39.4 Ease of Doing Business, Labor Standards, and Social Security
Key Takeaways
The Ease of Doing Business Act of 2018 (RA 11032) establishes standard processing times of 3 working days for simple transactions, 7 working days for complex transactions, and 20 working days for highly technical applications, enforcing automatic approval upon agency default.
Overtime earns an extra 25% on ordinary days, night work between 10 p.m. and 6 a.m. earns at least 10% more, and regular holidays are paid 200% when worked.
The 13th month pay is at least 1/12 of the basic salary earned in the year, payable by December 24; maternity leave is 105 days and paternity leave 7 days.
SSS contributions are 15% of the monthly salary credit from 2025 (10% employer, 5% employee), and SSS benefits are exempt from tax, legal process, and lien.
Ease of Doing Business, Labor Standards, and Social Security
This section covers laws that shape everyday business operations: the Ease of Doing Business and Efficient Government Service Delivery Act of 2018 (RA 11032), labor standards on wages, hours, premiums, 13th month pay, and leaves, and the Social Security Act of 2018 (RA 11199).
1. Ease of Doing Business Act of 2018 (RA 11032)
Policy and The Anti-Red Tape Authority (ARTA)
Republic Act No. 11032 amended the Anti-Red Tape Act of 2007 to eliminate bureaucratic red tape, simplify business procedures, expedite government service delivery, and punish corruption. It established the Anti-Red Tape Authority (ARTA) under the Office of the President.
The Citizen's Charter
Every government agency, local government unit (LGU), and government-owned or controlled corporation (GOCC) must establish an updated Citizen's Charter posted prominently at the entrance of its offices and websites, stating:
- Step-by-step application procedures;
- Complete documentary requirements;
- Official fees;
- Maximum processing time; and
- Responsible government officers.
Prescribed Statutory Processing Deadlines (The 3-7-20 Rule)
Under Section 9 of RA 11032, all government processing must adhere to statutory timeframes:
The 3-7-20 Processing Rule
│
┌─────────────────────────────────────┼─────────────────────────────────────┐
▼ ▼ ▼
Simple Transactions Complex Transactions Highly Technical Applications
Max 3 Working Days Max 7 Working Days Max 20 Working Days
Applications requiring only Applications requiring evaluation Applications requiring complex
ministerial verification or multi-office technical review scientific or regulatory review
- Simple Transactions: Maximum of three (3) working days (applications requiring ministerial verification of documents);
- Complex Transactions: Maximum of seven (7) working days (applications requiring substantive evaluation or multi-department technical review);
- Highly Technical Applications: Maximum of twenty (20) working days (applications requiring specialized scientific, financial, or regulatory evaluation, or activities posing danger to public health and safety).
Zero-Contact Policy & The Automatic Approval Mechanism
- Zero-Contact Policy (Section 7): Except during preliminary submission and assessment, no government officer or employee shall have any contact in person or electronically with an applicant regarding their application. All evaluations must be conducted strictly based on the documentary submissions.
- The Automatic Approval Rule (Section 10): If a government agency fails to approve or disapprove an application for a license, permit, or clearance within the statutory period (3, 7, or 20 working days), and the applicant has submitted all required documents and paid all official fees, the application shall be deemed automatically approved by operation of law.
2. Labor Standards
| Standard | Rule |
|---|---|
| Minimum wage | Set per region by the Regional Tripartite Wages and Productivity Boards |
| Hours of work and overtime | Normal hours are 8 a day; overtime on an ordinary day earns an additional 25% of the hourly rate, and overtime on a rest day, special day, or regular holiday earns an additional 30% of the hourly rate for that day |
| Night shift differential | At least 10% of the regular wage for each hour worked between 10:00 p.m. and 6:00 a.m. |
| Regular holiday | Paid 100% even if unworked (subject to the rules); 200% if worked |
| Special non-working day | "No work, no pay" unless a policy provides otherwise; 130% if worked (150% if it is also the employee's rest day) |
| 13th month pay (PD 851) | At least 1/12 of the total basic salary earned in the calendar year, for rank-and-file employees who worked at least one month, paid not later than December 24 |
| Service incentive leave | 5 days with pay per year after at least one year of service, convertible to cash if unused |
| Maternity leave (RA 11210) | 105 days with full pay for live birth, plus 15 days for solo mothers; 60 days for miscarriage or emergency termination of pregnancy; up to 7 days may be allocated to the child's father |
| Paternity leave (RA 8187) | 7 days with full pay for the first four deliveries of the lawful wife with whom the employee lives |
| Solo parent leave (RA 11861) | 7 working days of paid leave a year after at least six months of service |
Other statutory leaves include the 10-day leave for victims of violence against women and their children (RA 9262) and the special leave of up to two months for women who undergo gynecological surgery (RA 9710).
Social Security Act of 2018 (RA 11199)
Coverage: compulsory for employers and their employees not over 60 years old, self-employed persons, household helpers (kasambahay), and land-based overseas Filipino workers; non-working spouses of members may join voluntarily.
Contributions: the rate rose in steps under RA 11199 to 15% of the monthly salary credit from 2025, shared 10% by the employer and 5% by the employee, with monthly salary credits from PHP 5,000 to PHP 35,000 in 2025. Self-employed and voluntary members pay the full 15%.
Remittance and records: the employer deducts the employee's share, remits both shares on the schedule set by the SSS, reports new employees for coverage, and keeps employment records. Late remittance incurs a penalty of 2% per month.
Benefits: sickness, maternity, disability, retirement, death, funeral, and unemployment benefits for involuntary separation. The retirement pension requires at least 120 monthly contributions and retirement at 60 (optional, if separated) or 65 (compulsory); members with fewer contributions receive a lump sum.
Exemptions: SSS benefits are exempt from tax, legal process, and lien, except obligations to the SSS itself.
Penal clauses: failing to register employees, deduct, or remit contributions, and misappropriating deducted contributions are punishable by fines and imprisonment; for corporations, the responsible officers are liable.
A private engineering firm filed a complete application for a specialized environmental operational clearance with a regional government licensing agency. The transaction is classified under the agency's Citizen's Charter as a complex transaction. All official fees were paid, and complete documentary requirements were acknowledged. If the agency fails to act on the application after 8 working days without issuing any written notice of extension, what is the legal consequence under the Ease of Doing Business Act of 2018 (RA 11032)?
The application is deemed automatically approved by operation of law.
The application is deemed denied, and the applicant must file an administrative appeal before ARTA within 15 days.
The agency is granted an automatic mandatory extension of an additional 20 working days.
The applicant must re-submit the complete dossier and restart the 7-day processing period.
A rank-and-file employee earned a total basic salary of PHP 240,000 during the calendar year. What is the minimum 13th month pay under PD 851, and when is it due?
PHP 20,000, not later than December 24
PHP 24,000, not later than December 31
PHP 20,000, not later than January 15 of the following year
PHP 10,000, twice a year
From 2025, what is the SSS contribution rate under RA 11199 for an employed member, and how is it shared?
12%, shared equally
15%, with 10% paid by the employer and 5% by the employee
14%, with 9.5% paid by the employer and 4.5% by the employee
15%, paid entirely by the employee
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