The Employers Confederation of the Philippines (ECOP) on Tuesday served caution on the mandatory grant of 14th month pay to employees, saying it would be prejudicial to small businesses still trying to recover from the adverse effects of the COVID-19 pandemic
ECOP vice president George Barcelon hinted that businesses have not fully recovered, and forcing them to pay the 14th month pay would not be advisable.
“Kaya tingin ko mahihirapan ang mga negosyente sa 14th month pay,” Barcelon, who is also the president of Philippine Chamber of Commerce and Industry (PCCI), said in a broadcast interview.
Kabayan party-list congressman Ron Salo has filed House Bill No. 520 seeking the grant of the 14th month pay to all employees in the public and private sector regardless of the workers’ status of employment.
Under the bill, the 13th month pay already required by law would be paid to the employees on or before May 31 of each year in anticipation of the school enrollment of the employees’ dependents.
On the other hand, the 14th month pay was to be given on or before November 30 of each year in time for the Christmas celebration.
Barcelon said that while several companies were already giving 14th month pay to its workforce depending on their financial performance, making it compulsory would make it a big burden especially for MSMEs.
“There’s a leeway for business depending on their performance if they can afford the 14th month pay. But as a requirement, it will be a burden for MSMEs,” he stressed.
Under Salo’s proposal, the 14th month pay would be prorated based on the workers’ length of service.
The measure also provides that the 14th month pay should not be less than the employee’s monthly basic salary.
It was also proposed that the 14th month pay would be excluded from the computation of the employee’s gross yearly income, provided that it will not exceed the allowed exemptions pursuant to the National Internal Revenue Code or its implementing rules and regulations.