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Compensation and Benefits

Chapter 12: BENEFITS DETERMINATION PROCESS

 Employee Benefits - part of the total compensation package aside from pay for the time worked (life
insurance, pension, vacation)
 Pension plan - an arrangement made with an employer to pay money to an employee after retirement

WHY THE GROWTH IN EMPLOYEE BENEFITS?

 Wage and price controls

 Unions
 Employer impetus
 Cost effectiveness of benefits
 Government impetus – workers’ compensation, unemployment insurance, social security

THE VALUE OF EMPLOYEE BENEFITS

 Medical payments regularly are listed as one of the most important benefits employers receive
although health-care costs are the most rapidly growing and the most difficult to control of all the
benefit options offered by employers
 Stating employment benefits in ads leads applicants to focus and rely more heavily on it than job
choice

Employees:

 Expect benefits as part of their total compensation

 Do not understand true value of benefit
 Often undervalue their benefits
 Often take benefits for granted
 Often cannot list all benefits received
 Have preferences regarding type of benefits they want

KEY ISSUES IN BENEFIT PLANNING, DESIGN, AND ADMINISTRATION

Benefits Planning and Design Issues

 How to attract applicants: set up a day care to attract more mothers

 How to deal with undesirable turnover: design a benefit package that improve progressively with
seniority
 Integrating benefits with other compensation components
 Planning strategies for ensuring external competitiveness
 Ensuring that benefits are adequate
 Whether employee benefits are cost justified

Benefit Administration Issues

4 major administration issues in setting up a benefit package:

1. Who should be protected or benefited? (companies have provided FAR FEWER benefits for part-time
workers)
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Compensation and Benefits

2. How much choice should employees have among an array of benefits? (concerns choice ‘flexibility’ in
plan coverage)
a. Standard benefit package – employees are not offered a choice among benefits but there is
a package designed
b. Cafeteria-style – flexible benefit plans; choosing benefit options of greatest value to them

Another way to increase employee awareness in health care is to offer market-based and customer-
driven health care:

 Consumer-driven health care

o Full-defined contribution – employee is responsible for finding and purchasing individual medical
coverage, the employer provides funds through either direct compensation or a voucher
o Tiered networks – employer offers employees a choice of medical plans, which include medical
systems of varying costs
o Menu-driven – employers provide online information to help employees customize their own
benefit plan
o Managed competition – employer provides a subsidized basic medical plan with buy up options
o Health savings account – fund created by the employer, employee, or jointly to pay the first x
dollars of health-care expenses

3. How should benefits be financed?

 Noncontributory – employer pays total costs
 Contributory – costs are shared between employer and employee
 Employee financed – employee pays total costs for some benefits

4. Are you benefits legally defensible?

Benefit administrators should develop a compliance checklist and regularly conduct audits to ensure that
they are complying with the avalanche of new and existing requirements

Advantages of Flexible Benefit Programs:

 Employees choose packages that best satisfy their unique needs

 Flexible benefits help firms meet the changing needs of a changing workforce
 Increased involvement of employees and families improves understanding of benefits
 Flexible plans make introduction of new benefits less costly
 Cost containment: org sets maximum, employee chooses within that constraint

Disadvantages of Flexible Benefit Programs:

 Employees make bad choices and find themselves not covered for predictable emergencies
 Administrative burdens and expenses increase
 Adverse selection: employees only pick benefits they will use, the subsequent high benefit utilization
increases its cost
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Compensation and Benefits

Components of a Benefit Plan:

Factors Influencing Choice of Benefit Package

*Read mo sa book teh haha ang

haba eh

Approaches to Assess Employee Preferences:

 Demographic differences:
o Age
o Sex
o Marital status
o Number of dependents
o Blue collar vs. white collar
 Employee survey via questionnaire
 Flexible benefit plan

Administering the Benefit Program

 Employee benefit communication

o What is communicated
o To whom
o How it’s communicated
o How frequently
 Claims processing – when an employee asserts that a specific event has occurred and demands that
the employer fulfill a promise of payment; as such, a claims processor must:
o Determine whether the act has
o Determine if the employee is eligible for benefit
o Calculate the payment level
 Cost containment
o Probationary periods – excluding employees from benefit coverage until some term of
employment is completed
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Compensation and Benefits

o Benefit limitations – limiting to a certain fixed amount

o Copay – requiring that employees pay a fixed or percentage amount for coverage
o Administrative cost containment – controlling costs through policies like seeking competitive
bids

Chapter 13: BENEFIT OPTIONS

Legally Required Benefits

 Workers’ Compensation
 Social Security
 Unemployment Compensation

Retirement and Savings Plan Payments

 Defined benefit plans – an employer agrees to provide a specific level of retirement pension,
expressed as either a fixed dollar or percentage-of-earnings amount that may vary (increase)
with years of seniority in the company
 Defined contribution plans – the employer makes provisions for contributions to an account set
up for each participating employee. Years later when employees retire, the pension is based on
their contributions, employer contributions, and any gains or losses in stock investments
o 401(k) plan – savings plan in which employees are allowed to defer pretax income
o Employee Stock Ownership Plan (ESOP) – company makes a tax-deductible contribution
of stock shares or cash to a trust
o Profit-sharing plan – if the contribution of profits is delayed until retirement
 Cash balance plan – hybrid of DB and DC

How much retirement income to provide?

The level of pension a company chooses to offer depends on the answers to five questions:

1. What level of retirement compensation would a company like to set as a target, expressed in
relation to pre-retirement earnings?
2. Should Social Security payments be factored in when considering the level of income an
employee should have during retirement?
3. Should other postretirement income sources be integrated with the pension payment?
4. A company must decide how to factor seniority into the payout formula
5. Companies must decide what they can afford

Medical and Medically Related Payments

An employer’s share of health-care costs is contributed into one of six health-care systems:

 Community-based system
 Commercial insurance plan
 Self-insurance
 Health maintenance organization (HMO) – provide comprehensive benefits for a fixed fee
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 Preferred provider organization (PPO) – there is a direct contractual relationship between and
among employers, health-care providers, and third-party payers
 Point-of-service plan (POS) – hybrid plan of HMO and PPO benefits

Benefits for Contingent Workers: fewer

Chapter 14: COMPENSATION OF SPECIAL GROUPS

Who are Special Groups?

 Groups that receive special treatment

o Either in the form of add-on packages not received by other employees
o In the form of compensation components unique in the organization
 Special groups share two characteristics
o They tend to be strategically important to the company
o Their positions tend to have built-in conflict arising from different factions placing
incompatible demands on members of the group
 Special groups include:
o Supervisors, top management, boards of directors, scientists and engineers, sales
personnel, and contingent workers.

Supervisors

 The challenge in compensating supervisors centers on equity.

o Incentives are needed to entice nonexempt employees to accept the challenges of being
a supervisor.
 Supervisor jobs are often exempt from overtime pay.
 Strategies to attract workers into supervisory jobs include:
o Provide a 5-30% differential from the top-paid subordinate.
o Pay for scheduled overtime.
o There is an increased use of variable pay.

Corporate Directors

 A board of directors provides strategic decision-making advice.

o 8-11 individuals from both inside and outside the company.
 Due to attention to CEO pay and concerns about impartiality, companies are filling boards with
outside directors.
o Perceived as less prone to bias than internal directors.
o Internal members used to “rubber stamp” the CEO’s decision process.
 Now a director faces highly charged analysis of many things, including CEO
compensation.
o There is considerable risk as stockholders may sue directors.
 In exchange for assuming this risk, directors are well paid.
o Typically $260,000 for working 30-40 hours per month.
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Compensation and Benefits

Scientists and Engineers

 Firms hiring scientists and engineers, classified as professionals, struggle to figure out what pay
should be.
o For the first few years after graduation, an engineer’s knowledge is a valuable resource
but gradually, the knowledge becomes obsolete.
 Because salaries plateau, many make career changes such as moving into management or
updating their knowledge.
o Some companies use the dual career ladder providing two ways of progressing, either
the managerial or the professional track.
 A second problem centers on the question of equity.
o Maturity curves reflect the years of experience in the labor market.
 Organizations develop perks to satisfy the needs of professionals.
o Flexible schedules, large offices, campus -like facilities, and lavish athletic facilities.

