Career Advice          
   
  Issue: October 2008  
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Ina Teves, Organizational Development Consultant

Ina Teves is an organizational development consultant with a change management firm dedicated to making a difference wherever it goes by journeying with the client through the entire process of organizational transformation. Email your questions to ina.b.teves@gmail.com.

13th Month Pay, atbp
 

Last month’s column generated a good number of inquiries on Labor Law, which we will try to answer this month.  Please note, however, that I am not a lawyer.  You would do best to consult one before you take any action regarding your question. 

Where can I find a copy of the Labor Code of the Philippines?

You could buy yourself a copy at most bookstore chains that sell textbooks.  Or, if you do not wish to buy a copy, you could read it online at the website of the Department of Labor & Employment (DOLE) : http://www.dole.gov.ph/laborcode.  They also have a page for labor FAQs: http://www.dole.gov.ph/faq.  The department also posts the latest advisories affecting labor: http://www.dole.gov.ph/advisories/default.asp.

I am a part time instructor in a private caregiver school for four years now. I am being paid on a per hour basis. Am I also entitled to a thirteenth month pay? My average pay is about 10,000 pesos a month.

The Revised Guidelines of the Implementation of the 13th month pay law states that employers should pay all rank and file employees their 13th month pay on or before 24 December of each year, provided that said rank and file employees have worked for at least a month during the calendar year - “regardless of their designation or employment status, and irrespective of the method by which their wages are paid, provided that they have worked for at least one (1) month during a calendar year).” (http://www.chanrobles.com/revised13thmonthpayguidelines.htm

How is the 13th month pay computed for employees paid by results?

The usual computation of 13th month pay is total basic pay earned during the calendar year divided by 12.  This includes the cost of living allowance (COLA), integrated into the basic pay, of a covered employee.

For employees earning a guaranteed wage plus commission, their 13th month pay will be computed on the basis of both the guaranteed wage and commission.

May I know which is current of the two Presidential Decrees PD 442 and PD 851?

PD 442 is the Labor Code of the Philippines, issued on 1 May 1974. PD 851 is the 13th month pay law, issued 16 December 1976.   PD 851 was modified under President Cory Aquino through Memorandum Order 28.

How is the withholding tax on compensation computed? It seems that my employer is withholding too much from my salary and making big tax refund on or after April 15. May I also know the relevant legal basis for this?

Goodness!  I am not a tax accountant either, but fortunately, the website of the Bureau of Internal Revenue has FAQs on withholding tax: http://www.bir.gov.ph/taxinfo/tax_withld.htm#541.

You can also download Form 1601 C to compute your Monthly Remittance Return of Income Taxes Withheld on Compensation from: http://www.bir.gov.ph/birforms/form_pay.htm#1601C.

You may also go to the BIR office (BIR) nearest your place of work.  They have a customer service desk where they could help you compute your taxes for free. 

The New National Internal Revenue Code says that if there has been an overpayment of tax, “refund or credit shall be made to the employer only to the extent that the amount of such overpayment was not deducted and withheld hereunder by the employer.”  (Title II, Chapter XIII, Sec 79 C., Income Tax Collected at Source: Refunds or Credits, http://www.bir.gov.ph/taxcode/1843.htm)

I just want to ask, the company closed due to some personal matter of board members, being a regular employee though we have no any contract to the company and the company has 5 employees working Mondays to Saturdays for 4 years, are we entitled to have our separation pay? And if the company refuses to give the separation pay what are we going to do?

Article 283 of the Labor Code specifies that employers may validly cease operations or close the establishment by (1) if they serve one month’s notice (before date of closure) to the workers and the DOLE; (2) they have valid reasons for closing - and it’s not just to escape provisions on the Termination of Employment; and (3) they pay each employee one month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six months, or more, is considered one year. (http://www.dole.gov.ph/laborcode/book6.asp)

Whether or not you have an oral or written agreement does not matter.  How do you know that you are a regular employee? Article 280 says that a regular employee performs tasks necessary or desirable in the employer’s business, unless it is a project where employment has a specific beginning and end that is specified at the time the employee is hired, or, if it is a seasonal employment.

Do call the DOLE Hotline so you could be referred to the proper office: (632) 527-8000.

What are the rights of contractual employees?

DOLE Department Order 10-02 states that contractual employees have the same rights as regular employees as specified in the Labor Code, which are: “(a) safe and healthful working conditions; (b) labor standards such as service incentive leave, rest days, overtime pay, holiday pay, 13th month pay and separation pay; (c) social security and welfare benefits; (d) self-organization, collective bargaining and peaceful concerted action; and (e) security of tenure.” (http://www.chanrobles.com/doledepartmentorderno18-02-2002.html)