Minimum requirements for an employment contract

Compensation

An employees’ total compensation consists of the following items:

• A salary that is at least the minimum wage of the region where the employee is employed
• Holiday wage and overtime pay for work during holidays or rest days
• Overtime pay when working more than 8 hours in a day
• Night differential pay for work outside of working hours
• Service Incentive Leave: 5 days of vacation per year of service
• Parental leaves (Maternity, Paternity and Solo parent leaves)
• Other Leaves
• 13th month salary

Computing 13th month pay

A 13th-month salary is calculated from the total compensation the employee has received in the previous 12 months, meaning it includes both the base salary and the additional compensation such as overtime pay.

Typically, the 13th-month salary is paid either in November or December.

Mandatory benefits and contributions

• Companies are mandated by the Labor Code to give their regular employees a 13th month pay equivalent to one month of their annual salary
• Service incentive leave of at least 5 days with pay for every year of service
• Employees have a right to a weekly rest period of not less than 24 consecutive hours after every 6 consecutive normal work days
• Withholding a portion of an employee’s monthly salary to remit as contributions to government agencies is a requisite for employers, these agencies are as follows:
  • Social Security System (SSS)
  • Home Development Mutual Fund (HDMF)
  • Philhealth