Suits The C-Suite -- By Pamela Lantes-Arellano

After almost 20 years, the government has finally recognized the need to enhance the current maternity leave benefits for women.

In March, the Senate approved Senate Bill No. 1305 or the Expanded Maternity Leave Law of 2017 on its third and final reading. Under the bill, female employees in both government service and in the private sector can go on maternity leave for 120 days, regardless of mode of delivery. Moreover, an employee who qualifies as a solo parent under Republic Act No. 8972, is entitled to a maternity leave of 150 days.

The bill will become a law once it has a concurrent version at the House of Representatives, consolidated and approved at the bicameral conference committee level and, eventually, signed by the President.

The extended maternity leave granted in the bill is more than the minimum provided under Convention 183 of the Maternity Protection Convention of the International Labour Organization (ILO) which only prescribes 14 weeks or 98 days of maternity benefits.

Currently, the maternity benefit in the Philippines per Section 14-A of Republic Act 1161, as amended, otherwise known as Social Security Act of 1997, provides that a female employee shall be paid a daily maternity benefit equivalent to 100% of her average daily salary credit for 60 days or 78 days in case of caesarian delivery.

Aside from extending the maternity leave to 120 days, the bill also provides for an additional maternity leave of 30 days without pay provided that due notice, in writing, will be given to the employer at least 45 days before the end of the maternity leave.

The bill also protects from any discrimination at work those who avail of the maternity benefit — they cannot be demoted or terminated.

Senate Bill No. 1305 includes the following provisions:

a) The grant of maternity leave covers female workers in government and the private sector, including those in the informal economy, regardless of civil status or the legitimacy of her child;

b) Maternity leave shall be granted to female workers in every instance of pregnancy or miscarriage, regardless of frequency;

c) Any female worker entitled to maternity leave benefits as provided for herein may, at her option, allocate up to 30 days of said benefits to the child’s father, whether or not the same is married to the female workers; and

d) Maternity leave with pay shall be granted even if the childbirth or miscarriage occurs not more than 15 calendar days after the termination of the employee’s service, as her right thereto has already accrued.

Once passed into law, expectant and nursing mothers will now have adequate time to deliver, recover, and return to work while providing quality care for their newborn. The protection under the bill ensures a woman’s equal access to employment and the continuation of vital income for the family.

While many female employees are looking forward to the law, some employers have expressed ambivalence. Employers may feel reluctant about the extended length of the leave and the fact that they would have to cover the salary differential between what is granted by the Social Security System (SSS) and what is provided under the bill.

The bill provides that workers on maternity leave must receive not less than two-thirds of their regular monthly wages. Said provision conforms to Convention No. 183, where it states that the cash benefit paid during maternity leave should be at least two-thirds of a woman’s previous earnings — or a comparable amount if other methods are used to determine cash benefits — for a minimum of 14 weeks. The overall guiding principle is that the level of benefits should ensure that the woman can maintain herself and her child in proper conditions of health at a suitable standard of living.

Shifting the burden of the said differential to employers may work against women employees. Employers may have to think twice before they hire, retain or promote pregnant workers or women with family responsibilities. This scenario may happen despite the security of tenure provision explicitly stated in the bill.

Nevertheless, the bill provides an exemption to certain employers from paying the salary differential. Exempted are distressed establishments, retail/service establishments employing not more than 10 employees, those who pay their workers on a purely commission or task-basis and micro-businesses or those whose total assets are not more than P3 million and those who are already providing similar or greater benefits than those granted by the bill.

In the Philippines, maternity cash benefits are funded by SSS and the employer. The maximum covered earnings or compensation to be shouldered by SSS is P16,000 per month effective Jan. 1, 2014. Government may need to revisit the amount of maximum coverage to consider inflation for the past three years.

While some employers offer maternity benefits that are higher than what the current law requires, a majority of employers might face challenges in funding the additional maternity cash benefits provided in the bill. Though company initiatives are welcome, these alone are not enough to support and ensure a woman’s return to work after maternity leave. The provision of the bill to enhance the maternity benefit should also consider employers, such as offering tax incentives.

For instance, in 2010, Republic Act 10028 known as the Expanded Breastfeeding Promotion Act of 2009 was approved and the incentive granted to establishments or institutions. Complying with the provisions of the said Act allowed for a deductible expense for income tax purposes up to twice the actual amount incurred in providing lactation stations or facilities for breastmilk collection and storage for health institutions.

Speaking of tax incentives, if the government is genuinely inclined to enhance the benefits received by female employees under the bill, it is also worth considering the tax exemption (whether in whole or in part) of maternity benefits from withholding tax on compensation.

Moreover, there is also a need to clarify Section 3 of the bill where it states that “maternity leave shall be granted to female workers in every instance of pregnancy or miscarriage, regardless of frequency.” At present, Section 14-A of Republic Act 1161, as amended, otherwise known as Social Security Act of 1997, provides that the maternity benefits shall be paid only for the first four deliveries or miscarriages. This issue should be clarified by the concerned agencies in the rules and regulations for the effective implementation of this bill.

Despite these considerations, however, it is both encouraging and gratifying to learn that the government is trying to address the concerns of working Filipino mothers.

This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinion expressed above are those of the author and do not necessarily represent the views of SGV & Co.

Pamela Lantes-Arellano is a Tax Senior Director of SGV & Co.