Contingent Workers

 Temporary employee who is (1) hired for contingent work, (2) paid according to hours worked,
and (3) draws no benefits that are commonly available to the regular employees*.
 Engage in tentative employment
 Varied duration of employment

Not considered contingent workers

 Persons not expecting to continue their job for personal reasons, provided they have the option
of continuing

Types of contingent workers:

 Part-time employees
o Voluntary part time employee - part-timer workers who do not wish to work full-time.
o Involuntary part time employee
 Job sharing - 2 or more part-timers perform 1 job

Benefits to employers: Benefits to employees:

o Maintains productivity levels because o Continued employee benefits

of increased morale o Continued employment
o Retains skilled workers o Maintains family income
o Reduces training costs o Continued participation in qualified
o Minimizes post-recession costs retirement programs
o Increases flexibility
o Strengthens employee loyalty

 Temporary workers  On-call work

o Perform jobs on a short-term o Method for employing
basis temporary workers
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Compensation and Benefits

Reasons for hiring temporary employees:

1. To fill-in for core employees on approved leaves of absence

2. To have extra sets of hands during peak periods

 Leased employees

Leased employee arrangements:

a. Lease company does all HRM functions

b. Fees either % of payroll, or % per employee
c. Employees work for contract duration
d. Food service, security, building, maintenance, administration

 Independent contractors
o Includes freelancers and consultants
o Establish working relationships with companies on their own
o Typically possess specialized skills
o Typically selected to complete short-term projects

Rise in Use of Contingent Workers

 Economic recessions
 Shift in International competition
 From manufacturing to service
 More females in workforce
 Runaway costs to provide employer-sponsored health insurance

Pay and Benefits for the Contingent Workforce

 Part-Time Employees
Challenges for employers:
o Hourly or salary basis
o Equity problems between core and part-time employees
o Employee benefits
 Temporary Employees
Challenges to employers:
o Equity problems
o Employee benefits
o Responsibility for workers: temporary agency or client company?
 Leased Workers
Challenges to employers:
o To offer discretionary benefits or not
o Responsibility for providing discretionary benefits: leasing company or client company?
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Compensation and Benefits

 Independent Contractors
Challenge to employers:
o Determination of financial dependence
o Economic Reality Test
 Extent a worker controls methods & result
 The control a company has on worker’s earnings
 Importance of worker’s service to the company
 Initiative or skill level required
 Permanency, exclusivity, or length of assignment
 Worker’s investment in materials or equipment

Flexible Workers

 Flexible Schedules Flextime - gives individuals a daily choice in the timing of their work
commitments.

Advantages:

 For workers: shorter commuting time, more leisure time, more job satisfaction, and greater
sense of responsibility
 For employers:
o Lower tardiness & absenteeism
o Higher productivity
o Extended business hours •
Possible drawbacks
 For employers:
o Increased overhead costs
o Coordination problems

 Flexible Schedules Compressed Workweeks - any scheduling of work that allows a full-time job
to be completed in fewer than the standard five days.
o Four 10-hour days
o Three 12-hour days

Possible benefits: Disadvantages

 Can promote recruitment and • For workers: increased fatigue from

retention
 Can reduce commuting time
 Can allow more family time
the extended workday and family
adjustment problems.
• For organizations: work scheduling
problems, customer complaints,
possible union opposition.

• Flexible Schedules Telecommuting - work done at home or in a remote location via the use of
computers and advanced telecommunication linkages with a central office or other employment
location
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Compensation and Benefits

Advantages: Disadvantages:

• For workers: flexibility, comforts of • For workers: isolation from co-workers,

home, and choice of work locations
consistent with one’s lifestyle.
• For employers: increased productivity,
lower overhead costs (office space &
supplies)
decreased identification with work
team, family distractions
• For employers: no direct contact with
employees, performance appraisal
becomes difficult

Unions’ Reactions to Contingent Workers and Flexible Schedules

• Contingent workers are exploited

• Efforts to get cheap labor leads to poorly trained and less skilled workers
• Difficult to organize part time employees
• Part time work erodes labor standards
• Temporary employees generally not concerned with company productivity
• Unions’ bargaining power is weakened
• Safety and health issues arise from compressed workweek and flextime
• Concerns on the following:
o Employee isolation
o Uncompensated overtime
o Company monitoring

Key Issues in Flexible Employees’ Compensation

• Overtime pay
• Benefits: paid time off, working conditions, fringe benefits

Sales Incentive Compensation Plans

• Salespeople rely on incentives

• How sales compensation programs help companies:
o They align financial self-interest of sales professionals with company marketing
objectives
o They link sales professional’s compensation to fulfilling customer needs or other
marketing objectives
 Sales compensation plans derive objectives from strategic marketing objectives, which, in turn,
are derived from company strategic objectives
 Some sales objectives:
o Improve sales productivity
o Improve sales coverage of current customers
o Grow sales overall
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Compensation and Benefits

Alternative Sales Compensation Plans

Salary-only plans

 Sales professionals receive fixed base compensation, which does not vary with the level of units
sold, increase in market share or any other indicator of sales performance
 Relatively risk-free from the employee’s perspective
 Burdensome from the company’s viewpoint
 May be applicable only in certain situations as:
o Sales of high-priced products and services or technical products with long lead times for sales
o Situation in which sales representatives are primarily responsible for generating demand, but
other employees actually close the sales
o Situations in which it is impossible to follow sales results for each salesperson (e.g. team effort)
o Training and other periods when sales representatives are unlikely to make sales on their own
Salary-plus-bonus-plans

 Offer a set salary coupled with a bonus that is usually made in single payments
 Bonus rewards employee for achievement of specific, exceptional goals
Salary-plus-comission-plans

 Commission - a form of incentive compensation based on a percentage of the selling price of a

product or service
 Salary-plus-commission plans spread risk of selling between company and sales professional
 Salary component
o Presumably enhances company ability to attract good employees and allow the
company to direct its employees
 Commission component
o Serves as employee share in gains they generated for the company

Commission-plus-draw-plans

 Award sales professionals with subsistence pay or draws (money to cover basic living expenses)
yet provide a strong incentive to excel
 Draw - subsistence pay component
Types of draws:
o Recoverable - Act as company loans to employees that are carried forward indefinitely until
employees sell enough to repay their draws
o Non-recoverable - Act as salary because employees are not required to repay the loans if
they do not sell enough
Commission-only plans

 Salespeople derive their entire income from commissions

Types of commissions:
o Straight Commissions - Based on a fixed percentage of the sales price of the product or
service
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Compensation and Benefits

o Graduated Commissions - Increase percentage pay rates for progressively higher sales
volume
o Multiple-tiered commissions - Similar to graduated commissions but employees earn a
higher commission for all sales made in a given period if sales levels exceed a
predetermined level
 Well-suited for situations in which:
o Salesperson has substantial influence over the sales
o Low to moderate training or expertise is required
o The sales cycle is short

Compensating Executives

Executive Compensation Packages

 Has both core and employee benefits elements

 Emphasize long-term or deferred rewards over short-term rewards

Main components:

 Current or annual core compensation

o Base pay - Fixed element of annual cash compensation
o CEO jobs do not fall within formal pay structures
 CEO’s work is highly complex and unpredictable
 Setting CEO compensation differs dramatically from the rational processes
compensation professionals use for building market-competitive pay structures
o Mostly, annual base pay is a small part of the CEO’s total compensation
 It takes years for fruits of CEO’s strategic initiatives to be realized
 There are limits to the amount of annual salary that may be excluded as business
expense
o Bonuses - Represent single pay-for-performance payments companies use to reward employees
for achievement of specific, exceptional, goals
Types:
 Discretionary bonus - Awarded to executives on an elective basis
Factors to consider:
o Company profits
o Financial condition of the company
o Business conditions
o Prospects for the future
 Performance-contingent bonus - Based on attainment of specific performance criteria
 Predetermined allocation bonus - Based on a fixed formula, mainly based on company
profits
 Target plan bonus
o Ties bonuses to executive performance
o Bonus amount is commensurate with performance
o No bonus when performance is below acceptable standards
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Compensation and Benefits

 Short-term incentives
o Given in order to recognize executive’s progress toward fulfilling competitive strategy
goals
o Participation in current profit-sharing plans and gain sharing plans
o Profit sharing
 employees receive bonuses tied directly to the company's overall profitability
 Current profit-sharing plans: awarding cash to employees (quarterly or annually)
 Deferred profit sharing: cash awards held in trust accounts
o Gain sharing
 Incentive payments to participating employees based on improved company
performance
 bonuses are linked to specific improvements in performance, such as increased
productivity, higher sales or reduced expenses*

 Deferred core compensation: Stock compensation

o Agreement between an employee and a company to render payments to an employee
at a future date
o Supposed to create sense of ownership
o Provides tax advantages* (U.S.)

