HRM REVIEWER
employees
Promotion, Demotion and Transfer
 Promotion - or career advancement is
a process through which an employee
of a company is given a higher share
of duties, a higher pay-scale or both. A
promotion is not just beneficial for
employees but is also highly crucial
for employer or business owners. It
boosts the morale of promoted
employees, increases their
productivity and hence improves
upon the overall profits earned by the
organization.
 Approaches to recruit employees
for promotion
 CLOSED PROMOTION
SYSTEM – the responsibility
of the supervisor to identify
promotable employees for
the job to be filled.
 OPEN PROMOTION SYSTEM
– also known as job posting –
enhance participation and
the achievement of equal
opportunity goals.  And all
employees are potential
candidates to such vacancies
 Objectives of promotion
 To provide an incentive for
initiatives, and ambition
 To make the best use of skills
and ability
 To reduce discontent and
unrest
 To attract suitable and
competent workers
 To suggest logical training for
advancement
 To recognize outstanding
achievements   Reorganization, company
 To improve morale,
motivation, and job
satisfaction of employees
 Criteria used in promoting
 SENIORITY – length of
service
o Straight seniority – the
length of service of an
employee is the sole
basis for determining
who gets the promotion.
o Qualified seniority – the
more competent
employee as compared to
another employee with
longer service will be the
one promoted.
 CURRENT AND PAST
PERFORMANCE –promotion
is based on previous job
performance and evaluation.
 Unofficial Promoting Criteria
 Personal Characteristics
 Nepotism – showing of
favoritism or patronage to
relatives
 Social factors/Friendship
 Demotion - This is the reassignment
of an employee to a lower job
involving fewer skills and
responsibilities. It is also the
movement of an employee to a less
important job from a higher-level job
in the organization. It may not
involve a reduction in pay but a
reduction in status or privileges.
- The alternative to demotion
should be re-training or
reorientation on the job and
attitude toward work, or as a last
resort, termination of
employment if no improvement is
achieved.
 Reasons behind demotion
merger, or business reverses
resulting to fewer jobs,
 forcing some employees to Total Rewards and Compensation
accept demotion.
 Inability of employees to Total Rewards - Monetary and nonmonetary
perform their job based on rewards provided by companies to attract,
acceptable standards motivate, and retain employees.
 As a form of disciplinary  The following are Strategic Decisions
action or way to handle that can guide the design of
disciplinary problems, also compensation practices
viewed as a routine form of  Compliance with all applicable laws
punishment for wrongdoing. and regulations
 The tool used to inform the  Cost-effectiveness for the
employee concerned that he organization
or she is beginning to be a  Internal and external equity for
“liability” rather than an employees
“asset” to the organization.  Optimal mix of compensation
 Transfer - This is the reassignment of components
an employee to a job with similar pay,  Performance enhancement for the
status, duties, and responsibilities or organization
to another work shift, or from one  Performance recognition and talent
unit to another in the same company management for employees
just like being an invoice clerk to a  Enhanced recruitment, involvement,
salesclerk. The right to transfer an and retention of employees
employee is part of management’s
inherent power or prerogatives.
 Reasons for Transfer
 Due to job dissatisfaction
 In conflict with
supervisor or coworkers
 For employee’s
convenience
 Organizational needs
may require transfer due
to business expansion,
retrenchment, erroneous
placement, or to meet
departmental
requirements during
 Determining Pay Rates - Most wage
peak season.
and salary systems establish pay
 For an employee to be
ranges for certain jobs based on the
better suited or adjusted
relative worth of the job to the
to the job (remedial
organization. An employee’s
transfer)
performance on the same job should
then determine where that
employee’s pay falls within the job’s
range.

Determinants of Pay
o External Factors
- Market factors (supply and
demand for labor, economic
conditions and unemployment)
- Existing pay level in the
community
- Government regulations and laws
(minimum wage law)
o Organizational
Factors
- Type of industry
- Profitability and company’s ability
to pay
- Unionized or nonunionized
- Size of the company
- Capital or labor intensive
- Value of the job – contribution to
the company
o Job Factors
- Skill (mental requirements,
complexity of duties, personal
qualifications, ability to make
decisions)
- Responsibility (commitments,
supervision, quality of work,
handling of confidential
information)
- Effort (physical and mental effort
required, attention to details,
pressure of work)
- Working Conditions (job
conditions, physical hazards)
o Individual Factors
- Performance, productivity
- Experience
- Seniority (length of service)
- Potential, promotability
 STRATEGIC COMPENSATION
DECISIONS
• ORGANIZATIONAL CLIMATE
Create a climate that reduces dissatisfaction
with compensation.
