By Ashutosh Agarwal, Manager, Global Benefits, GoGlobal
Recent reports show the Philippines gross domestic product (GDP) grew by 5.6% in 2023, making it the fastest-growing economy in Southeast Asia. This rapid growth is also accompanied by an expected rise in foreign direct investments (FDI), with major pledges announced by the US and Germany.
Unemployment is also at a record low, creating fierce competition for talent. This hurdle is particularly challenging for international companies entering or expanding in the market. In this landscape, offering attractive, compliant benefits is critical. In this blog post, we look at the statutory benefits that employers in the Philippines must provide.
Social Security System (SSS)
The country’s Social Security System (SSS) serves as the backbone of the Philippines’ social insurance programs. It provides financial protection against life events that can disrupt an employee’s income, such as illness, disability, maternity and retirement.
- Social Security (SS): Employers and employees contribute a combined total of 14% of the employee’s monthly salary credit (MSC). The employer covers 9.5% while the employee contributes 4.5%. The contribution is capped at an MSC of PHP 20,000. This offers financial support for employees in times of need.
- Employees’ Compensation (EC): In addition to SS contributions, employers also contribute towards employees’ compensation. This program provides financial assistance in cases of work-related injuries or illnesses. Contributions range from PHP 10 to PHP 30, depending on the employee’s salary.
- Worker’s Savings and Investment Program (WISP): Formerly known as the Mandatory Provident Fund, the WISP program encourages long-term savings and investment for employees. Employers and employees contribute a total of 14% of the employee’s MSC, capped at PHP 10,000. The employer covers 9.5%, while the employee contributes 4.5%.
These contributions are essential for ensuring that employees have financial support during times of need. Employers must deliver timely and accurate reporting and remittance of these contributions to remain compliant with Philippine laws.
Philippine Health Insurance Corporation (PhilHealth)
PhilHealth is the government-run national health insurance program that aims to deliver affordable and accessible healthcare services to all Filipinos.
Employers and employees each contribute 2.5% of the employee’s monthly salary credit (up to PHP 100,000). This program grants employees and their dependents access to a range of medical services. These include inpatient and outpatient care, surgeries, and emergency services.
PhilHealth’s coverage extends to maternity benefits, including essential prenatal and postnatal care, delivery services and newborn care. This is a significant benefit that can help ease the financial burden of maternity care on employees.
Incremental increases in PhilHealth contributions were announced recently. Companies must be prepared for these adjustments to maintain compliance and avoid penalties.
Home Development Mutual Fund (Pag-IBIG Fund)
The Pag-IBIG Fund is a national savings program that primarily provides affordable housing loan opportunities to its members. Both employers and employees contribute 2% of the employee’s MSC, up to PHP 10,000. This contribution helps employees access affordable housing loans, contributing to their long-term financial stability.
For expatriates or employees working for foreign-based employers, proper categorization and coverage under Pag-IBIG regulations is important. Accurate enrollment in Pag-IBIG programs not only protects employees but also shields businesses from legal risks associated with non-compliance.
Mandatory health and safety standards
In line with the Philippines’ Occupational Safety and Health Standards, companies are required to provide both pre-employment and annual physical examinations for employees. These checks are vital for assessing the physical fitness of employees and reducing health risks in the workplace.
Companies must cover the costs of these examinations. Maintaining full compliance with health standards is essential for preventing workplace injuries and promoting overall employee well-being.
13th-month bonus pay
One of the most well-known statutory benefits in the Philippines is the mandatory 13th-month pay. Filipino employees are entitled to receive an additional salary equivalent to one month’s wage, typically paid at the end of the year.
This benefit is enshrined in law and applies to all rank-and-file employees who have worked for at least one month during the calendar year.
Benefits compliance is key
Navigating the statutory benefits landscape in the Philippines is essential for businesses aiming to attract top talent and maintain compliance with local laws.
Complying with these statutory benefits can be a challenge, especially for international companies unfamiliar with the complexities of Philippine labor laws. However, it is a business imperative to get these benefits right to avoid legal risks and promote employee satisfaction.
Up next: supplementary benefits in the Philippines
As the competition for skilled employees intensifies, companies must not just meet the minimum requirements but also enhance their overall benefits offerings. In the next instalment of this series, we will dive into supplementary benefits that can further enhance employee satisfaction.
Stay tuned for more insights on how to refine your benefits strategy in the Philippines.
Learn more about regulations and hiring in the Philippines here: Hire in the Philippines | GoGlobal
Contact us today to discover how the GoGlobal Global Benefits Team can help you design benefits that fuel business expansion and hiring in the Philippines.