Company Stocks

 Main form of executive’s deferred compensation

 Represents total equity of the firm
 Stock compensation plans are designed to increase sense of ownership

Forms of Deferred Stock Compensation:

 Incentive stock option plans - Entitle executives to purchase their companies’ stock in the
future at a predetermined price
 Non-statutory stock options - Companies award stock options to executives at discounted
prices but do not qualify for favorable tax treatments (U.S.)
 Restricted stock
o Executives have no ownership or control over disposition of the stock for a
predetermined period (i.e. 5-10 years)
o Stocks must be sold back to the company for the same discounted price at time of
purchase if employment is terminated before end of designated restriction period
 Phantom stock
o Compensation arrangement where boards of directors compensate executives with
hypothetical company stocks rather than actual shares of company stock
o Similar to restricted stock as specific conditions must first be met before phantom
shares can be converted into actual shares
o General Conditions:
 Executives must remain employed for a specified period
 Executives must retire form the company
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Compensation and Benefits

 Discount Stock Options - Similar to non-statutory stock options but companies grant stock
options at rates far below the stock’s fair market value on the date the option is granted
 Stock appreciation rights
o Provide executive income at the end of a designated period, like restricted stock
options, but executives never have to exercise their stock rights to receive income
o Payments are awarded by the company to executives based on difference in stock
price between time of grant at fair market value to the end of the designated
period, allowing the executives to keep the stock

 Deferred core compensation: golden parachutes

o A clause included in most executive’s employment agreement
o Provide pay and benefits to executives after a termination that results from change in
ownership or corporate takeover
o Extend pay and benefits from 1-5 years, depending on agreement
o Included in agreements for the following reasons:
 Limit executive’s risk in case of unforeseen events
 Promote recruitment and retention of talented executives
 Deferred core compensation: platinum parachutes
o Lucrative awards that compensate departing executives with severance pay, continuation
of company benefits, and even stock options
o Used to avoid long legal battles or critical press reports

 Clawback provision
o Stipulation in CEO employment contracts that allow boards of directors to take back
performance-based compensation if it is subsequently found that performance goals were
not actually achieved
o Becoming more common because of increased scrutiny of CEO compensation

 Employee Benefits: Enhanced Protection Programs

o Supplemental Life Insurance - Protection that pays an additional monetary benefit
 Increases value of executives’ estates bequeathed to designated beneficiaries upon
their deaths
 Provide executives with favorable tax treatments
o Supplemental Retirement Plans
 Designed to restore benefits restricted under qualified plans (U.S.)
 Employers may take tax deductions for contributions to fund future retirement plans
 Employee Benefits: Perquisites
o Integral part of executive compensation package
o Commonly known as PERKS
o Purposes:
 Recognizes executives attained status
 Used for personal comfort or as a business tool

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Compensation and Benefits

Common executive perks

 Company cars  Travel perks

 Financial services  Residential security
 Legal services  Tickets to sporting events
 Recreational facilities

Chapter 16: INTERNATIONAL PAY SYSTEMS

 Culture – shared mental programming which is rooted in the values, beliefs, and assumption held in
common by a group of people and which influences how information is processed
o The assumption that pay systems must be designed to fit different national culture is based on the belief
that most of a country’s inhabitants share a national character
o Job of global manager based on this assumption is to define the national characteristics that influence
pay systems
o Widely used list of national cultural attributes by Hofstede
 Power distance – unequal distribution of power
 Individualism-collectivism – looking after oneself or remaining integrated into groups
 Uncertainty avoidance – a culture programs its members to feel either uncomfortable or comfortable in
unstructured situations
 Masculinity-feminity – distribution of emotional roles between the genders

*Countries where culture is alleged to emphasize respect for status and hierarchy (high power
distance), hierarchical pay structures are appropriate.

*For low-power-distance, egalitarianism is a better approach.

 Managerial autonomy – degree of discretion managers have to make total compensation a strategic
tool

National Systems

Japanese Traditional National System

 3 pillars:
1. Lifetime security within the company
2. Seniority-based pay and promotion systems
3. Enterprise unions

German Traditional National System

 “Vergutung” – most common German word for compensation

Strategic Market Mind-set

Three general compensation strategies:

1. Localizer – operation on different countries means different pay systems for each; operate
independently of the corporate headquarters
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2. Exporter – virtual opposites of localizers; exporters design a total pay system at headquarters and
“export” it worldwide for implementation at all locations
3. Globalizer – used as a part of “glue” to support consistency across all global locations

Expatriate Pay

Expatriate or “Expats” – employees temporarily working and living in a foreign country

 Parent-country nationals (PCN’s) – expats who are citizens of the employer’s parent or home
country and living and working in another country
 Third-country nationals (TCN’s) – expats who are citizens of neither the employer’s parent country
nor the foreign country where they are living and working
 Local country nationals (LCN’s) – citizens of a foreign country where the parent employer operates

*Only rarely do organizations decide that hiring LCNs is inappropriate.

Elements of Expatriate Compensation

 Salary
 Taxes
*Most employers pay whatever income taxes are due to the host country and/or the home country
via tax equalization
 Housing
 Allowances and premiums

The Balance Sheet Approach – stems from accounting where credits and debits must balance

 Based on the premise that employees on overseas assignments should have the same spending
power as they would in their home country. Therefore, the home country is the standard for all
payments. The objective is to:
1. Ensure mobility of people to global assignments as cost-effectively as possible
2. Ensure that expats neither gain nor lose financially
3. Minimize adjustments required of expats and their dependents

Alternatives to Balance Sheet Approach

 Negotiation – the employer and employee find a mutually aggregable package

 Localization or local plus – ties salary to the host country’s salary scales and provides some COLA for
taxes, housing, and dependents

The balance sheet approach ties salary to home country while the modified balance sheet ties salary
to region.
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Compensation and Benefits

WORKERS’ STATUTORY BENEFITS

MINIMUM WAGE

Republic Act No. 6727 (also known as the “Wage Rationalization Act”) mandates the fixing of the
minimum wages applicable to different industrial sectors, namely, non-agriculture, agriculture
plantation, and nonplantation, cottage/handicraft, and retail/service, depending on the number of
workers or capitalization or annual gross sales in some sectors

The Rules Implementing RA 6727 define the industrial sectors as follows:

 “Agriculture” refers to farming in all its branches and, among others, includes the cultivation and
tillage of the soil, production, cultivation, growing and harvesting of any agricultural or horticultural
commodities, dairying, raising of livestock or poultry, the culture of fish and other aquatic products
in farms or ponds, and any activities performed by a farmer or on a farm as an incident to or in
conjunction with such farming operations, but does not include the manufacturing and/or
processing of sugar, coconut, abaca, tobacco, pineapple, aquatic or other farm products.
 “Retail Establishment” is one principally engaged in the sale of goods to end-users for personal or
household use. A retail establishment that regularly engages in wholesale activities loses its retail
character.
 “Service Establishment” is one principally engaged in the sale of service to individuals for their own
or household use and is generally recognized as such.

Minimum wage rates

 Non-agricultural sector: PHP537.00

 Agricultural/Retail/Service/Manufacturing sector: PHP500.00

The basis of the minimum wage rates prescribed by law shall be the normal working hours of eight
(8) hours a day.

