Government Mandated Benefits Policy

GOVERNMENT MANDATED BENEFITS POLICY HR-PP-031

DEFINITION The Government Mandated Benefits Policy is designed to document Offshoring Inc’s compliance to government legislation on benefits to be enjoyed by everyone employed in the private sector.

1.1 SOCIAL SECURITY SYSTEM is the protection which society provides for its members against economic and social distress caused by the loss of substantial reduction of earnings resulting from illness, maternity injury, unemployment, old age and death. The term social insurance derives from the fact that the system is a broad scale risk sharing arrangements among the members of a community.

1.2

PHILIPPINE HEALTH INSURANCE/PHILHEALTH is an integrated and comprehensive approach to health development institutionalized by the government. Philhealth endeavors to make essential goods, health and other social services available to all its members at affordable cost. Priority for the needs of the underprivileged, sick, elderly, disabled, women, and children shall be recognized.

1.3 PAG-IBIG FUND / HOME DEVELOPMENT MUTUAL FUND is an off shoot of constitutional mandate on the promotion of public welfare through ample social services, as well as humanist commitment to the interest of the working groups, in relation particularly to their need for decent shelter. Pag-ibig fund is a system of employeeemployer contributions for housing purposes.

1.4 13th MONTH PAY is mandated to augment income to cover the additional expenses brought about the December Holiday season. 13th month shall be received by all employees who have worked at least one month within a calendar year. It should be released not later than Dec 20th of each year.

1.5

STATUS OF EMPLOYMENT - Offshoring has two types of status of employment, which was designed to provide flexibility to outsourced staff in terms of handling their taxes. As a consequence, treatment of government mandated benefits particularly that of SSS, Phil-health and Pag-ibig vary depending on the status. 1.5.1 EMPLOYEE STATUS – company is obliged to withhold tax based on tax table and employee share for SSS, Phil-health and Pag-ibig. 1.5.2 CONSULTANT STATUS – company is obliged to withhold 10% tax for those who earn Pesos 720,000 or below for one year and 15% for those who earn above Pesos 720,000 for one year. The company will not withhold the employee’s share for SSS, Phil-health and Pag—ibig. The corresponding employer share for SSS, Phil-health and Pag-ibig shall however be added on to the employee’s pay.

2. SCOPE The policies & procedures embodied herewith shall cover all bona fide employees of Offshoring Inc.

3. POLICY 3.1 SOCIAL SECURITY SYSTEM 3.1.1 Employee’s Contributions. – Offshoring shall deduct on a semi-monthly basis and withhold from the salary of staff on employee status the employee’s contribution based on the SSS table of contributions 3.1.2 Employer’s Contributions. – Offshoring shall pay the employer’s share for SSS contributions directly remit it to SSS for staff on employee status and directly to staff on consultant status via inclusion of such amount to their semimonthly salaries. 3.1.3 Offshoring shall remit contribution to an authorized collection bank or directly to SSS monthly. Upon payment of the contribution the company shall submit a contribution list or form R3 to SSS. 3.1.4 Availment of various benefits under SSS can be seen in SSS official website http://www.sss.gov.ph/sss/index.html.

3.2 PAG-IBIG FUND / HOME DEVELOPMENT MUTUAL FUND 3.2.1 Offshoring shall deduct from staff on employee status Pesos 100 for their Pag-big contribution. 3.2.2 Offshoring shall only provide the mandatory counterpart of Pesos 100 per employee. 3.2.3 If the employee wants to increase his monthly contribution to Pag-ibig fund, he may do so by informing the payroll master. 3.2.4 Employee who decided to increase his monthly contribution has an option to shoulder the increase in employer contribution as well. 3.2.5 The employer counterpart of Pesos 100 for Pag-ibig contribution will be included to staff under professional status semi monthly salary. 3.2.6 Availment of various benefits under Pag-ibig fund can be seen in their official website http://www.pagibigfund.gov.ph/mt_fac.htm.

3.3 PHILIPPINE HEALTH INSURANCE / PHILHEALTH 3.3.1 Philhealth provides all citizens with the mechanism to gain financial access to health services, in combination with other government health programs. 3.3.2 Employee’s Contributions. – Offshoring shall deduct on a semimonthly basis and withhold from the salary of staff on employee status the employee’s contribution based on the Philhealth table of contributions 3.3.3 Employer’s Contributions. – Offshoring shall pay the employer’s share for Philhealth contributions directly remit it to Philhealth for staff on employee status and directly to staff on consultant status via inclusion of such amount to their semi-monthly salaries. 3.3.4 Together with the employer's counterpart, the premiums are remitted to PhilHealth or at any accredited collecting bank/agent on or before the 10th day of the month following the month being paid for. ME-5 Form is used in remitting your premiums. 3.3.5 Payments are reported to PhilHealth on a monthly basis using the revised Remittance Report Form (RF-1) on or before the 15th of the month following the applicable month. 3.3.6 Benefits of PhilHealth membership can be seen in their official website http://www.philhealth.gov.ph/.

3.4 13th MONTH PAY 3.4.1 All employees, regardless of status, who have worked for at least one (1) month are entitled to receive the 13th month pay. 3.4.2 The 13th month pay is base on total gross salary received by the employee from Jan 10th to Dec 25th payroll divided by 12. 3.4.3 13th month pay of up to Pesos 30,000 is tax free, the amount exceeding Pesos 30,000 is subject to tax as per BIR’s regulation. 3.4.4 The 13th month pay of resigned or separated employee shall be pro-rated and will be included in the employee’s last pay. The formula will still be total compensation from Jan 10th and or start date up to last payroll divided by 12.

4. EFFECTIVITY AND VALIDTY This policy paper shall take effect immediately after approval and should be reviewed annually or as the need arises.