A senate bill intended to increase the earnings of the working class has been filed a second time. Senate Bill No. 2, also known as “An Act Requiring Employers in The Private Sector to Pay 14th Month Pay,” has been filed by Senator Vicente “Tito” Sotto this week in lieu of the rise of basic commodities and the meager P10 wage increase.
Non-government employers will be mandated to grant 14th month pay to rank-and-file employees who have worked with the company for at least one month.
Regardless of their employment status, employees in the private sector shall be given the 13th month pay not later than June 14th, and the 14th month pay not later than December 24th. The adjustment takes into account the need for “extra earnings in the middle of the year to help in school and medical expenses.”
Computation of the 14th month pay is similar to how the 13th month pay is computed. Section 7 of the bill sets the 14th month pay minimum amount to not less than one-half (1/2) of the employee’s total basic salary, which will be subject to the tax exemption cap of up to P82,000.
While the bill is generally set to add more compensation and protect the rights of workers, it also rests upon the employer’s discretion. As stated on Section 6: “The frequency of payment of this monetary benefit may be the subject of agreement between employer and employee or any recognized/collective bargaining agent of employees.”
Sotto clarified this in his interview with GMA News. “In the bill that we are proposing, na pag hindi kaya ng kumpanya mo, huwag kang magbigay. Gano’n din naman ang 13th month pay. Pero iyong may kaya, at alam naman ng gobyerno kung sino ang may kaya, dapat magbigay naman. (If a company is not able to afford [the 14th month pay], they will not be required to do so. The same applies to 13th month pay. Those who can afford it, and the government knows who, should grant the 14th month pay.)”
Netizens, on the other hand, are calling for more stringent measures in ensuring that workers get the right wage and benefits. They say that the government should prioritize investigating private companies that fail to provide minimum wage and government benefits among their employers, instead of adding a 14th month pay, which could further increase the price of commodities.
Employers Confederation of the Philippines (ECOP) president Donald Dee expressed in a statement that he does not support the bill, saying that small companies will have a hard time providing the added compensation. “I think this is very poorly timed, at saka alam naman natin ngayon na ang importante ngayon sa atin dito (and we know that what’s important with us right now) is how to create jobs, to create an environment so that we can have more investments.”
Department of Labor and Employment (DOLE) Undersecretary Joel Maglunsod said that there are already some companies who provide up to 16th month pay, and the effectivity of the law will depend on the power of the workers, especially those with workers’ unions.
For Trade Union Congress of the Philippines (TUCP) spokesperson Vince Camilon, the bill is but timely. “Kailangan ng mga manggagawa na magkaroon ng dagdag na income o dagdag na kita para sa kanila dahil napakataas ng presyo ng mga bilihin (Workers need additional income due to the high cost of commodities),” in agreement with Sotto’s intention in the bill.
To get an idea on how the 14th month pay will be implemented in private companies, we spoke with John Espejo*, an HR specialist of a multinational company based in the Philippines.
ECM: How feasible is it for private companies to grant their employees a 14th month pay, really?
Espejo: Feasibility depends on a lot of situations. First is the economic status of the country. Second is the industry where the company belongs to. Third is the size and profitability of the company. The economy is doing good but primarily on the SMEs.
Most multinational organizations are reshaping as the global economy is still recovering from 2008 financial crisis and recently the global oil crisis, but the SMEs are flourishing and promising. I’m not sure if the SMEs can afford to pay another month every year. Some companies in the past year even gave more than 15 months but it was not sustained due to economic crisis and competition.
ECM: Do you have qualms about implementing this in your company?
Espejo: Our company adheres to the policies or laws. If approved, I’m sure they will implement it as we try to make sure that the company practices the right business ethics for the benefit of the workforce.
ECM: What are the possible deterrents in the proper application of this law?
Espejo: The 14th month pay can be a lot of help to employees as this can be used for enrollment, like how the 13th month is being used for Christmas. People need not to look for other sources to cover portion, if not all, of the tuition fee. It’s a good idea but I’m not sure if it’s sustainable. Can a company afford to give another month without sacrificing the headcount? A question we can only answer once the bill is passed. Always remember that a company decides on the performance of the previous year and the bottomline or targets of the present year.
*Note: Real name and company are withheld to protect privacy.