Lesson 6: Compensation and Benefits
stock.
Compensation is an organized system that
provides monetary compensation to
employees in exchange for work performed.
Benefits refer to the compensation paid by
employers over and above regular salary or
wages.
An organization's compensation packages
system is a significant factor in keeping skilled
workers and what it gives employees in
exchange for their services. Wages and salaries
are vital parts of any compensation system, but
most also include features such as incentives
and employee benefit programs. - to make
employees feel valued.
Wages and Salaries - An organization that pays
less than its rival may soon lose valuable
personnel. Some union contracts specify
differential wages based on experience. Note,
however, that the basis for differential pay
must be job-related, not favoritism or
discrimination.
Incentives Programs - refers to an official
monetary plan to motivate and recognize
employees’ performance. Sales bonuses are a
typical incentive. Employees who sell a certain
number or amount of goods for the year
receive a special payment.
Companies may offer incentive plans to all
their employees. Gain-sharing incentives
distribute bonuses to all employees in a
company based on reduced costs from working
more efficiently. Any profit from production
above a certain level is split 50-50 between the
company and the employees.
Profit-sharing plans are based on the
company’s profitability level. Profits acquired
over and above a specific quota are shared
with employees. Stock ownership by
employees serves as an incentive to lower
costs, increase productivity and profits, and
thus increase the value of the employees’
Comparable Worth - regardless of SEX,
employees should be compensated equally for
jobs involving the same degree of skills,
responsibilities, and effort performed on the
job. All the positions in a company must be
evaluated and then rated in terms of basic
dimensions, such as the level of skill required.
All jobs could then be compared based on a
standard index.
Benefits Programs - Most companies are
required by law to provide worker’s
compensation, holiday pay, and insurance
contributions. Some businesses voluntarily
provide extended health, life, disability
insurance, buy stock through payroll
deductions at a slightly discounted price, vision
care and dental benefits to employees, and
even offer free legal services.
Laws on Wages and Working Hours in the
Philippines
“The State shall afford protection to labor,
promote full employment, ensure equal work
opportunities regardless of sex, race or creed,
and regulates the relations between workers
and employees. The state shall assure workers’
rights to self-organization, collective bargaining,
security of tenure, and just and human
conditions of works.”
The law that concern the above provisions are
the Labor Code of the Philippines as amended
and the other laws that are part of the Labor
and Social Legislation in the country, namely,
regulations related to the Labor Code like PD
928, as amended on minimum wage, PD 851, as
amended on 13th-month pay, and PD 525, as
amended on emergency allowance, and
like the Social Security Law, as amended
Revised Government Service Insurance Act and
the Philippine Medical Care Act, as amended.
Rights of Workers with Regards to Wages A shorter meal period of not less than 20
minutes may be allowed, provided this shorter
• Fair wages and equal remuneration for work
meal period is credited as compensable hours
of equal value without destructions of any kind,
worked.
women being guaranteed conditions of work
not inferior to those enjoyed by men, with all
equal pay for similar work: and

• A decent living for themselves and their

families.

Rights with Regards to Rest, Working Hours,

and Holiday

ICESCR - International Covenant of Economic,

Social, and Cultural Rights

The ICESCR speaks of “the right to just and

favorable conditions of works which ensure,
rest, leisure and reasonable limitation of
working hours and periodic holidays with pay,
as well as remuneration for public holidays.

Minimum Wage Law (RA 602)

Applies to employees in PRIVATE enterprises in

AGRICULTURE, INDUSTRY, or TRADE sector.

Meal and Rest Periods

A worker is entitled to no less than one hour off

for regular meals and to rest periods or coffee
breaks of five to twenty minutes, except as
provided in the implementation rules and
regulations.

This meal period may be shortened under the

following conditions:

• When the work is non-manual in nature or

does not involve strenuous physical exertion;

• When there are actual or impending

emergencies or when there is urgent work to
be performed in machinery, equipment or
installations to avoid severe loss which the
employer would suffer; and

• When the work is necessary to prevent

profound loss of perishable goods.