Monthly-Paid Employees and Daily-Paid Employees

 Monthly-paid employees are those who are paid every day of the month, including unworked rest
days, special days, and regular holidays. Factor 365 days in a year is used in determining the
equivalent monthly salary of monthly-paid employees.
 Daily-paid employees are those who are paid on the days they actually worked and on unworked
regular holidays.

HOLIDAY PAY

 Payment of the regular daily wage for any unworked regular holiday.
 Entitled to the minimum wage rate (daily basic wage and COLA).
 Entitled to at least 100% of his/her minimum wage rate even if he/she did not report for work,
provided he/she is present or is on leave of absence with pay on the workday immediately
preceding the holiday.
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A. Regular Holiday
 Merits 200% of the daily wage of the employee
 Retail/Service Establishment employing less than 10 workers are not covered/exempted

Php. 537.00 (non-agricultural wage in NCR) x 200% = Php. 1,074 (if worked only on a regular holiday)

 Where the holiday falls on a scheduled rest day of the employee, work performed on said day merits at
least an additional 30% od the employee’s regular holiday rate of 200% or a total of 260%

Php. 537.00 x 260% = Php. 1396.2 (if worked only on a regular holiday AND rest day)

Twelve (12) regular holidays in a year under Executive Order No. 292, as amended by Republic Act 9849:

 New Year’s Day January 1

 Maundy Thursday Movable Date
 Good Friday Movable Date
 Araw ng Kagitingan Monday nearest April 9
 Labor Day Monday nearest May 1
 Independence Day Monday nearest June 12
 National Heroes’ Day Last Monday of August
 Eidl Fitr Movable Date
 Eidl Adha Movable Date
 Bonifacio Day Monday nearest November 30
 Christmas Day December 25
 Rizal Day Monday nearest December 30

 When a regular holiday falls on a Sunday, the following Monday shall not be a holiday, unless
proclamation is issued declaring it a special day.
 When Araw ng Kagitingan falls on the same day as Maundy Thursday or Good Friday, a covered employee
is entitled to have at least two hundred percent (200%) of his/her daily wage even if said day is unworked.
Where the employee is required to work on that day, he/she is entitled to an additional 100% of the daily
wage.

PREMIUM PAY

 Refers to the additional compensation for work performed within eight (8) hours on non-workdays,
such as rest days and special days.

Special Days

 Ninoy Aquino Day Monday nearest August 21

 All Saints Day November 1
 Feast of Immaculate Conception of Mary December 8
 Last Day of the Year December 31
 EDSA People Anniv Feb 25
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 Special Day
o The “no work, no pay”
principle applies during
special days and such other
special day proclaimed by the
President
 COLA shall not be included in the
computation of premium pay.
 Work performed on special
days merits additional
compensation of at least 30% of
the basic pay (130%)
o P 537 x 130% = P 698.10
 Special day falling on his rest
day, he shall be entitled to an
additional compensation of 50%
o P 537 x 150% = P 805.50
 Regular holiday and rest day,
plus 30% of the regular holiday
rate of 200% based on his daily
basic wage rate or a total of
260%
o (P 537 x 200%) + 30% (P 537 x
200%) = P 1,396.20
Overtime Pay
 Additional compensation for
work performed beyond 8
hours a day
 COLA shall not be included in
the computation of OT pay
COMPUTATIONS
1. Overtime Pay – Additional
25% of the hourly rate
o (P 537 / 8) x 125% =
P 67.125
o P67. 125 x No. of OT
hours = answer
2. Overtime during rest day or
special day – additional 30%
of the hourly rate, 30% for
special/rest day
o (P 537 / 8) x 130% x
130% x No. of OT
hours
3. Overtime during Special
day and rest day – additional
30% of the hourly rate, 50%
for special and rest day
o (P 537 / 8) x 150% x
130% x No. of OT
hours
4. Regular Holiday with Overtime –
additional 30% of hourly rate, and
100% for regular holiday
o (P 537 / 8) x 200% x 130% x
No. of OT hours
5. Regular Holiday and Rest day with
Overtime – 260% for regular holiday
and rest day, and 30% for OT
o (P 537 / 8) x 260% x 130% x
No. of OT hours
Night Shift Differential
 Additional compensation of 10% of
an employees’ regular wage rate for
each hour between 10:00PM – 6:00
AM
 COLA should not be included in the
computation for NSD
Service Incentive Leave
 May be used for sick leave purposes
 Unused service incentive leave is
commutable to its money equivalent
at the end of the year
o The basis shall be the salary
rate at the date of conversion
 Employee who has rendered 1 year
of service is entitle to SIL of 5 days
with pay
Maternity Leave
 Whether married or unmarried
o 60 days – normal delivery or
miscarriage
o 78 days – caesarian section
 With benefits equivalent to 100% of
the average daily salary credit of the
employee
 Female employee should be:
o SSS member at the time of
her deliver/miscarriage
o Must have given the required
notification to the SSS
through her employer
o Employer must have paid at
least 3 monthly contributions
within the 12-month period
immediately before the date
of contingency
AGITO
Compensation and Benefits

Expanded Maternity Leave (RA occupation, the male

11210) employee is still entitled to the
 105 days Expanded paternity leave benefit
Maternity Law  7 days with full pay, consisting of
 Section 3 – Grant of basic salary and mandatory
Maternity Leave allowances
o All covered female  Usage shall be after the delivery,
workers in the without the prejudice to an
government and employer’s policy of allowing the
private sector, employee to avail of the benefit
including those in the before or during the delivery,
informal economy, provided that the total number of
regardless of civil days shall not be more than 7 days of
status or legitimacy of each covered delivery
her child  A married male employee shall be
o 105 days maternity entitled to paternity leave benefit
with full pay and an provided that he has met the
option to extend for an following conditions:
additional 30 days o An employee at the time of
without pay the delivery of his child
o Maternity leave cannot o Cohabiting with his spouse at
be deferred but should the time that she gives birth or
be availed of either suffers miscarriage
before or after the o Applied for paternity leave
actual period of with his employer within a
delivery in a reasonable period of time
continuous and from expected date of delivery
uninterrupted manner. by his pregnant spouse
 Who are covered: o His wife has given birth or
o Female workers in the suffered a miscarriage
Public Sector
o “ “ “ “ in the private Parental Leave for Solo Parents (RA 8972)
sector  Granted to a solo parent to enable
o “ “ “ “Informal him/her to perform parental duties
Economy and responsibilities where physical
o “ “ “ “ voluntary presence is required (PTA Meetings,
contributors to SSS check-ups)
and female national  “Child” – a person living with and
athletes dependent on the solo parent for
Paternity Leave support.
 Granted to all married male o Unmarried, unemployed,
employees in the private below 18 years old, or 18
sector regardless of their years old but is incapable of
employment status self-support because he/she
(probationary, regular, is physically and/or mentally
contractual, project basis) challenged
 Shall apply to the first 4  7 days every year with full pay,
deliveries of the employee’s consisting of basic salary and
lawful wife with whom he is mandatory allowances
cohabiting
o If the spouses are not
physically living
together because of
the workstation of
AGITO
Compensation and Benefits