- Entitlement philosophy: Assumes
that individuals who have worked
another year with the company
are entitled to pay increases with
little regard for performance
differences.
- Pay-for-performance philosophy:
Assumes that compensation
decisions reflect performance
differences.
• COMPENSATION RESPONSIBILITIES
-HR specialist develops and
administers the compensation
system
- HR ensures pay practices comply
with all legal requirements
 DIFFERENT FORMS OF
COMPENSATION
 PAYMENT FOR TIME
WORKED
- Pay surveys are used to establish
competitive pay for the industry
and job evaluation is the principal
method for setting time-pay
schedules.
 INCENTIVE FORMS OF
COMPENSATION
This is a method of compensating employees
on the basis of output which means, more
production, more earnings.
 Classification:
• Piecework or payment by results – this is a
system to pay based on the number of items
produced or processed by each individual
worker in a unit of time such as items
 per hour or items per day.
• Individual incentive plans – this rewards
individual performance on a real-time basis
for meeting goal or hitting a target rather
than increasing a person’s base salary at the
end of year.
• Group incentives – these are given when it
is difficult to measure individual output or
when cooperation is needed to complete a
task.
 PERFORMANCE BASED-REWARD
Organizations want employees to perform at
relatively high levels and need to make it
worth their efforts to do so. It is believed that
when rewards are associated with higher
levels of performance, it will presumably
motivate the employees to work harder to
achieve awards.
 SPOT BONUSES
-These are spontaneous incentives
awarded to individuals for
accomplishments not readily
measured by a standard.
- Ex.”recognize exemplary
customer service each month to
identify employee of the month
awardee”
 SKILL AND KNOWLEDGE-
BASED PAY/COMPETENCY-
BASED PAY
- This sets pay levels on the basis of
how many skills an employee has
or how many jobs he/she can do.
This emphasizes the importance
of an employee’s ideas, growth,
and development.
 PROFIT SHARING
- At the end of the year, some
portion of the company’s profits is
paid into a profit sharing pool,
which is then distributed to all
employees.
 STOCK OWNERSHIP PLANS
- Employees are gradually given a
minor stake in ownership of a
corporation.
 JOB EVALUATION METHODS
Job evaluation is a formal, systematic
means to determine the relative worth of
jobs within an organization.
• POINT FACTOR METHOD
- Point factor method or point
system requires evaluators to
quantify the value of the elements
of a job. On the basis of the job
description or interviews with job
occupants, points are assigned to
the degree of various
compensable factors to do the job.
- Ex: points are assigned based on
skill required, physical and mental
effort needed, working condition
and amount of responsibility
involved.
 Advantage: Detailed and
specific
 Disadvantage: Time
consuming and costly to
develop
• RANKING METHOD
- This is the simplest and oldest
method and the least often used
job evaluation technique. It
involves ranking each job relative
to all other jobs, usually based on
overall difficulty rather than on a
number of compensable factors.
 Advantage: Takes less time to
accomplish than other
methods
 Advantage: Can be
constructed simply, quickly,
and cheaply
 Disadvantage: Limited to
smaller organizations where
employees are very familiar
with various jobs
• CLASSIFICATION METHOD
- Job classification method or Job
grading evaluation method is
simple, widely used in which jobs
are categorized into groups. The
groups are called classes if they
contain similar jobs, or grades if
they contain jobs that are similar
 in difficulty but otherwise
different.
 Advantage: Can be
constructed simply, quickly,
and cheaply
 Disadvantage: Jobs are forced
to fit into categories
• FACTOR-COMPARISON METHOD
- This method is similar to the point
method but slightly more
complex, and it involves a
monetary scale instead of a point
scale, thus, not as popular as the
point method.
 Advantage: Can be applied
to a wide range of jobs
 Disadvantage: Relatively
difficult to explain to
employees since the pay
for each factor is based on
judgments that are
subjective.
Wage and Wage Related Benefits
 How to Calculate for the Daily Rate
from Your Monthly Salary?
Basic salary refers to the monetary
amount paid to an employee,
excluding added
bonuses or deductions from
absences or incurred late minutes.
