Introduction to Maternity Leave in the Philippines

In the Philippines, maternity leave is a fundamental right afforded to female workers to ensure their health and well-being during pregnancy, childbirth, and the postpartum period. This protection is enshrined in the Philippine Constitution, which mandates the state to protect working women by providing safe and healthful working conditions, taking into account their maternal functions. The primary legislation governing maternity leave is Republic Act No. 11210, also known as the "105-Day Expanded Maternity Leave Law," which was signed into law on February 20, 2019. This law builds upon earlier provisions under the Social Security Act of 1997 (Republic Act No. 8282) and the Labor Code of the Philippines (Presidential Decree No. 442, as amended).

The Expanded Maternity Leave Law significantly increased the duration of paid maternity leave from the previous 60 or 78 days (depending on the mode of delivery) to 105 days for all female workers in both the government and private sectors. It also includes an option for an additional 30 days of unpaid leave, and for solo parents under Republic Act No. 8972 (Solo Parents' Welfare Act), an extra 15 days of paid leave, bringing the total to 120 days. The law covers live births, miscarriages, and emergency terminations after the 22nd week of gestation, ensuring comprehensive coverage for various pregnancy outcomes.

A key aspect of this law is the provision for full pay during maternity leave, which is composed of two components: the maternity benefit from the Social Security System (SSS) and the salary differential paid by the employer. This article delves into the concept of the salary differential, its computation, legal obligations, and specifically addresses whether small employers are exempt from this requirement under Philippine law.

Understanding the Maternity Benefit and Salary Differential

The SSS Maternity Benefit

The SSS maternity benefit is a cash allowance provided to qualified female members who have paid at least three monthly contributions within the 12-month period immediately preceding the semester of childbirth or miscarriage. The benefit is calculated based on the member's average daily salary credit (ADSC), which is derived from their monthly salary credits (MSC). The MSC is capped at a maximum of PHP 20,000 per month (as of the latest adjustments), meaning the maximum daily maternity benefit is PHP 666.67 (PHP 20,000 divided by 30 days).

For a 105-day maternity leave, the total SSS benefit would be up to PHP 70,000 (105 days x PHP 666.67). However, this amount may not cover the full salary of higher-earning employees, as the SSS benefit is limited by the contribution ceiling.

The Salary Differential

To ensure that female workers receive their full pay during maternity leave, RA 11210 mandates employers to pay the "salary differential." This is the difference between the employee's actual basic salary and the SSS maternity benefit received. For example:

If an employee's daily basic salary is PHP 1,000, and their SSS daily maternity benefit is PHP 666.67, the employer must pay the differential of PHP 333.33 per day for the 105 days.
Total salary differential: PHP 333.33 x 105 = PHP 35,000 (approximately).

The law explicitly states in Section 2 that "the full payment shall be advanced by the employer within thirty (30) days from the filing of the maternity leave application." This advance is reimbursable by the SSS only up to the extent of the maternity benefit, but the differential remains the employer's responsibility.

Importantly, the salary differential applies only to the basic salary and does not include allowances, bonuses, or other variable pay unless these are integrated into the basic salary as per company policy or collective bargaining agreements (CBAs). The differential must be paid without deduction for taxes, as maternity benefits are tax-exempt under the Tax Code.

Eligibility and Requirements for Maternity Leave

To avail of maternity leave and the associated benefits:

The employee must notify the employer of her pregnancy and expected delivery date at least 30 days prior, unless not feasible due to medical reasons.
She must have rendered at least six months of service in the 12 months preceding the leave (for government employees; private sector requirements align with SSS contribution rules).
The leave is available for the first four deliveries or miscarriages; beyond that, it reverts to special leave benefits under the Magna Carta of Women (RA 9710), which provides 60 days for gynecological disorders.

Employers are prohibited from discriminating against women on maternity leave, such as demotion or termination, under penalty of fines and imprisonment as outlined in the law.

Are Small Employers Exempt from Paying the Salary Differential?

A common question among employers, particularly those operating small businesses, is whether they are exempt from paying the salary differential due to their size or limited resources. Under Philippine law, the answer is generally no—small employers are not exempt from this obligation.

Scope of Application

RA 11210 applies universally to all employers in the private sector, regardless of the number of employees or the scale of operations. The law's Implementing Rules and Regulations (IRR), issued jointly by the Department of Labor and Employment (DOLE), Civil Service Commission (CSC), and SSS in May 2019, reiterate that the expanded maternity leave benefits, including the salary differential, are mandatory for all covered employers. There is no provision in the law or IRR that carves out exemptions based on employer size, such as for micro, small, or medium enterprises (MSMEs).