Leave for Victims of Violence Other Statutory Benefits

Against Women and Children  Separation Pay
(VAWC) (RA 9262) o Given to employees in
 Private sector women instances covered by Art. 298
employees who are victims and 299 of the Labor Code of
as defined in RA 9262 shall the Philippines
be entitled to the paid leave  Retirement Pay
benefit under such terms and o Employees shall retire upon
conditions provided herein reaching 60 years old but
 Leave shall cover the days not beyond 65 years old and
that the woman employee have served the company for
has to attend to medical and at least 5 years
legal concerns o benefit applies to all
 Victim-employee to present to employees except
her employer a certification government employees,
from the barangay employee of retail, service,
chairman/councilor , that an and agricultural
action relative to the matter is establishments with not more
pending than 10 employees
 A leave up to 10 days with  Benefits under the Employees
full pay, consisting of Compensation Program (PD 626)
mandatory allowances and o Covers all workers in the
basic salary formal sector
 Shall be extended when the o Loss of income benefit
need arises as specified in o Medical benefits
the protection order issued by o Rehabilitation services
the barangay or the court o Carer’s allowance
o Death and funeral benefits
13th Month Pay (PD 851) o Types of Disability
 All employers are required to  Temporary Total Disability
pay their rank and file (TTD) – Employee who is
employees 13th month pay, unbale to work for a
regardless of the nature of continuous period not
their employment and exceeding 120 days
irrespective of the methods  Permanent Partial
by which their wages are Disability (PPD) – Given to
paid, provided they worked worker who loses a body
for at least 1 month during a part and consequently the
calendar year loss of the use of that body
 Should be given not later than part
December 24 every year  Permanent Total Disability
 Shall not be less than 1/12 of (PTD) – given if the
the total basic salary earned employee’s inability to work
by an employee lasts for more than 240
𝑡𝑜𝑡𝑎𝑙 𝑏𝑎𝑠𝑖𝑐 𝑠𝑎𝑙𝑎𝑟𝑦 𝑒𝑎𝑟𝑛𝑒𝑑 𝑑𝑢𝑟𝑖𝑛𝑔 𝑡ℎ𝑒 𝑦𝑒𝑎𝑟 days
 =
12 𝑚𝑜𝑛𝑡ℎ𝑠 o PhilHealth Benefits (RA 7875)
𝑝𝑟𝑜𝑝𝑜𝑟𝑡𝑖𝑜𝑛𝑎𝑡𝑒 13𝑡ℎ 𝑚𝑜𝑛𝑡ℎ𝑦 𝑝𝑎𝑦
AGITO
Compensation and Benefits
o SSS (RA 1161)

Provides package of
benefit in the event
of death, disability,
sickness, maternity,
and old age
 Provides
replacement of
income lost
o PAG-IBIG (RA 9679)
 Pagtutulungan sa
Kinabukasan: Ikaw,
Bankgo, Industriya,
at Gobyerno)
 Home development
mutual fund
DISCRETIONARY BENEFITS
 Originated in the US in mid
1940s and 1950s
3 Broad Categories of Discretionary
Benefits:
1. Protection Programs
2. Paid Time Off
3. Services
Disability Insurance
 Replaces income for
employees who become
unable to work because of
sickness or accidents
 Employees need this kind of
protection:
 The probability of being
disabled for at least 90
consecutive days is higher
than the chance of dying
while working
 One of every three
employees will have a
disability that lasts 90 days
Types of Disability Insurance
 SHORT TERM
o Provides protection for
a limited time
o Usually less than 6
months
oInability to perform duties of
one’s regular job
 Manifestations include:
 Recovery from
injuries
 Recovery from
surgery
 Treatment or
illness requiring
hospitalization
 Pregnancy
 LONG TERM
o Provides benefits for extended
periods
o Between 6 months and life
o Disability as the inability to
engage in any occupational for
which the individual is qualified
o Usually begin 3-6 month of
disability until retirement or a
specified number of months
Life Insurance
 Employer-provided life insurance
protects families by paying a specified
amount to an employees beneficiaries
upon employee’s death
Types of Life Insurance
 TERM LIFE INSURANCE
o Provides protection for a
specific time period based on
a specified number of years to
a maximum age
o Automatically expired after the
term
 WHOLE LIFE INSURANCE
o Do not terminate until payment
is made to beneficiaries
o More expensive
 UNIVERSAL LIFE INSURANCE
o Provides protection to
employees’ beneficiaries
based on the insurance
feature if term life insurance
and more flexible savings or
cash accumulation plan found
in whole life insurance
programs
AGITO
Compensation and Benefits

Retirement Programs and among employers, health-

 Often referred to as pension care providers, and third-party
plans payers
 Provide income to employees  Point of service Plan (POS)
and their beneficiaries during o Hybrid plan combining HMO
some or all or their retirement and PPO
 Employees rank pension o Permits an individual to
plans as one of the more choose which plan to seek
important benefits treatment form
 Health Reimbursement
Protection Programs – Health Arrangements (HRAs)
 Include health insurance, o Employer sets up an account
hospitalization benefits, for a specified amount
managed care plans through o Qualified medical costs are
health maintenance submitted for reimbursement
organizations (HMO) until the account is depleted
 Customized Plans
General Health Care o Employee chooses among a
 Employers share of health menu of health care products
care costs are contributed o Employer subsidizes part of
into: the premium
o Community Based  Design your own products
System o Employer select their own
 Insurance rates are providers and benefit
based on the o Employer subsidizes up to a
medical experience set level
of the entire  Health Savings Accounts (HSAs)
community o Tax exempt account built upon
o Commercial by contributions of the
Insurance Plan employee, employer, or both
 Guarantees fixed
payment to the Paid Time Off
insured for hospital  Compensate employees when they
service are not performing their primary work
 The insured in turn duties among the major types are:
reimburses the o Holidays o Sabbatical
hospital o Vacation o Clean-up,
 Self-Insurance o Sick preparation
o Cost of medical Leave time, or travel
coverage is directly o Personal time
related to usage level Leave o Rest period
o Employer payments o Jury o Lunch Period
go directly to medical Duty o Integrated
care providers o Funeral Paid Time Off
 Health Maintenance Leave policies
Organization (HMO) o Military o Volunteerism
o Comprehensive Leave
benefits for a fixed fee

 Preferred Provider
Organization (PPO)
o Direct contractual
relationship between
AGITO
Compensation and Benefits

Services  Transportation Services

 Employee Assistance o Helping bring employees to
Programs (EAP) work
o Help employees cope  Shuttle bus
with personal  Train tickets
problems that may  Transit passes or
impair their job vouchers
performance (alcohol  Outplacement Assistance
or drug abuse, o Providing emotional and
domestic violence, technical support to
emotional impact of employees who are being laid
disease, clinical off or terminated
depression, eating o Those best suited for
disorder) outplacement include:
o Can be formal  Lay off due to
programs run on-site economic hardship
by in-staff, can be  Mergers and
contracted out acquisitions
 Family Assistance  Company
Programs reorganization
o Help elder care and  Changes in
childcare through management
referrals or on-site  Plant closings or
child or elder care relocation
 Elder care –  Elimination of specific
physical, emotional, positions (redundancy)
or financial o Services can include:
assistance  Personal counseling
 Childcare –  Career assessment
supervision of pre- and evaluations
school age  Training in job
dependent children research techniques
whose families work  Resume and cover
outside home letter writing
o Flexible scheduling  Interview techniques
and leave  Wellness Programs
o Daycare – subsidies o Promote maintain employee’s
for day care in physicals and psychological
community centers health
 Tuition Reimbursement  Smoking cessation
o Promote employees’  Stress management
education  Weight control and
o Full or potential nutrition
reimbursement of  Financial Education
expenses incurred for Helping employees manage their budget and
training or education long-term savings
o Variations in tuition
reimbursement
percentage may be
based on relevance of
the course to company
goals or employee
grades
AGITO
Compensation and Benefits