For monthly-paid
- Basic salary refers to the monetary amount
paid to an employee, excluding added
bonuses or deductions from absences or
incurred late minutes. For monthly-paid
employees, here is how it is computed:
- (Basic Monthly Salary x 12) /
(Total Working Days in a Year) =
DAILY RATE
 The total working days in a year
(TWD) may vary from one employee
to another. If an employee regularly
works from Mondays to Saturdays, his
expected TWD in a year is 313 days.
While if an employee only works from
Mondays to Fridays, then his TWD in
a year is 261 days.
 Premium Pay
- Premium pay refers to the
additional compensation for work
performed within 8 hours
on nonwork days, such as rest days and
special days.
There are 3 special holidays:
– Ninoy Aquino Day
– All Saints Day
– Last Day of the Year
 Premium Pay Rates:
– On a rest day or special holiday, an
employee is entitled to an additional 30% of
his daily basic rate, or a total of 130%.
- On a rest day which is also a special holiday,
an employee is entitled to an additional 50%
of his daily basic rate, or a total of 150%.
– On a regular holiday which is also an
employee’s rest day, an employee is entitled
to an additional 30% of the regular holiday
rate of 200%, or a total of 260%. Note that it
is only applicable to employees covered by
the holiday-pay rule.
The “no work, no pay” principle applies
during special non-working days and such
other special days as may be proclaimed by
the President of the Philippines. Workers
who are not required or permitted to work on
these days are, therefore, not entitled to any
compensation. This, however, is without
prejudice to any voluntary practice or CBA
(collective bargaining agreement) providing
for payment of wages and benefits for
declared special days even if unworked.
 Right to Holiday Pay
 -Holiday pay refers to the payment
of the regular daily wage for any
unworked regular holidays.
 Regular Holidays
- Every employee is entitled to this
holiday day. This means that the
employee is entitled to at least
100% of his/her basic wage even
if he/she did not report for work,
provided he/she is present or is on
leave of absence with pay on the
work day immediately preceding the
holiday.
12 regular holidays are (Republic Act
No. 9849):
 New Year’s Day
 Maundy Thursday
 Good Friday
 Araw ng Kagitingan
 Labor Day
 Independence Day
 National Heroes’ Day
 Eidl Fitr
 Eidl Adha
 Bonifacio Day
 Christmas Day
 Rizal Day
- Rate Example:
If work is accomplished on a regular holiday
(up to 8 hours), an employee is entitled to at
least twice (200%) of his basic wage. If the
holiday corresponds to a scheduled rest day,
the employee is entitled to an additional 30%
based on his regular holiday rate of 200%,
which comes to a total of at least 260%.
 Absences
1. All covered employees shall be entitled to
holiday pay when they are on leave of
absence with pay on the workday
immediately preceding the regular holiday.
Employees who are on leave of absence
without pay on the day immediately
preceding a regular holiday may not be paid
the required holiday pay if they do not work
on such regular holiday.
2. Employers shall grant the same percentage
of the holiday pay as the benefit granted by
competent authority in the form of
employee’s compensation or social security
payment whichever is higher, if the
employees are not reporting for work while
on such
leave benefits.
3. Where the day immediately preceding the
holiday is a non-work day in the
establishment or the scheduled rest day of
the employee, he/she shall not be deemed to
be on leave of absence on that day, in which
case he/she shall be entitled to the holiday
pay if he/she worked on the day immediately
preceding the not work day or rest day.
 Successive Regular Holidays
Where there are two (2) successive regular
holidays, like Maundy Thursday and Good
Friday, an employee may not be paid for both
holidays if he/she absents himself/ herself
from work on the day immediately preceding
the first holiday, unless he/she works on the
first holiday, in which case he/she is entitled
to his/her holiday pay on the second holiday.
 OVERTIME PAY
Minimum wage is based on a work week of 40
hours or 8 hours per day. The normal
hours of work in a day is 8. There is a rest
day of not less than 24 consecutive hours or 1
day for every 6 days of work which should be
scheduled by the employer upon consultation
with the employees. The daily 60 minute
mandatory lunch break is not included in the
8 hour work day. Meal period is not less than
60 minutes or 1 hour and non-compensable.
Rest periods or coffee breaks running from 5
to 20 minutes shall be considered
compensable working time. Overtime pay
rates vary depending on when the overtime
work takes place: regular work day, holiday,
rest day, or night (between the hours of 10pm
to 6am).
 Overtime Rates:
- Regular work day: plus 25% of
the hourly pay rate.
- Rest day, regular/special holiday:
plus 30% of the hourly rate on
said day.
