It is not necessary to have a written employment contract to prove that a person is an employee.
The Labor Code requires that private employment companies submit to the Labor Bureau employment contracts for evaluation and approval. These contracts must not provide employment terms that are less favorable than the standards provided by the law. These agreements must include information on wages, termination requirements, and other benefits.
Employment contracts can include restrictive covenants such as non-compete and non-solicitation clauses; however, they must not be excessive or oppressive, and must not unreasonably restrict trade.
In the Philippines, temporary employment may take the form of casual or seasonal work, depending on the nature of the job.
Employees can also use temporary staffing agencies to hire temporary workers for specific projects. In this case, two contracts are concluded: one between the employee and the agency and another between the client (employer) and the agency. The agency takes an administrative fee of not less than 10% of the total contract price for providing temporary employees to the employer. All temporary employees are entitled to security of tenure and all the rights and privileges as provided in the Labor Code. The contractor and the user employer are jointly responsible for the temporary employees' rights.
Employers may require the agency to furnish a bond equal to the cost of labor under contract, on the condition that the bond will answer for the wages due the employees should the agency fail to pay the same.
Probationary contracts must not exceed 6 months in duration from the date the employee starts work (unless they are covered by an apprenticeship agreement stipulating a longer period).
The labor law of the Philippines states that regular hours of work must not exceed 8 per day.
A Compressed Work Week Scheme (CWW) is an arrangement that permits regular work hours to exceed 8 hours but allows a decrease in the number of workdays to less than 6.
Employees under 15 years of age must not be allowed to work for more than 20 hours a week or 4 hours a day. Employees between 15 and 18 years of age are permitted to work for 8 hours a day or 40 hours a week.
The Labor Code establishes the right of an employee who has worked at least 12 months for the same employer to 5 days of paid annual leave known as "Service Incentive Leave." The 12 months do not need to be consecutive. An employee's entire service for the same employer, regardless of the number of contracts, including any holidays or authorized absences, counts towards eligibility.
Employees who are employed by the State, managerial, field personnel, domestic workers, or those working without supervision are not entitled to Service Incentive Leave. Employers who employ fewer than 10 employees are exempt from granting Service Incentive Leave. Nothing prohibits an employer from offering more generous paid annual leave to its employees.
If the employee does not use all of the Service Incentive Leave by the end of the year, the employer must pay compensation for the unused leave.
The Philippines' Labor Code does not contain any provisions on sick leave. It only provides 5 days of paid leave to employees with at least 1 year of service.
An employee who has paid at least 3 monthly Social Security System (SSS) contributions in the 12-month period immediately preceding the trimester of sickness or injury and who is confined for more than 3 days in a hospital or elsewhere with the approval of the SSS is paid a daily sickness benefit equivalent to 90% of their average daily salary by their employer for each day of confinement. However, this allowance will only start being paid after fully paid sick leave from the employer has been exhausted. This benefit is paid for a maximum of 120 days in a year and 240 days in total for any given period of confinement. Employees must inform their employers of their confinement within 5 days of its commencement. The daily benefits paid by employers are fully reimbursed to them by the Social Security System.
A female employee who has performed continuous aggregate service of at least 6 months within the last 12 months is entitled to a special leave benefit of 2 months with full pay based on her gross monthly compensation. This leave is to be used following surgery caused by gynecological disorders.
Maternity leave is addressed through the Social Security System (SSS). Paid leave lasts 105 days. If the mother is a single parent, she is eligible for 120 days of paid maternity leave. Women can avail themselves of an additional leave of 30 days without pay if they provide at least 45 days’ notice to the employer. Maternity leave must begin at least two weeks before childbirth. Paid leave of 60 days is provided in case of miscarriage and emergency termination of pregnancy. 100% of the salary is paid during maternity leave.
Maternity leave with pay is also provided if the childbirth or miscarriage occurs not more than 15 days after employment termination.
The labor laws of the Philippines provide 7 days of paid paternity leave to all married male employees working in the private sector (regardless of employment status) at the birth of their partner's child.
The leave is granted for the first 4 deliveries of the legitimate spouse with whom the male employee is cohabiting. This leave is also granted in case of miscarriage.
In addition to this leave, a female employee can allocate up to 7 days of paid leave from her maternity leave to the child's father, whether or not they are married.
According to the Philippines' Labor Code, notice periods vary according to the substantive reason for the dismissal. An employee can only be lawfully dismissed if both the substantive and the procedural requirements for dismissal are met. The dismissal must not only be for a just or authorized cause (or be related to the employee's ill health or failure to pass the probationary period as provided for by law), but the rudimentary requirements of due process must also be observed.
In case of dismissal due to redundancy, retrenchment to prevent losses, or the closing/cessation of operation of the establishment, a written notice must be given to employees at least 1 month in advance.
An employee can terminate the employee-employer relationship without just cause by serving a written notice on the employer at least one month in advance.
If an employment relationship is terminated by the completion of a project (or a phase of that project), no prior notice is required.
Employees are entitled to severance pay as follows:
Termination due to installation of labor-saving devices or redundancy – at least one month's salary for every year of service
Termination due to retrenchment – at least 1/2 month's salary for every year of service
Termination due to closure or cessation of operations not due to business losses or financial reverses – at least 1/2 month's salary for every year of service
Termination due to disease – at least 1/2 month's salary for every year of service
Termination due to just causes – no severance benefits
The minimum severance pay is 1 month's salary.