ARGENTINA:  10 years -‐ 20 years: 28 days

WAGE AND SALARY:  20 years above: 35 days
15,625 ARS/Month (September 2019)
SEVERANCE PAY
16,875 ARS/Month (October 2019)
 3 months or less: 0.5-‐month salary
MANDATORY BENEFITS:  3 months -‐ 5 years: 1-‐month salary
OVERTIME WORK DURING  5 years and above: 2 months’ salary
WEEKDAYS:  If appropriate notice was not given, additional
+ 50% of the payments will be provided.
payment OVERTIME MATERNITY LEAVE
WORK ON:  90 days
 WEEKENDS/NATIONAL HOLIDAYS  30 days before birth and 60 days after; or 45
+ 100% of the payment days before birth and 45 days after
 13TH MONTH PATERNITY LEAVE
PAY  2 days after child's birth
"Aguinaldo" OTHER LEAVE:
 Semi-‐annual  Marriage: 10 days
installments June  Death of a relative: 3 days
30th  Examination for university or secondary school:
 December 18th 2 days at a time
SOCIAL SECURITY
 Retirement and Governmental INDONESIA:
 Pension WAGE AND SALARY:
65 years old for men
60 years old for women RP 3,940,972 / MONTH USD 263 / MONTH
PESO 13,363.03 / MONTH RP 131,365.733 / DAY
 Made contributions for 30 years
USD 13.15 / DAY
 Demand employees for
PESO 668.1515 / DAY
Retirement at the age of 70
Indonesia work: 40 hours per week Indonesia
RETIREMENT PROGRAM
work: 8 hours per day
 BASIC RETIREMENT PROGRAM
 DISABILITY RETIREMENT PROGRAM PAID TIME OFF, PROTECTION BENEFITS & OTHER
 PENSIONS FOR DECEASED BENEFITS:
MEMBERS  Time off – 14 public holidays additional days
 PENSIONS FOR DISEASED RETIREES off for those observing Islam
 RETIREMENT FOR ADVANCED AGE  Annual leave – 12 days per year
HEALTH INSURANCE  Maternity leave -‐ expecting mothers are
 Employers: 6% entitled to 1.5 months period of rest before the
 Employees: 3% on top of their time at which they are estimated by an
base pay This includes: obstetrician or a midwife to give birth to a baby
o maternity and child plans and another 1.5-‐month period of rest thereafter.
o dental plans  Paternity leave -‐ Fathers in Indonesia working
o medication in the public sector (civil servants) are eligible for
o medical appointments exams paid paternity leave for one month, while those
o surgeries in the private sector are eligible to two days of
SICK LEAVE paid leave.
 3 months paid sick  Personal leave -‐ Employers must provide
leave (> 5 consecutive paid time off for personal leave as follows:
years)
 6 months paid sick
leave (5 consecutive
years)
ANNUAL VACATION LEAVE
 6 months -‐ 5 years: 14 days
 5 years -‐ 10 years: 21 days
 AGITO
Compensation and Benefits

MANDATORY BENEFITS:
 Vacation days: 12 paid vacations days
after 1 year of employment
 Social security payments: mandatory of
the law
 Pension fund: mandatory by law,
employer’s contribution is 5.7% from gross
salary and employee contribute 3%
 Sick leave -‐ absence from work due to
illness or injury should not deduct the
workers’ days of annual leave.
o Compensation – monetary
 Sick day/leave: rate of 100% of the
compensation must be paid to cover
employee’s salary for the first 4 months, the
the following (Labor law):
percentage of the pay decreases
Annual leave that has not
afterwards
expired or been taken
 Employers must provide continuous leave Relocation expenses
to workers who are ill if they provide a Medical and housing allowance
written statement from their doctor. The Other benefits provided under the
wage received by the workers should be collective labor agreement
as the following: Other compensation amounts as
determined by the Industrial Relations Court
If the dismissal is not due to the employee’s
fault, the employee is entitled to 2 times the
severance pay amount plus the standard
service appreciation pay and compensation
Social security -‐ Social security payments are
mandatory by the law. Percentages can be
 Severance pays found in the chart below:
o Standard severance pays

o Service appreciation pays OVERTIME WAGE:

 For overtime performed in weekdays, for the
first overtime hour, wages must be paid at
one and a half times the hourly wage and for
every subsequent overtime hour, wages
must be paid at two times the hourly wage.
 For overtime performed on a weekly rest day
and/or a public holiday which falls on a
weekly rest day for a Six Day Work Week:
AGITO
Compensation and Benefits

o a. the first seven hours: two times the agriculture, or institutions of higher
hourly wage education, individuals whose earning or
o b. the eight hours: three times the productive capacity is impaired by a
hourly wage; physical or mental disability, including
o c. the ninth and tenth hour: four times those related to age or injury, for the work
the to be performed.
hourly wage. YOUTH MINIMUM WAGE
 For overtime performed on a weekly  Allows employers to pay employees
rest day which falls on a week day for under 20 years of age a lower wage for
a Six Day Work Week: 90 calendar days after they are first
a. the first five hours: two times the employed.
hourly wage; PAID TIME OFF
b. the sixth hour: three times the hourly  Sick Leave – 5 days
wage;  Paid Time Off
c. the seventh and eighth hour: four  17 days after one year of service
times the hourly wage.  22 days after five years of service
 For overtime performed on a weekly  25 days after ten years of service
rest day and/or a public holiday for a
 28 days after 20 years of
Five-‐Day Work Week:
employment
a. the first eight hours: two times the
 Bereavement Leave a total of up to
hourly wage;
104hours (13days) of sick leave each
b. the ninth hour: three times the hourly
leave year
wage;
c. the tenth and eleven hours: four
 Leave of Absence – 12 weeks off in a
12-‐month period.
times the hourly wage.
 Military Leave – 30 days of leave per
year, accumulated at the rate of 2.5
days per month
 Sabbatical – 2 to 12 months
UNITED STATES OF AMERICA:  Jury Duty
WAGE AND SALARY: PAID TIME OFF
 USUAL PAID HOLIDAYS
Fair Labor Standards Act (FLSA)
o New Year's Day,
MINIMUM WAGE o Easter,
o Memorial Day,
$7.25/hour o Independence Day (4th of July),
Applies to employees of o Labor Day,
enterprises that have annual gross o Thanksgiving Day,
volume of sales or business done of o Friday after Thanksgiving
at least $500,000. o Christmas Day
OVERTIMEPAY JURY DUTY
 Employees covered by the Act Eight (8) states require an employer to pay
must receive overtime pay for employees while serving jury duty:
hours worked over 40 in a work Alabama, Colorado, Connecticut,
week at a rate not less than time Louisiana, Massachusetts, Nebraska, New
and one-‐half their regular rates of York, and Tennessee.
pay.  Fifteen (15) states specifically prohibit
SUBMINIMUM WAGE employers from requiring employees to
 Provides for the employment of take paid vacation, sick, personal, or
certain individuals at wage rates other type of leave: Alabama, Arizona,
below the minimum wage. Arkansas, Indiana, Louisiana, Mississippi,
 Student-‐learners (vocational Missouri, Nebraska, Nevada, New
education students) full-‐time Mexico, Ohio, Oklahoma, Utah,
students employed by retail or Vermont, and Virginia.
service establishments,  PROTECTION BENEFITS:
AGITO
Compensation and Benefits

FAMILY AND MEDICAL Security.