 NIGHT SHIFT DIFFERENTIAL
For work done between the hours of 10pm to
6am, employees are entitled to Night Shift
Differential (NSD), which represents an
additional 10% to the regular wage for each
hour of work performed or a total of 110%.
Computing Night Shift Premium where Night
Shift is a Regular Work:
 On ordinary day (110% x basic hourly
rate)
 On a rest day, special day, or regular
holiday (110% of regular hourly rate
for rest days, special days, or regular
holidays)
 SERVICE CHARGES
Employees of employers collecting service
charges are entitled to an equal share in the
85% of the total of such charges, except
managerial employees. The remaining 15% of
the charges may be retained by the
management to answer for losses and
breakages and for distribution to managerial
employees, at the discretion of the
management in the latter case. Service
charges are collected by most hotels and
some restaurants, night clubs, cocktail
lounges, among others.
It shall be distributed once every 2 weeks or
twice a month at intervals not exceeding 16
days.
 Exceptions to Coverage of Benefits
granted under the provisions on
Overtime, Premium, Holiday, Night
Shift Differential Pays and Service
Charges
These mentioned benefits apply to all
employees except:
1. Government employees.
2. Workers of retail and service
establishments regularly employing less than
10 workers.
3. Managerial employees and officers or
members of a managerial staff.
4. House helpers and persons in the personal
service of another.
5. Workers who are paid by results/output.
6. Field personnel if they regularly perform
their duties away from the office or place of
business.
 SERVICE INCENTIVE LEAVE
Every employee who has rendered at least
one (1) year of service is entitled to a Service
Incentive Leave (SIL) of five (5) days with
pay. SIL may be used for sick and vacation
leave purposes. The unused SIL at the end of
the year can be converted into cash using the
salary rate at the date of conversion. It is the
employer’s prerogative to grant additional
vacation leave.
Meaning of “one year of service”
The phrase “one year of service” of the
employee means service within 12 months,
whether continuous or broken, reckoned
from the date the employee started working.
The period includes authorized absences
unworked weekly rest days, and paid regular
holidays. Where by individual or collective
agreement, practice or policy, the period of
working days is less than 12 months, said
period shall be considered as one year for the
purpose of determining entitlement to the
service incentive leave.
 PARENTAL LEAVES
The Labor Code of the Philippines covers
three different types of parental leaves:
maternity leave, paternity leave and solo-
parent leave.
A. Maternity Leave
- Whether married or not, each
pregnant employee is entitled to a
maternity leave benefit.
Republic Act No. 11210: An Act Increasing the
Maternity Leave Period to One Hundred Five
(105) Days for Female Workers with an
Option to Extend for an Additional Thirty (30)
Days Without Pay, and Granting an Additional
Fifteen (15) Days for Solo Mothers, and for
Other Purposes. For the duration of the
maternity leave, the employee receives a
fraction of his regular monthly salary from
the company which is in turn reimbursed by
the SSS. It is common for companies to give
the whole regular pay and shoulder what is
not covered by the SSS. To benefit from a
maternity leave, it is required for the
employee to be registered with the SSS and be
employed at the time of the expected
delivery. Furthermore, the SSS must be
notified by the employer and at least three
monthly contributions must have been made
to the SSS for that employee within the past
year.
The maternity leave benefit being given
instead of a regular wage, it can not be
included in an employee’s 13th month wage.
 COVERAGE OF THE PROGRAM
All Female Workers in the Public or Private
Sector, Informal Economy, Voluntary
Contributors and Female Athletes, who have:
- Given birth; or
- had a Miscarriage or Emergency
Termination of Pregnancy (ETP)
Regardless of
-Civil Status, Employment Status,
Legitimacy of her child; and
- Frequency of pregnancy (for the
EMLL, no more limitation of your
pregnancy)
 QUALIFYING CONDITIONS
 Notified the SSS thru her
Employer
 Paid at least 3-months
contributions within the 12-
month period prior to
semester of contingency. A
semester refers to two (2)
consecutive quarters ending
with the quarter of
contingency.
Here are the granted benefits under the EMLL
(Expanded Maternity Leave Law):
1. Paid leave benefit granted to a qualified
female worker in the public and private
sector, for the duration of:
- 105 days – any instance of live
childbirth, normal or CS. (Live
childbirth includes infants born alive
and yet pronounced dead upon a few
hours or days from birth)
- 120 days – additional 15 days for solo
parent under RA No. 8972 or Solo
Parents’ Welfare Act.
