Want to Build an Excellent Compensation and Benefits Program? Here's an Ultimate Guide!
Introduction
Employees are the backbone of every successful company. They play a key role in helping businesses achieve greater success and growth. For this reason, employers should take the extra mile to attract and retain top-tier talent.
If you want your company to stand out from the crowd and attract the best of the best, you should prioritize offering a competitive compensation and benefits program in the Philippines. This doesn’t only refer to the payment your employees receive for their work—it also includes perks like bonuses, paid time-offs, and the opportunities to work remotely, among others.
Attractive compensation and benefits will help you uphold a more engaged, motivated, and productive workforce. If you are wondering how to tailor an enticing program that aligns with your organizational goals and values, Q2 HR Solutions is here to help. In this article, we take a deep dive into the laws and types of compensation and benefits in the Philippines and how working with HR firms can assist you.
Compensation and Benefits in the Philippines
Compensation and benefits are a crucial part of any job, as they are what employees receive in exchange for their time, skills, and dedication to their work. In the Philippines, compensation varies based on factors such as the local market, experience, and company finances. On the other hand, most employee benefits are required by law, but you can add more perks to attract and retain talent.
Philippine Compensation Laws
The Department of Labor and Employment (DOLE) oversees the country’s compensation and benefits policies. To ensure the protection and well-being of workers, DOLE adheres to the Labor Code of the Philippines, which contains rules that employers must follow when hiring Filipino workers.
According to the National Wages and Productivity Commission (NWPC), the minimum wage rate for workers in Metro Manila is ₱533 to ₱570. However, most companies pay above the minimum wage, with salaries depending on the industry, job level, and employee skills.
Besides the base salary, employees are entitled to overtime pay, an additional 25% of their hourly rate, should they exceed eight hours on a normal workday. If they work the night shift, they should receive no less than 10% of their regular wage for every hour they render between 10 pm and 6 am.
Meanwhile, employees who work on their designated rest days or special holidays are entitled to premium pay. This means they will receive an additional 30% of their daily salary if they need to work these days. If the special day falls on their scheduled rest day, they will receive a higher premium pay of 50%. In the case of a regular holiday that also falls on a rest day, the employee will receive a total premium pay of 260%.
One of the most crucial parts of the compensation and benefits in the Philippines is the 13th-month pay. Under Presidential Decree No. 851, employers must provide a cash bonus to all employees, equating to one month’s salary. Companies must give 13th-month pay before December 24.
There are several other compensation policies under the Labor Code that employers should comply with. However, this can be complicated to navigate, especially if you are a first-time business owner. With the help of HR outsourcing services in the Philippines from Q2 HR Solutions, you can keep your company on the right side of the law while prioritizing your employees’ best interests.
What Are Employee Benefits?
Employee benefits are perks and incentives that employers offer on top of their employee’s regular salaries. These benefits create a more comfortable and enjoyable workplace and help employees maintain a good work-life balance. They can come in many forms and vary depending on the company and the industry.
Common Benefits Given to Employees
Your company’s benefits package should include the mandatory benefits in the Philippines that all employees are entitled to receive. This includes:
Paid Time Off
Paid time off can be in the form of vacation time, sick leave, or personal days. It allows employees to take time off without worrying about losing income. Whether for a vacation, a family emergency, or a mental health day, having paid time off is crucial for their overall well-being.
Social Insurance
Social insurance provides a safety net for people who may otherwise struggle to make ends meet during difficult times. It protects them against financial challenges linked to illnesses, accidents, and old age.
Health Insurance
Health insurance is another essential employee benefit. It provides employees access to medical care, such as doctor visits, prescriptions, and hospital stays. It also gives employees peace of mind knowing they can receive the medical attention they need without breaking the bank.
Housing Loan
A housing loan allows employees to acquire financial assistance to own a house. In the Philippines, the Home Development Mutual Fund (HDMF) or Pag-IBIG fund enables Filipino workers to enjoy easy-payment plans that can be deducted from their monthly salaries.