LEAVE(FMLA) Then you must have a medical condition
Is a federal law that can be of that meets Social Security's definition of
assistance if you need to take time disability
off  UNEMPLOYMENT BENEFITS
from work because of family Eligibility for unemployment insurance,
responsibilities the
Employers with more than 50 amount of unemployment compensation
workers you will receive, and the length of time
must provide eligible employees up benefits are available are determined by
to 12 state law.
work weeks of unpaid FMLA leave  Earnings Requirements
during  Eligibility Based on Type of Job Loss
any 12-‐month period.  Hours Worked Requirements
O Who's Eligible for FMLA o SHORT TERM DISABILITY BENEFITS
Birth and care of a new born child Insurance policy that protects an
of employee from loss of income in the case
the employee that he or she is temporarily unable to work
Care for an adopted child or due to illness, injury, or accident.
child in  Employees need to work for the
foster care employer for a certain amount of time
Are for an immediate family before coverage kicks in.
member  Employees need to work
with a serious health condition -‐time, usually 30 hours or more a week
Medical leave when the
employee is o LONG TERM DISABILITY BENEFITS
unable to work because of a serious
An insurance policy that protects an
health
employee from loss of income in the event
condition
that he or she is unable to work due to illness,
Deal with emergencies related to
injury, or accident for a long period of time.
a
family member’s active military duty  Employees usually need to work for the
o MILITARY FMLA employer for a certain amount of time
National Defense Authorization before coverage kicks in
Act extends coverage to
employees with spouses, children,  Employees need to work full-‐time, usually
or parents who now are serving on, 30 hours or more a week
or have been called up for, active
duty in the military  Employees need to elect their benefits
Who's Child care for the child of a and be contributing to the plan
deployed military member OTHER BENEFITS
Attending certain military
briefings o Health Benefits
or
o Wellness Benefits
ceremonies
Making financial or legal o Retirement and Planning Benefits
arrangeme
nts o Work-‐life and Convenience Benefits
related to the military member’s
o Financial and Career Benefits
absence
o Travel and Relocation Benefits
Eligible for FMLA
 SOCIAL SECURITY DISABILITY
To qualify for benefits, you must BRAZIL:
first have
worked in jobs covered by Social WAGE AND SALARY:
AGITO
Compensation and Benefits
o18 days, if the employee had from 15
to 23 unjustified absences
998 reals ($257.5) 65 BRL / hour
11, 323 reals / monthly
MADATORY BENEFITS:
•monthly salary;
•transportation vouchers;
•family allowance;
•profit-‐sharing upon achievement of
goals;
•paternity leave;
•vacation pay, plus one-‐third
vacation bonus;
•13th-‐month salary
•monthly contribution to the
employee
severance indemnity fund (FGTS),
•Maternity Leave
•rights provided for in a CBA;
•severance pays
PATERNITY LEAVE:
• Fathers are entitled to up to
five days paid parental leave. An
employer can grant an additional 15
days' paid paternity leave and
recover that payment from tax
benefits granted by the federal
government.
VACATION LEAVE:
•Employees entitled to 30 paid
vacation days after every 12 months
of work.
•Vacation payment is equivalent to
one month's salary + 1/3 of the
month salary.
•The main condition that workers must
follow tohave the right to 30 day-‐
vacations is to not have more than
five unjustified absences in a year.
•If this happens, the vacation days
are decreased as follows:
o24 days, if the employee had from 6 to 14
unjustified absences
o12 days, if the employee had from 24 to 32
unjustified absences
onone, if the employee had more than 32
unjustified absences in a year
•A company can consider as unjustified any
absence that does not fit the following:
o In the case of the death of a family
member
o If an employee gets married
o If an employee’s child is born
o In case of blood donation
o If employees list themselves as a voter
• A company can consider as unjustified any
absence that does not fit the following:
o Absences that happened due to military
service
o Absences that happened while the worker
was doing vestibular (Brazilian test to enter
college)
o Absences that happened while the worker
was attending court
Annual Vacation
o After each 12-‐month period, workers have
the right to annual vacation.
o Employees have the right to get a
vacation bonus instead of taking leave
from work.
• Collective Vacation
oThe employer can concede two periods
of collective vacation per year, and both
of them must be of at least 10 days.
o Companies willing to concede
collective vacation must notify the Ministry of
Labor at least 15 days in advance.
13TH Month Pay
o Equivalent to one-‐twelfth of the monthly
salary for each month worked, calculated
based on the salary for the month of
December and paid in two instalments,
the first between the months of February
 AGITO
Compensation and Benefits
and November and the second
on 20 December;
Maternity Leave
oA pregnant employee is entitled to
120 days of paid maternity leave. This
payment is made by the employer
and reimbursed by the National Social
Security.
oAn employer can grant an
additional 60 days of paid maternity
leave and recover that payment from
tax benefits granted by the federal
government.
oThe pregnant employee also has job
stability (that is, they cannot be made
redundant) from confirmation of
pregnancy up to five months after the
delivery.
Severance pays
oLegal Compensation
a.The labor rights related to the
mandatory severance pay vary
according to the type of termination,
as follows:
b.Termination without cause, on the
employer's initiative:
•prior notice of 30 days increased by
three days for each year of service for
the same company; salary balance in
the termination month;
•Legal Compensation
o The labor rights related to the
mandatory severance pay vary
according to the type of termination,
as follows:
a. Termination without cause, on the
employer's initiative:
o prior notice of 30 days increased by
three days for each year of service for
the same company;
o salary balance in the termination
month;
o unused earned vacations and one-‐
third additional payment;
o prorated vacation and one-‐third
additional payment;
o 13th salary (or prorated 13th salary,
depending on the termination date);
o FGTS: deposit in the employee's
dedicated FGTS account (equivalent to 8
per cent of the employee's pay) in the
termination month, as well as upon prior
notice and 13th salary;
o 50 per cent FGTS fine based on the
amount deposited in the employee's FGTS
account;
o any other labor right related to the
termination provided for in the current
CBA; and any other compensation or
benefit contractually agreed with the
employee
a. Termination with cause, on the
employer's initiative:
o salary balance in the termination
month;
o earned vacation and one-‐third
additional payment; and
o FGTS: deposit in the employee's
blocked account (equivalent to 8 per
cent of the employee's pay) in the
termination month
a. Termination as a result of resignation by
the employee:
o salary balance in the termination
month;
o 13th salary (or prorated 13th salary,
depending on the termination date);
o earned vacations and one-‐third
additional payment;
o prorated vacation and one-‐third
additional payment; and
o FGTS: deposit in the employee's
blocked account (equivalent to 8 per
cent of the employee's pay) in the
termination month, as well as upon 13th
salary.
• In any termination, the Labor Reform
Law provides the employer with a 10-‐ day
term from the termination date for paying
severance.
• Sick Leave
a. January 1st -‐ New Year’s Day
 AGITO
Compensation and Benefits
b. April 21st – Tiradentes
c. May 1st -‐ Labor Day
d. September 7th
Independence Day
e. October 12th -‐ Our Lady of
Aparecida Day (also Children’s
Day)
f.November 2nd -‐ Day of the
Dead
g.November 15th -‐ Proclamation
of the Republic
h.December 25th –Christmas Day
i.Carnival, or Carnaval, that
antecedes the catholics’ lent;
j.Holy Friday
k.Corpus Christi
DISCRETIONARY BENEFITS:
• Health Insurance
Companies that give health
insurance as a benefit usually
extend this benefit to the
employee's spouse and kids under
18.
• Scholarships
o Many companies offer financial
aids or even afford the
employee's school tuition
• New Benefits
 Meal Vouchers
PAID TIME OFF:
• Holiday Leave
o According to Brazilian law, it’s
forbidden to make employees work
during national and local holidays,
unless the job on that day is considered
essential for the operation of the
company.
o Every year, the duration of paid
holidays is 30 consecutive days.
o These are the following national holidays of
Brazil:
-‐
o Employees are entitled to paid time off in the
event of illness or injury for the first 15 days of sick
leave.
Any further days off are paid through fixed rates
by the National Institute of Social Security (INSS).
SOUTH KOREA
WAGE AND SALARY:
8,350 won / hourly
1.3 million KRW / month (minimum salary)
Income tax is charged at a rate of 6% to 38%
(depending on income)
Pay Date
Salaries in South Korea are paid by the 15th
day of each month.
Working Hours
40 hours per week and 8 hours per day.
The maximum amount of the working
hours per week is 52.
Overtime Payment
Anything over 40 hours per week, 8 hours
per day is considered overtime.
Night Work
50 percent of the ordinary hourly wage must
be paid for work performed between 10
p.m. and 6
a.m. This is termed the night-‐time premium.
PAID TIME OFF:
 Holiday
o 1st of May (Labor Day)
 Working hours
o Under the Korean Labor Law employers
must allow employees a minimum of one
paid day off per week
 Annual Leave
o After one year of service employees are
legally required to 15 days of paid annual
leave
 Sick Leave
o employers are required to pay employees
for sick leave only in cases of occupational
injury or illness
 Maternity and Nursing Leave
o entitles female to 90 days paid maternity
leave 45 days must be used after
childbirth, with the final 30 days
compensated by the Unemployment
 AGITO
Compensation and Benefits
Insurance Fund
 Paternity Leave
o 10 days paid leave
o Child Care Leave
employees who have child not
more than 8 years old or in the 2nd
or lower grade, eligible for one year
of child care paid leave
 Family Care Leave
90 days per year of family care
leave
 Military and Training Leave
employers may not penalize
employees for work missed due to
military obligations
 Fertility Leave
3 days of leave for fertility
treatment
PROTECTION BENEFITS:
South Korea Protection Pay
 To qualify to a pension a person
must be at least 61 years old
above and had made at least
10 year of contribution.
 In South Korea there are four
types of Social Security;
 National Pension (NP)
o National Health Insurance (NHI)
o Employment Insurance (EI)
o Worker's Accident Compensation
Insurance (WCI_)
 There is also severance pay that
requires no employee
contribution. It is taxed from the
people.
OTHER BENEFITS:
Social insurance
 Regardless of the number of
employees that the company
may have, there are four types of
‘social insurance’ that i t is
required to subscribe to on behalf
of, and for the benefit of, its
employees:
o national pension;
o unemployment insurance;
o worker ’s compensation for
industrial accidents; and
o national health insurance.
JAPAN:
WAGE AND SALARY:
originated while insured; the minimum
guarantee is 49,967 yen per month], survivor
benefits [provided
¥901 / hourly
¥4.14 million / annually
PROTECTION BENEFITS:
MEDICAL CARE
-‐patient pays 20% of medical costs (30% for
dependents and 20% for their hospitalization)-‐
includes medical treatment, surgery,
hospitalization, nursing care, dental care,
medication, etc.
SICKNESS BENEFITS
-‐The Health Insurance Scheme provides 60% of
the standard monthly remuneration
(determined on the basis of the insured person's
basic monthly salary/wage) as a sickness or
injury benefit from the fourth day, for up to 18
months.
MATERNITY BENEFITS
-‐Health Insurance Scheme provides 60% of the
standard monthly remuneration as a maternity
benefit for the 42 days before and 56 days after
childbirth. In addition, there is a lump-‐sum birth
and nursing grant (spouse lump sum birth and
nursing grant for the spouse) of 300,000 yen.
NATIONAL PENSION SCHEME
-‐ Applies to all residents in Japan 20 to 59 years
old.
1.basic old-‐age pension
2.basic disability pension
3.basic survivor's pension
EMPLOYEE’S PENSION INCURANCE SCHEME
-‐ Applies to persons employed by private-‐
sector companies.
1.old-‐age benefits [over 60 years of age (over
59 for women) who have contributed for 25
years or more
2.disability benefits [disabilities resulting from
sickness or injury for a family when an insured
person or a person who was eligible for a basic
old-‐age pension dies]
-‐ Financial resources are covered by insurance
premiums paid equally by employees and
 AGITO
Compensation and Benefits
employers. The premium rate is 17.35%
(since October 1996).
FAMILY BENEFITS
-‐5,000 yen per month for the first and
second child respectively, and 10,000
yen for each additional child
EMPLOYMENT INJURY BENEFITS
1.Workmen's accident compensation
insurance is aimed at all workers
2.When a worker is injured, falls ill,
becomes disabled or dies as a result of
a work-‐related accident, including
accidents while commuting, insurance
benefits are paid to the worker or his
survivors as follows:
a.MEDICAL BENEFIT (when the worker
needs medical treatment);
b.TEMPORARY DISABILITY BENEFIT (when
the worker cannot receive any
earnings due to absence during the
period of medical treatment, the
benefit is paid from the fourth day of
the absence);
c.LONG-‐TERM DISABILITY BENEFIT
(When the worker has not fully
recovered from injury or illness after one
and a half years from the beginning of
medical treatment, and whose
disability falls into the category of injury
or illness);
d.PERMANENT DISABILITY BENEFIT (When
the worker has permanent disabilities
after recovery from a work-‐related
injury or illness)
e.SURVIVOR BENEFIT AND FUNERAL
EXPENSES (Funeral compensation
benefits) (when the worker dies);
f. HEALTH CARE BENEFIT (When the
worker who receives disability and injury
(compensation) benefit needs
continuous or on-‐call care and, at
present, is receiving such care).
PAID TIME OFF:
• IN JAPAN, IT IS MANDATED BY LAW
THAT ALL FULL-‐TIME EMPLOYEES ARE
GIVEN A BASIC 10 DAY PAID LEAVE IN
THEIR FIRST YEAR. COMPANIES ARE ALSO
ALLOWED TO EXCEED MORE THAN THAT.
• THOUGH THERE ARE CERTAIN REQUIREMENTS
THAT MUST BE MET : WORKING AT LEAST 30 HRS
PER WEEKMUST HAVE AN ATTENDANCE RATE OF
MORE THAN 80%WORKED FOR MORE THAN 6
MONTHS ALREADY THOUGH SOME COMPANIES
CAN GIVE THE BASIC 10-‐DAY PAID LEAVE
MUCH EARLIER THAN THAT
• THE AMOUNT OF LEAVE DAYS WITH PAY WILL
INCREASE THE LONGER YOU STAY AT THE
COMPANY (LOYALTY SYSTEM)
• PART TIME WORKERS ALSO HAVE PAID LEAVE
DAYS
• CALCULATION FOR PART-‐TIME PAID LEAVE
(EITHER OF THE TWO DEPENDING ON THE HIGHER
AMOUNT)
o LAST 3 MONTHS TOTAL WAGES/ NUMBER OF
DAYS WORKED X 0.6
o LAST 3 MONTHS TOTAL WAGES/ 92 DAYS
• STOCKING PAID LEAVE DAYS IS ALSO
ALLOWED BUT EXPIRES IF UNUSED AFTER TWO
YEARS ACCORDING TO THE ARTICLE 39.5 OF THE
LABOR STANDARDS ACT OF JAPAN
• THE GOVERNMENT OF JAPAN IS VERY
GENEROUS WHEN IT COMES TO ADDING THAT
MANDATED 10 DAYS LEAVE. THE COUNTRY HAS
12 PUBLIC HOLIDAYS BEING IMPLEMENTED.
• MARRIED COUPLES CAN GET 5 EXTRA DAYS OF
PAID LEAVE IF THEY WILL BE GOING TO THEIR
HONEYMOON
• MOURNING DAYS ARE ALSO CONSIDERED AS
PAID LEAVE DAYS. THOUGH IT DEPENDS ON THE
RELATION OF THE EMPLOYEE TO THE DECEASED.
o 5 DAYS IF IT IS YOUR PARENT OR SIBLING
o 3 DAYS IF IT IS YOUR GRANDPARENT
OTHER BENEFITS:
Overtime
-‐ The overtime hours should stay within the
following limits in Japan:
-‐ 5 hours per day
-‐ 45 hours per month
-‐ 360 hours per year.
Overtime pay rate
-‐The Japanese Labor Law fixes the extra
payment for overtime hours
 AGITO
Compensation and Benefits