- 60 days – miscarriage or Emergency
termination of pregnancy (ETP)
including stillbirth (or infant already
dead upon birth)
Employed female workers shall receive Full
Pay which consists of:
- SSS Maternity Benefit
- Salary differential to be paid by the
employer
*Salary differential refers to the difference
that shall be shouldered by the employer
when the actual cash benefit received from
the Social Security System (SSS) is less than
the full pay or full salary of the female
employee during the duration of the
maternity leave.
2. Option to extend for additional 30 days
without pay in case of live childbirth,
provided that the employer shall be given due
notice.
3. Paid maternity leave and allowances and
benefits granted to female national athletes
4. Health care services for pre-natal, delivery,
postpartum and pregnancy-related
conditions as governed by the existing rules
and regulations of the PhilHealth.
 AMOUNT OF MATERNITY BENEFIT
 Daily Cash Allowance equivalent to
100% of female member’s Average
Daily Salary Credit for compensable
period of 105, 120, or 60 days, as the
case maybe.
 Employers shall pay salary
differential
Employer maybe exempted in giving salary
differential given the following conditions:
 Distressed establishments
 Retail/Service establishments
with not more than 10
workers
 Micro-business enterprises
with total assets of not more
than 3 Million
 Those with similar or more
than the proposed benefits
(Application for exemption shall be submitted
to DOLE every 1st quarter of the year)
B. Paternity Leave
All married male employees are entitled to a
7 day paternity leave for the delivery or
miscarriage of his legitimate spouse with
whom he must live, for up to four
pregnancies. The paternity leave is at the cost
of the employer and is not reimbursed by the
SSS.
C. Solo-Parent Leave
In addition to parental leaves at the time of a
child’s birth, the Filipino labor code drew a
special leave for solo-parent employees as
described in the Solo Parents Welfare,
Republic Act No. 8972. The employee must
have been working for at least a year to be
entitled to a solo-parent leave, which allows
him to 7 working days of leave in a year.
 OTHER LEAVES
A. Gynecological Leave
- A woman employee having rendered
continuous aggregate employment service of
at least six (6) months for the last twelve (12)
months shall be entitled to a special leave
benefit of two (2) months with full pay based
on her gross monthly compensation following
surgery caused by gynecological disorders.
B. Leave For Women And Their Children Who
Are Victims Of Violence
- Victims shall be entitled to take a paid leave
of absence up to ten (10) days in addition to
other paid leaves under the Labor Code and
Civil Service Rules and Regulations,
extendible when the necessity arises as
specified in the protection order.
Any employer who shall prejudice the right of
the person under this section shall be
penalized in accordance with the provisions
of the Labor Code and Civil Service Rules and
Regulations. Likewise, an employer who shall
prejudice any person for assisting a co-
employee who is a victim under this Act shall
likewise be liable for discrimination.
 13th MONTH PAY
Each year, a 13th month pay is given to all
rank-and-file employees. By law, this benefit
must be paid before December 24th and is
mandatory. Employees who have resigned or
have been severed from the company before
the payment of the 13th month pay are still
entitled to it in proportion to the length of
time they worked for during that year.
The total basic salary earned for the year
exclusive of allowances, overtime, holiday,
and night shift differential pay.
The 13th month pay must be at least 1/12th
of the total basic salary of each employee
earned during that calendar year. (total basic
salary earned for the year divided by 12)
 SEPARATION PAY
Following the labor code of the Philippines,
articles 283 and 284 state that an employee
can claim separation pay if his contract is
ended under authorized causes. According to
article 282 an employee terminated for just
cause (neglect of duties, fraud, crime…) is
generally not entitled to separation pay.
A separation pay of ½ month pay for every
year of service can be claimed under the
following authorized causes
– Retrenchment of person for loss prevention.
– Cessation of operation of a branch not due
to serious losses or financial difficulties.
– If the employee has contracted a disease not
curable within 6 months and that his
presence at work can be harmful to himself or
his co-workers.
A separation pay of 1 month pay for every
year of service can be claimed under the
following authorized causes:
– Labor-saving devices installed by the
employer.
– Redundancy of the employee’s services for
the company.
– Impossibility to reinstate the employee to
his former position or to an equivalent
position, for reasons outside of the
employer’s power.
The employer has the right to terminate the
contract of an employee following any of the
above authorized causes through a written
notice to both the employee and the
Department of Labor and Employment of the
Philippines at least one month before the
contract cessation date.