Comparison with Other Labor Laws

This lack of exemption contrasts with certain other labor protections. For instance:

The Barangay Micro Business Enterprises (BMBE) Act of 2002 (RA 9178) exempts registered BMBEs (enterprises with total assets not exceeding PHP 3 million) from the coverage of the Minimum Wage Law. However, this exemption does not extend to social security benefits like maternity leave, which are governed separately by the SSS Law.
Under the Labor Code, certain retail and service establishments employing not more than 10 workers may be exempt from holiday pay or service incentive leave, but again, maternity benefits are not included in these exemptions.

The rationale is that maternity benefits are considered social welfare measures tied to SSS contributions, which all employers must remit regardless of size. Failure to pay SSS contributions can result in penalties, and the salary differential is an extension of this system to ensure full pay equity.

Potential Relief for Small Employers

While there is no outright exemption, small employers may find indirect relief through:

SSS Contribution Subsidies or Adjustments: The government occasionally provides subsidies or flexible payment schemes for MSMEs to ease SSS compliance, though these do not waive the differential.
Tax Incentives: Under the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act (RA 11534), MSMEs may benefit from reduced corporate income tax rates (20% instead of 25%), which could indirectly help cover labor costs like the differential.
DOLE Assistance Programs: The DOLE offers technical assistance and training for small businesses on labor compliance, including maternity leave administration. In cases of financial hardship, employers can seek DOLE mediation, but this does not absolve them of the obligation.

However, non-compliance can lead to severe consequences. Violations of RA 11210 are punishable by fines ranging from PHP 20,000 to PHP 200,000, imprisonment of 30 days to six months, or both, per offense. Additionally, aggrieved employees can file complaints with the DOLE or the National Labor Relations Commission (NLRC) for back payments, damages, and attorney's fees.

Challenges and Implementation Issues

Despite the law's clarity, implementation challenges persist, particularly for small employers:

Financial Burden: For businesses with slim margins, paying the salary differential upfront (especially for higher-paid employees) can strain cash flow. The law requires the employer to advance the full pay, with SSS reimbursement covering only the benefit portion.
Administrative Requirements: Small employers must maintain accurate records of SSS contributions and ensure timely remittance to avoid disqualifying employees from benefits.
Awareness Gaps: Many small business owners are unaware of the full extent of their obligations, leading to inadvertent violations. DOLE conducts outreach, but coverage in rural areas remains limited.
COVID-19 and Economic Impacts: Post-pandemic recovery has highlighted difficulties for MSMEs, prompting calls for amendments, but no changes have been made to exempt them from maternity differentials.

Judicial and Administrative Interpretations

Philippine courts have consistently upheld the mandatory nature of maternity benefits. In cases like Saudi Arabian Airlines v. Rebesencio (G.R. No. 198587, 2015), the Supreme Court emphasized that maternity leave is a statutory right that cannot be diminished by employment contracts. Although specific to airline stewardesses, the principle applies broadly.

DOLE Department Order No. 202-19 provides guidelines on the computation and payment of the differential, reinforcing its non-exempt status. SSS Circular No. 2019-009 details the benefit claims process, requiring employers to certify the salary differential payment.

Recommendations for Employers and Employees

For Employers:

Integrate maternity leave policies into employee handbooks and ensure HR personnel are trained on RA 11210.
Budget for potential differentials by reviewing employee salaries against SSS ceilings.
Register with SSS promptly and maintain compliance to avoid penalties.
Consider voluntary benefits like extended paid leave to attract talent, especially in competitive sectors.

For Employees:

Verify SSS contribution status regularly via the SSS website or app.
Notify employers early and keep medical documentation.
If differentials are withheld, seek assistance from DOLE regional offices or legal aid organizations like the Integrated Bar of the Philippines.

Conclusion

The 105-Day Expanded Maternity Leave Law represents a significant advancement in protecting Filipino women's rights in the workplace, ensuring they receive full pay through a combination of SSS benefits and employer-paid salary differentials. Small employers are not exempt from this requirement, as the law applies universally to promote gender equality and social justice. While financial challenges exist, compliance is essential to avoid legal repercussions and foster a supportive work environment. As Philippine society evolves, ongoing advocacy may lead to further refinements, but for now, the framework stands as a cornerstone of labor protection. For specific cases, consulting a labor lawyer or DOLE is advisable to navigate individual circumstances.