Currently, the statutory workweek is 48 hours over six days with a minimum of one day of rest per week. To align with international best practice, the amendments propose to decrease the normal workweek to 40 hours over five days with a minimum of two days of rest per week. The overtime upper limits would remain the same with a maximum of three hours per day, up to three times per week.
Under current legislation, employees are entitled to an annual Christmas bonus (aguinaldo) of 15 days’ wages. If the proposed amendments are passed, the mandatory annual Christmas bonus would double to 30 days’ wages.
Employees receive a cash lump sum upon separation from their employer calculated by multiplying years of service by a specified number of days of pay, subject to a daily maximum of 2x the federal minimum wage. If the proposed amendments are passed, all permanent employees would be entitled to a seniority premium equal to 15 days’ pay instead of the current 12 days. In the event of resignation, permanent employees would be entitled to the increased seniority premium after 12 years of service instead of the current 15 years.In the event of retirement, disability, death, and dismissal, permanent employees would remain entitled to a seniority premium regardless of their years of service.
Employers should monitor the passage and implementation timeline of the upcoming changes and budget for the increased costs associated with the seniority premium and the Christmas bonus as well as increased overtime costs and the potential need to hire more staff following the decrease of the normal workweek.