 RETIREMENT PAY
All employees from the private-sector may
retire from age 60 up to age 65, at which
retirement becomes compulsory, and must
have served the establishment for at least 5
years.
Retirement pay must at least be equivalent to
half of a month’s salary for each year of
service and a fraction of at least 6 months is
therefore considered as one whole year.
One “half month salary” must include the
following: a) 15 days salary based on the last
salary pay, b) the pay equivalent of a five days
of incentive leave, c) 1/12 of the 13th month
pay. Therefore, one ½ month salary is
equivalent to 22.5 days.
Minimum Retirement pay = Latest daily pay
rate x 22.5 days per month x number of years
of service
Depending on the agreements between the
employer and employee other benefits can be
included in the retirement pay such as a
Collective Bargaining Agreement (CBA).
Employee Benefits
 Managing Employee Benefits
  Benefits - Tangible indirect rewards
provided to an employee or group of
employees for organizational
membership. Benefits include
retirement plans, paid time off,
healthy insurance and more.
 Benefits as Competitive Advantage
Offered to:
 Aid in recruiting and retention
 Improve organizational performance
 Meet legal requirements
 Reinforce the company philosophy of
social and corporate citizenship
 Part-Time Employee Benefits
 Most do not receive employee
benefits
 Are least likely to receive health
and life insurance benefits
 Older Workers Benefit Needs
Benefits attractive to older workers are:
 Modified work schedules
 Simplified seasonal travel
 Wellness programs
 Tax Advantage of Benefits
One of the major driving forces behind the
growth of employee benefits is the tax
advantage.
 The Bureau of Internal Revenue or
BIR ruled that employers could
deduct the costs of benefits as a
business expense and the employees
do not need to include the value of
health benefits in their taxable
income.
 Employers provided benefits that are
much less costly than the benefits
workers could purchase on their own
because of tax exemptions of benefits
which can also serve as incentives for
employers to give more benefits.
 Nontaxable Benefits Under the Code
 Compensation for sickness or
injury
 13th month pay and other
bonuses not to exceed
P30,000.00 per year.
 Allowances and benefits given
for the convenience of the
employer.
 Allowances and benefits given
which are in the nature of or
necessary to the taxpayer’s
business, trade, or profession.
 SSS, Philhealth, and Pag-IBIG
contributions, as well as union
dues
 Contributions of the employer
for the benefit of the employee
including retirement,
hospitalization, and health
insurance.
 DE MINIMIS BENEFITS
De minimis benefits are benefits
which are in the nature of facilities or
privileges furnished or offered by an
employer to his/her employees that
are of relatively small value, and are
offered or furnished by the employer
merely as a means of promoting the
health, goodwill, contentment, or
efficiency of its employees.
- The following are de minimis benefits:
 Monetized unused vacation
leave credits of employees not
exceeding 10 days during the
year and the monetized value
of leave credits paid to
government officials and
employees.
 Medical cash allowance to
dependents of employees not
exceeding P750.00 per
employee per semester or
P125.00 per month.
 Rice subsidy of P1,500.00 or
one sack of 50-kg rice per
month amounting to not more
than P1,500.00
 Uniforms and clothing
allowance not exceeding
P4,000.00 per annum.
 Actual yearly medical benefits
not exceeding P10,000.00 per
annum.
 Laundry allowance not
exceeding P300.00 per month.
 Employees achievement
awards, e.g., for length of
service or safety achievement,
which must be in the form of a
tangible personal property
other than cash or gift
certificate, with an annual
monetary value not exceeding
P10,000.00 received by the
employee under an
established written plan
which does not discriminate
in favor of highly paid
employees.
 Gifts given during Christmas
and major anniversary
celebrations not exceeding
P5,000.00 per employee per
annum.
 Flowers, fruits, books, or
similar items given to
employees under special
circumstances, e.g., on account
of illness, marriage, birth of a
baby, etc.
 Daily meal allowance for
overtime work not exceeding
25 percent of the basic
minimum wage.
 Employee Allowance
Employee allowance is a universal benefit
awarded to employees in the various
levels in an organization.
 They are nontaxable. E.g.,
clothing, mileage, meal.
 They come in different forms.
- Clothing allowance, meal allowance,
transportation allowance, grand
vacation, etc.
 Employees allowances are
exempted from tax if they do not
exceed the price ceilings set by
law.
