‘Distressed’ firms may seek 13th month pay exemption


INSTEAD of foregoing the mandated 13th month pay this year due to the economic effects of the coronavirus pandemic, Labor Secretary Silvestre Bello III said on Thursday, Oct. 8, 2020, that employers should just defer its release.

Bello’s statement followed an announcement from the Employers Confederation of the Philippines (Ecop) that some two million workers may be unable to get their 13th month pay this December.

“If you can’t give it now, maybe next year or next month, just not now,” Bello said in an online forum.

“To me, that might be the more acceptable formula to address the issue of payment of the 13th month pay,” he added.

Bello said he believes even the workers will agree to such an arrangement.

He said companies that could not yet afford to give the mandated benefit to their employees should seek the approval of the Department of Labor and Employment (Dole).

Only “distressed” companies would be exempted from paying this benefit this year, Bello said.

Bello said he will issue an advisory to define distressed company.

“We may have to define exactly the meaning of distressed. Are these the small and medium-sized enterprises? We will study this subject in tripartite consultation,” Bello said.

Massive losses

Ecop president Sergio Ortiz-Luis has cited the massive losses suffered by businesses as the pandemic halted their operations and pushed economies worldwide into a deep recession.

Under Presidential Decree No. 851, employers are required to grant 13th month pay to all their rank and file employees not later than December 24 every year.

The 13th month pay is equivalent to one-twelfth of an employee’s annual basic salary.

Cebu Chamber of Commerce and Industry president Felix Taguiam said the release of 13th month pay is a very sensitive issue that must be thoroughly discussed by Dole, businesses and employees.

“What the Dole will issue as guidelines, we will just follow. Labor and management must agree to a common stand depending on the business situation especially in this Covid situation,” Taguiam said.

“Businesses can’t afford labor disputes which would be very costly and unproductive. Everybody must sit down and talk,” Taguiam added.

For his part, Mandaue Chamber of Commerce and Industry (MCCI) president Steven Yu said the deferment actually discourages permanent closure and bankruptcy which is good for the economy.

“This is an apt recognition of the bigger picture by Dole,” Yu said.

Yu suggested that depending on the country’s fiscal situation, the government can consider realigning some funds to subsidize part of the 13th month pay to spread Christmas cheer to millions of hardworking Filipino workers.

Matter of survival

For Philippine Retailers Association Cebu Chapter spokesperson Robert Go, plans to defer the release of the 13th month pay to next year is good for distressed entrepreneurs.

“In fact, most have advanced the 13th-month pay already during the initial enhanced community quarantine, meaning no more 13th-month to get. The deferment for those distressed companies is good.

At least, they can prolong their business lifespan and might survive,” said Go.

“Today, surviving is more important because they still have a chance to hire workers in the future when they continue the business,” Go added.

Interviewed by SunStar Cebu, employees who requested anonymity said they would like to get their 13th month pay on time.

“We are looking forward to that because we need it to pay for our child’s tuition,” said Sheena, not her real name.

For Ralph (not his real name), a deferment on the release of the 13th month pay is unfair for employees already expecting to receive it.

“That is not right; employees nationwide are expecting it. If that’s the situation, they could’ve told us about this earlier. Not now when we are two months away from receiving the 13th-month pay,” he said.

Sought for comment, Nora Analyn Diego, Associated Labor Unions-Central Visayas Regional Vice President, said there must be an agreement reached between employers and their workers on the 13th month pay deferment or possible installment.

“The company should file an application or notice with Dole to prove they are economically distressed, in which case deferment is understandable, but not exemption,” Diego said.

She further explained that because the 13th month pay is mandated by law, its non-payment is a violation of the 13th month pay law.

Diego said there should be parameters clearly defining what qualifies as “distressed businesses.”

Temporary displacement

Meanwhile, the Dole is eyeing the extension of the six-month temporary displacement of workers in a bid to protect and preserve jobs.

Bello said he will issue an advisory on Friday, Oct. 9, extending the period within which companies may rehire temporarily displaced employees.

Under the law, employers are required to rehire workers temporarily displaced by the Covid-19 pandemic.

Bello said employers have requested for the extension as they have not recovered from their losses.

In Cebu, MCCI’s Yu said the extension is warranted because the local economy has not improved at all.

“The purchasing power even weakened because the savings were used up. One effect of the stagnation is it destroys the equipment and tools due to prolonged non-use. Therefore, businesses are having a difficult time to reopen because they have to spend a lot on repairs,” Yu said.

He said an extension will give businesses hope and a chance to reopen.

“Doing otherwise will discourage them and will lead to permanent closure. This will damage our economy more,” Yu added.

For retailer Go, the extension of the six-month displacement period spells good news to entrepreneurs who plan to reopen in time for Christmas.

“If they end the six-month temporary displacement then massive retrenchment follows for sure,” said Go. (HDT / SunStar Philippines, JOB, WBS)


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