Additional Benefits
Besides the statutory benefits, you can offer extra perks to improve employee morale, productivity, and job satisfaction. Some of the most sought-after benefits popular in offshoring companies in the Philippines are:
Free Meals at Work
Flexible Work Schedules
Company Transport
Gym Membership Access
Free Entertainment Tickets
Workshops and Training
Ways to Improve Your Compensation and Benefits
As businesses compete for top talent in today’s job market, offering attractive compensation and benefits in the Philippines has become more important than ever. If you are looking for ways to entice employees with perks beyond just a salary, you have come to the right place. Q2 HR Solutions lists helpful tips below:
Perform Job Analysis and Evaluation
Conducting job analysis and evaluation is one effective way to uphold fair employee compensation. This involves gathering information from managers and employees about their responsibilities, duties, and requirements and using it to review and update job descriptions. By classifying, ranking, and assessing positions, you can determine the appropriate compensation based on hierarchy. It also helps to research your market to determine the salary range for certain roles.
Use Pay Structure
A pay structure is a system that outlines the salary range for different job positions in an organization. A well-designed one ensures that employees are compensated based on their experience and level of responsibility. It also provides a framework for employee advancement and pay increases.
Conduct Employee Surveys
While mimicking your competitor’s compensation and benefits is easier, their offerings might not work for your company. After all, every employee has different needs and wants. Surveys allow you to gain insights into how you can help improve their quality of life and keep them happy, engaged, and motivated. They also uncover what they think of your company and address their sentiments before they become major grievances.
How HR Firms Can Help You Design Employee Benefits Programs
When formulating an employee benefits program, there is no one-size-fits-all solution. What you may deem a perk may not be considered so by your employee. When you work with a reliable HR outsourcing company in the Philippines, like Q2 HR Solutions, you can easily create a package that sets your organization apart.
First, we will work closely with you to determine the objectives of the benefits. Besides the statutory ones, are you looking to offer benefits unique to your industry? Do your benefits aim to attract and retain valuable talent? These goals will help you stay realistic and focused.
Next, Q2 HR Solutions will help you pinpoint the most meaningful benefits for your employees. If your workplace is a combination of veteran employees, millennials, and gen z’s, we will create benefits that reflect everyone’s needs and preferences.
Maintaining a benefits program can be expensive, especially when operating a small-scale company. However, rest assured that we will help you stay on budget. Our experts will walk you through your best options so you can provide employee perks that your competitors don’t have.
Frequently Asked QuestionsWhy Are Compensation and Benefits Important?
A competitive compensation and benefits program does more than attract the best talent. It also shows that you value your employees. When they feel they are being compensated fairly, they will likely stay loyal and go above and beyond. More importantly, you can expect them to speak positively about your company, helping you build a positive reputation in the job market.
How Frequently Should We Be Formally Reviewing Compensation?
We recommend benchmarking your company’s compensation every two years. However, if your organization hasn’t kept up with comparing pay rates in recent years or has made several changes to jobs, we suggest doing it more often. Even if you don't conduct a full-on review of pay rates yearly, keeping up with what's happening in the job market and looking closely at key positions is essential.
How Can We Manage the Rising Costs of Benefits?
Evaluate the current perks you offer and identify which are the most important to your employees. You can remove underutilized benefits or introduce new ones that are more valued. If you can, automate your benefits administration to help you with mistakes that could cost your company, like late coverage terminations and incorrect deductions from employee paychecks.
It would also help if you did your research when choosing a healthcare plan, as it accounts for most of your benefits costs. Lastly, consider implementing a wellness program to promote healthy habits among your employees and prevent medical conditions.
Conclusion
A well-designed compensation and benefits program is essential for any business that wants to attract and retain top talent, improve employee satisfaction and engagement, and remain competitive in the industry. Investing in your employees’ well-being and demonstrating your commitment to the workforce can build a culture of trust, loyalty, and success.
The experts at Q2 HR Solutions are here to guide you with the compensation and benefits in the Philippines and help you formulate a package that employees and job seekers can’t resist. Contact us today to learn more about our proven solutions.