 Fringe benefits exceed the price
limit on benefits are no longer tax-
exempt, and the benefactor will
shoulder the tax imposed on it.
 Only the “de minimis” benefits
with small value and limited only
to facilities and privileges
furnished by companies to
promote goodwill, healthy,
efficiency, and contentment to
employees are exempt from tax.
 Employee allowance is given at a
company’s discretion and
goodwill. It is not a law-mandated
benefit.
Managing Employee
 Labor Movement
 A Background on the Early
Philippine Labor Movement
Isabelo delos Reyes formed the Union
de Litografos e Impressores de
Filipinas upon his return to the
country from his exile in Spain. He is
the father of Philippine trade
unionism.
During this time, the workers were
not protected by any labor law. As a
result, Filipinoworkers suffered a lot
of injustices from the hands of the
Spaniard employers.
In May 1, 1974 former president,
Ferdinand E. Marcos issued
 Presidential Decree No.442, “a decree
instituting a labor code and
consolidating labor and social laws to
afford protection to labor, promote
employment and human resources
development, and insure industrial
peace based on social justice.”
After EDSA Revolution that ushered
the administration of President
Corazon Aquino, a new constitution
was drafted, wherein a full section
was devoted to the protection of labor.
 Three Categories of Employees:
 Managerial employees – have the
power to decide and do managerial
acts
 Supervisory employees – have the
power to recommend managerial
acts
 Rank-and-file employees
 LABOR RELATIONS
Book V of the Labor Code
- Labor organizations
- Collective bargaining
- Grievance machinery
- Voluntary arbitration
- Conciliation and mediation
- Unfair labor practices strikes
- Picketing
- Lockout
 LABOR STANDARDS
Book I to IV, and VI of the Labor Code
- Wages
- Hours of work
- Holiday pay and other benefits
- Conditions of employment of
women, minors, house helpers, and
home workers
- Medical and dental services
- Occupational health and safety
- Termination of employment
- Retirement
= During this time, the workers were
not protected by any labor law.
 LABOR ORGANIZATION
- Means any union or association of
employees which exists in whole
or in part for thepurpose of
collective bargaining or of dealing
with employers concerning terms
and conditions of employment.
 LEGITIMATE LABOR
ORGANIZATION
- Any labor organization duly
registered with the Department of
Labor and Employment (DOLE).
 NATIONAL UNION OR
FEDERATION
- An alliance of a group of unions in
one industry in any area, region, or
country.
 EXCLUSIVE BARGAINING
REPRESENTATIVE
- Any labor organization duly
recognized or certified as the sole
and exclusive bargaining agent of
all employees in the bargaining
unit.
 COLLECTIVE BARGAINING
- Is the decision-making process
where management and the union
set the terms andconditions of
employment and the rules and
procedures in the employee-
employer relationship.
 COLLECTIVE BARGAINING
AGREEMENT
- The end result of collective
bargaining; refers to the
negotiated contract between a
legitimate labor organization and
the employer concerning wages,
hours of work and all other terms
and conditions of employment in a
bargaining unit, including
mandatory provisions for
grievances and arbitration
machineries.
 LABOR DISPUTES
- Refer to questions or controversies
regarding terms and conditions of
employment, including the ways
by which such terms and
conditions are negotiated, fixed,
arranged, or modified over and
above minimum standards.
 ARBRITATION
- Represents the final stage in the
dispute resolution process. The
grievance does not always result in
an acceptable solution because
when a deadlock occurs, labor
contracts call for arbitration. It
has two kinds: voluntary and
compulsory.
= Refer to claims arising from the
failure of the employer to comply with
the social and welfare obligations
under the law.
 STRIKE
- Any temporary stoppage of work
by the concerted action of
employees as a result of an
industrial or labor dispute.
 LOCKOUT
- The temporary refusal of any
employer to furnish work as a
result of an industrial dispute.
 LABOR ARBITER
- The hearing officer of the National
Labor Relations Commission
(NLRC) and his decision is
appealable to NLRC.
 UNION SECURITY AGREEMENT
- A contractual agreement, usually
part of a collective bargaining
agreement, in which an employer
and a trade or labor union agree
on the extent to which the union
may compel employees to join the
union, and/or whether the
employer will collect dues, fees,
and assessments on behalf of the
union.
 TYPES OF LABOR DISPUTES
- Rights Disputes
Involves alleged violation of a right
recognized by law, collective
bargaining agreement (CBA),
contracts, or company policy.
