Navigating the legal landscape of labor relations is a critical responsibility for any small business owner in the Philippines. Compliance with the Labor Code of the Philippines and related social legislations not only protects the business from costly litigation and administrative fines but also fosters a productive and loyal workforce.

Below is a comprehensive breakdown of the mandatory benefits and legal requirements for employers.

1. Mandatory Social Insurance Contributions

Every employer, regardless of the size of the business or the number of employees, is required by law to register their employees and remit monthly contributions to the following agencies. Failure to deduct and remit these is a criminal offense.

Agency	Coverage	Responsibility
Social Security System (SSS)	Provides disability, sickness, maternity, and retirement benefits.	Shared by employer and employee.
PhilHealth	Provides health insurance and hospitalization subsidies.	Shared by employer and employee.
Pag-IBIG Fund (HDMF)	Provides housing loans and provident savings.	Shared by employer and employee.

Note: Even if a business has only one employee, registration with these agencies is mandatory from the first day of employment.

2. Minimum Wage and 13th Month Pay

Small businesses must adhere to the compensation standards set by the Regional Tripartite Wages and Productivity Boards (RTWPB).

Minimum Wage: This varies depending on the region (e.g., NCR vs. Region IV-A) and the sector (Non-Agriculture vs. Agriculture).
13th Month Pay: Under Presidential Decree No. 851, all rank-and-file employees who have worked for at least one month during the calendar year are entitled to 13th-month pay. This must be paid no later than December 24 of each year.
Computation:

3. Statutory Leave Benefits

Employees who have rendered at least one year of service are entitled to various leaves. While some small businesses offer more, the following are the legal minimums:

Service Incentive Leave (SIL): Five (5) days of leave with pay for every employee who has rendered at least one year of service. This can be used for vacation or sick leave; if unused, it is commutable to cash at the end of the year.
Maternity Leave: 105 days of fully paid leave for female employees (regardless of civil status), with an option to extend for an additional 30 days without pay.
Paternity Leave: 7 days of leave with pay for married male employees for the first four deliveries of their legitimate spouse.
Solo Parent Leave: 7 days of leave with pay for employees who are left with the responsibility of parenthood.
VAWC Leave: 10 days of leave with pay for victims of violence against women and their children.

4. Premium Pay and Differentials

Small business owners must account for additional compensation when employees work beyond standard hours or during rest periods.

Overtime Pay: For work exceeding 8 hours a day, an additional of the hourly rate (regular day) or (holiday/rest day).
Night Shift Differential: An additional of the regular wage for work performed between 10:00 PM and 6:00 AM.
Holiday Pay: * Regular Holiday: of the daily wage if worked; if not worked.
Special Non-Working Day: of the daily wage if worked; "no work, no pay" applies if not worked (unless a favorable company policy exists).

5. The BMBE Law: A Vital Exemption for Small Businesses

The Barangay Micro Business Enterprises (BMBE) Act of 2002 (RA 9178) provides significant relief for micro-businesses with total assets (excluding land) of not more than ₱3,000,000.

Incentive: BMBEs are exempted from the Minimum Wage Law. However, employees are still entitled to all other statutory benefits like SSS, PhilHealth, and 13th-month pay.
Tax Incentive: Exemption from income tax arising from the operations of the enterprise.

6. Occupational Safety and Health (OSH) Standards

Under RA 11058, all establishments are required to provide a safe and healthy workplace. Small businesses must:

Conduct a mandatory OSH orientation for all workers.
Designate a Safety Officer (the owner can take this training).
Provide first-aid kits and ensure access to emergency medical services.

7. Security of Tenure and Due Process

In the Philippines, an employee can only be dismissed for Just Causes (e.g., serious misconduct, neglect of duty) or Authorized Causes (e.g., redundancy, retrenchment).

Owners must follow the "Two-Notice Rule":

First Notice: Detailing the grounds for termination and giving the employee a chance to explain (within at least 5 days).
Hearing/Conference: A chance for the employee to present evidence.
Second Notice: The final decision of termination.

8. Administrative Record-Keeping

The Department of Labor and Employment (DOLE) conducts inspections to ensure compliance. Small businesses must maintain:

Payroll records (showing deductions and net pay).
Daily Time Records (DTR).
Proof of remittance to SSS, PhilHealth, and Pag-IBIG.
Employment Contracts clearly stating the job description, status (probationary or regular), and compensation.