Health Care Exceptions:

-‐Cleaner jobs $1,000 / month
-‐ National Universal Health care system -‐Security guard $1,100 / month
-‐ Employees enrolled in Social
Insurance can benefit from the national VACATION LEAVE
coverage.  7 days of annual leave
 Worked in the company for
-‐ Employees receive a Social Insurance three consecutive months
card  One additional day is added per
-‐ Pay only 30% of the standard costs each year
Sick Leave
SICK LEAVE
-‐There are no sick leave rights in Japan.
When employees get sick they use their
paid vacation to take a leave of
absence. Some foreign companies
grant sick leave to their employees as a
special benefit.

MATERNITY LEAVE

Commutation expense
PATERNITY LEAVE
-‐Companies typically refund  Must be legally married
commutation expenses based on the  Father is employed for over 3 years
monthly train fare although it is not an  2 weeks paid leave
obligation.

Business Expenses PARENTAL LEAVE

-‐Business related expenses are fully
reimbursed to employees (travel,
meals, lodging). Expenses non-‐ related
to work usually have to be included in
salary and are subject to taxation.
 2 days paid childcare leave yearly if
youngest child Is between 7 and 12
years old
 Employed for over 3 months

Annual Physical Checkup Benefit

-‐Employees registered under the social

insurance general system “Kyokai
Kempo” are entitled to receive as a
benefit an annual physical checkup, at
any hospitals designated by “Kyokai-‐
kempo”. Cost supported by the
employee for this checkup is around
JPY 7,000. More advanced checkup is
available for additional fees.

SINGAPORE:

WAGE AND SALARY:

No minimum wage laws and

regulations
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Compensation and Benefits
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Compensation and Benefits
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Compensation and Benefits
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Compensation and Benefits