COMPLIANCE CHECK: PHILIPPINES: SICKNESS BENEFITS

Employers are not required to provide paid sick leave benefits in the Philippines, but many do. This update considers how sickness benefits under the Social Security System (SSS) interact with company provided paid sick leave.

Obligations under the SSS

In the Philippines, there is no legal requirement to provide sick leave or medical leave benefits to employees. Rather, an employer has an obligation to:

  • register its employees with the SSS;
  • pay the employer's share in the required contributions to the SSS;
  • deduct from the employee's salary their share in the required contributions to the SSS; and
  • remit the contributions to the SSS.

Among the SSS benefits that member-employees are entitled to is the provision of a sickness benefit. The SSS sickness benefit is a daily cash allowance equivalent to 90% of employee's average daily salary credit. The SSS sickness benefit is granted up to a maximum of 120 days in one calendar year.

To qualify for the SSS sickness benefit, the employee must:

  • have paid at least 3 months of contributions within the 12-month period immediately before the semester of sickness/injury;
  • be unable to work due to sickness/injury and is confined whether in a hospital or at home for at least 3 days; and
  • have used up all company provided sick leave with pay for the current year and have duly notified their employer.

The employer advances the payment of the SSS sickness benefit but can seek reimbursement from the SSS.

Interactions Between the SSS Sickness Benefit and Company Provided Paid Sick Leave

The SSS sickness benefit only applies after any company provided sick leave has been fully utilised. To illustrate, where an employer provides 10 days of paid sick leave, an employee will first utilise those 10 days and will receive full pay on those 10 days. Once those 10 days are utilised, if the employee continues to be unable to work due to sickness/injury, the employee will be able to utilise the 120-day SSS sickness benefit and will receive 90% of their average daily salary credit (assuming that the other pre-conditions are satisfied).

Where an employer provides paid sick leave benefits to employees, the employer may impose its own terms and conditions. An employer may, for instance, require more than three days of hospitalisation in order for the employee to be eligible for sick leave. However, if no such term has been attached to the paid sick leave entitlement, the employer cannot rely on the statutory SSS benefit terms to withhold sick pay.

Key Takeaways

Many employers in the Philippines provide paid sick leave benefits, including multinational companies who often grant harmonised employee entitlements across their operations in Asia. Employers should consider how such benefits interact with the sickness benefits under the SSS and whether conditions ought to be attached to company provided paid sick leave.