- Internal Disputes
Economic or bargaining dispute where
the issues involved are not mandated
by law and could be negotiated.
- Labor Standards Disputes
Include nonpayment or
underpayment of wages and wage-
related benefits and violations of
health and safety standards.
- Labor Relations Disputes
Involves employee discipline unfair
labor practice, deadlocks, strikes, etc.
- Welfare and Social Legislation
Disputes
Refer to claims arising from the failure
of the employer to comply with the
socialand welfare obligations under
the law.
 DIFFERENT MODES OF
SETTLING LABOR DISPUTES
 NEGOTIATION
• Parties control the process.
• Parties engaged in verbal
interaction completely in their own
terms.
• Decision is made by the two
conflicting parties.
• Outcome is whatever the parties
agree to.
• Applied to t he nonunionized or
unorganized group of workers in the
private and government sectors.
 COLLECTIVE BARGAINING
• Decision-making process between
union and management
• Aims to set the terms and
conditions of employment and
procedures in the employer-
employee relationship.
• Aims to ensure that the agreement
is enforced through the grievance
machinery with voluntary arbitration
as the last step in the process.
 GRIEVANCE MACHINERY
 Internal rules of procedures
intended to resolve all issues
arising from the
implementation and
interpretation of the collective
bargaining agreement.
 Part of the continuous process
of the collective bargaining
intended to promote friendly
dialogue between labor and
management as a means of
maintaining industrial peace.
 MEDIATION
• Similar to conciliation although the
mediator is expected to put forward
settlement proposals.
• Parties fully participate in deciding
issues and in creating, evaluating, and
solving theconflict to come up with a
win-win solution.
 CONCILIATION
• Occurs when a conciliator-mediator
intervenes in a negotiation.
• Conciliator cannot decide upon the
dispute.
• Can only reconcile the dispute by
facilitating the meeting of the minds
between the parties.
• In the meeting with the conciliator,
the disputing parties are given the
chance to state their demands and
position with the aim of reaching a
viable agreement.
  Two Kinds of Arbitration
 ARBITRATION
- Process where a third party, the
arbitrator, decides upon the
agreement or award in a labor
dispute.
- A quasi-judicial process in which
the parties agree to submit an
unresolved dispute to a third
neutral party for binding
settlement.
- Represents the final stage in the
dispute resolution process. The
grievance does not always result in
an acceptable solution because
when a deadlock occurs, labor
contracts call for arbitration.
 Two Kinds of Arbitration
 Voluntary Arbitration – the
parties agree to submit
themselves to arbitration.
 Compulsory Arbitration –
parties are compelled or
ordered to submit
themselves to arbitration
in case there is deadlock
during collective
bargaining.
 Authority of an Arbitrator
• Investigate and hear the case upon
notice of the parties
• Render an award (decision) based
on the contract and record of the case
• Set and conduct hearing,
attendance of witnesses and proof
documents
• Conduct fact-finding and other
modes of discovery
• Conduct reopening of hearing
• Modify any provision of existing
agreement upon which a proposed
change is submitted for arbitration.
VIOLATION OF WORKER’S RIGHTS
If a worker or employer, feels that
their labor rights are being violated in
any way, they can opt to file a
grievance.
WHAT IS A GRIEVANCE?
In a technical sense, a grievance is
defined as any question by the
employer or the worker regarding the
interpretation or application of the
collective bargaining agreement (CBA)
or company personnel policies.
The term grievance also refers to any
dispute or controversy arising from
the terms and conditions of an
employment. Even without a union or
CBA, Article 255 of the Labor Code of
the Philippines states that an
employee or group of employees may
present their grievances to their
employer at any time.
WHAT IS THE PROCESS FOR FILING A
GRIEVANCE?
The procedure for filing a grievance is
at the discretion of the employer and
employee and subject to the policies of
their respective workplaces.
If the grievance arises from the
interpretation or application of the
CBA, i.e., grievance in the technical
sense, it is then subject to the
grievance procedure: a formal series
of steps agreed upon by the parties to
a CBA. From a legal standpoint, the
grievance procedure is a mandatory
part of every CBA.

Within the grievance procedure is the

grievance machinery: A provision
within the CBA that is established by
the employees and their employer
regarding the adjustment and
resolution of grievances. If this
grievance is not settled within seven
days, it shall be referred to voluntary
arbitration. A voluntary arbitrator or
panel of voluntary arbitrators,
specified in the CBA, has the authority
to hear and deliberate over all labor
disputes.