De Minimis, Per Diem Service Charges, etc.: Little-Known Employee Benefits in the Philippines

While benefits like maternity leave and thirteenth-month pay often receive more emphasis, there are others that may, and should, also be to your benefit as an employee

Benefits are an integral part of an employee’s compensation package, which is often the key consideration for many when deciding to accept, and/or remain at, a job. Understandably, the more comprehensive the benefits are, the more beneficial it is to us as we work full-time.

However, apart from the maternity leaves, thirteenth-month pays, and government contributions that we are all generally familiar with, there are others that we may be entitled to or are voluntarily being provided by our employers that we are not as familiar with or making use of.

De Minimis Benefits

In an effort to reward employee performance and set incentives, it is common for employers to give compensation in cash or in-kind to employees. Among these are compensations of small value, otherwise known as De Minimis benefits.

Under Revenue Regulations (RR) 8-00, as amended by RR 10-00, the Bureau of Internal Revenue (BIR) categorizes the following as De Minimis benefits:

• 10 days monetized unused vacation leave credits;

• Medical cash allowance to dependents of employees not exceeding Php750 per semester or Php125 per month;

• Rice subsidy of Php1,000 or one-sack of rice per month;

• Uniforms and clothing allowance not exceeding Php3,000 per year;

• Medical benefits not exceeding Php10,000.00;

• Laundry allowance of Php300 per month;

• Employee achievement awards in the form of tangible personal property other than cash or gift certificate, with an annual monetary value not exceeding Php10,000 received by the employee under an established written plan;

• Flowers, fruits, books or similar items given to employees under special circumstances, e.g. on account of illness, marriage, the birth of a baby, etc.; and

• Daily meal allowance for overtime work not exceeding 25-percent of the basic minimum wage.

Similar to its Gross Benefits (13th-month pay, Christmas bonuses, etc.), De Minimis benefits are also excluded from the computation of gross income as long as it remains below Php82,000, making it exempt from taxation.

Per Diem Benefits

“Per Diem” literally translates to “per day”, and is typically the verbiage used when referring to the compensation of employees who work on consultancy or on, again, a “per day”, basis. However, per diem also often refers to the method of compensating employees for work-related travel expenses they have incurred.

In the private sector, this type of per diem benefits are commonly set at the discretion of the company, and usually comes in the form of a company credit card or other similar expenditure accounts, or as petty cash used as a work-related travel budget. This is very helpful for jobs that involve an extensive amount of travel or commuting, but again, it is not required of privately-owned companies.

Those employed in government, on the other hand, can refer to Executive Order (EO) 298, or Prescribing Rules and Regulations and New Rates of Allowances for Official Local and Foreign Travels of Government Personnel. It mandates that a Php800 allowance, regardless of rank and destination, be provided to government workers for work-related travel. Under the EO, 50-percent of the allowance or Php400 should go to lodging, 30-percent, or P240, for meals, and 20-percent (or P160) for incidental expenses.

The EO also specifically states that the allowance can be used in full if arrival to the destination is not later than 12 noon. If the staff arrived after 12 noon, only 80-percent, or P640, can be utilized. Furthermore, an allowance of Php80 can be allocated for breakfast an employee has left before 12 noon, and a total of P160 for breakfast and lunch can be spent if departing after the said time.

While EO 298 remains the measure for per diem benefits of government employees, House Resolution No. 243 was filed in Congress in 2017 and seeks to amend EO 248, 248-A, and 298 to increase the allowance from the present rate.

Service Charges

According to Article 96 of the Labor Code of the Philippines, “all service charges collected by hotels, restaurants, and similar establishments shall be distributed at the rate of eighty‑five percent (85%) for all covered employees and fifteen percent (15%) for management.” Distributed once every 2 weeks or twice a month at intervals not exceeding 16 days, service charges cover all rank-and-file employees.

Although seemingly easy to abide by, data from the Department of Labor and Employment (DOLE) has indicated otherwise. It showed that from ‎‎2014 to 2017, 621 out of 212,641 establishments from all over the country were found to have violated labor provisions on service charges, and failed to show proof that they distributed their collected service charge to their employees.

As a result, Article 96 of the Labor Code has been amended. Republic Act No. 11360 or the service charge law was signed in August 2019, to have Article 96 to now read: “All service charges collected by hotels, restaurants, and similar establishments shall be distributed completely and equally among the covered workers except managerial employees.”

Flexible Working Conditions

In an effort to ease the traffic common in most of the Philippines’ major cities, and to provide employees an added degree of flexibility and more time to spend with their family or focus on their well being, the House of Representatives approved House Bill 6152 in August of 2017, which will allow employees to work four days a week at 12 hours a day.

The compressed workweek policy is aimed “to promote business competitiveness, work efficiency, and labor productivity”, and while yet to be fulfilled into law, some employers are already exploring the schedule with their employees in a continued effort to not only provide them the best chance to succeed but to also cut back on their operational costs.

Highly dependent on one’s role in the company, as well as the nature of the business itself, employees are always encouraged to ask about the shortened workweek and other scheduling options with their employees and just make sure that these meet the 40 to 48 hour work weeks mandated by the government for full-time employees.

Meals and Snacks

Another employee benefit that employers are not mandated by law to provide but are often typical among many companies is meals and snacks. While this is surely a welcome addition to almost any compensation package, employees must still keep in mind that company-provided meals and snacks can easily be a salary deduction as opposed to an additional benefit, but still with their consent of course. According to DOLE:

“The employer may provide subsidized meals and snacks to his employees provided that the subsidy shall not be less than 30% of the fair and reasonable value of such facilities. In such a case, the employer may deduct from the wages of the employees not more than 70% of the value of the meals and snacks enjoyed by the employees, provided further that such deduction is with the written authorization of the employees concerned.”

Again, many a company offers daily meals and snacks to their employees, and often make mention of the benefit during recruitment and candidate interviews, so it is usually not too difficult to determine which companies offer this particular employee perk.

For more information on the employee benefits which will, are, and should be receiving, it is always recommended to reach out to your company’s Human Resources and Administrative department, or the Department of Labor and Employment.

Know of any other less commonly known or provided employee benefit? Contact us so we can include it!

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