Who are covered?

All employees in all establishments and undertakings whether for profit or not are entitled to overtime pay for work rendered beyond eight (8) hours. But this does not apply to managerial employees, field personnel, members of the family of the employer who are dependent on him for support, domestic helpers, persons in the personal service of another, and workers who are paid by results. Employees in the government are also entitled to overtime pay but they are governed by Civil Service laws and rules. Only employees in the private sector are covered by the Labor Code. Special rules for health personnel For health personnel in (1)cities and municipalities with a population of at least one million (1,000,000) or in (2)hospitals and clinics with a bed capacity of at least one hundred (100), their normal hours of work are eight (8) hours a day, for five (5) days a week, exclusive of time for meals. (Article 83, LCP) Health personnel includes resident physicians, nurses, nutritionists, dietitians, pharmacists, social workers, laboratory technicians, paramedical technicians, psychologists, midwives, attendants and all other hospital or clinic personnel. Overtime work by health personnel included in the two abovementioned instances is, as a rule, not allowed since it involves strenuous physical work considering the number of patients or clients they must attend to. However, they may be compelled to work beyond such hours where the exigencies of the service require that they work for six (6) days or forty-eight (48) hours. But the employer is required to pay an additional compensation of at least thirty percent (30%) of their regular wage for work on the sixth day. Can an employee be compelled to render overtime? When an employee spends additional time for work, he puts in more physical and mental effort. It is but proper that he be compensated for that. He is also delayed in going home and cannot spend time with family and enjoy the comforts of his home. As such, the law discourages employers to require employees to work overtime. Generally, he cannot compel the employee to render overtime, except in certain instances (Sec 10, Rule I, Bk. III, IRR) to wit: 1) When the country is at war or when any other national or local emergency has been declared by the National Assembly or the Chief Executive; 2) When overtime work is necessary to prevent loss of life or property, or in case of imminent danger to public safety due to actual or impending emergency in the locality caused by serious accident, fire, floods, typhoons, earthquake, epidemic or other disaster or calamities; 3) When there is urgent work to be performed on machineries, installations, or equipment, in order to avoid serious loss or damage to the employer or some other causes of similar nature; 4) When the work is necessary to prevent loss or damage to perishable goods; 5) When the completion or continuation of work started before the 8th hour is necessary to prevent serious obstruction or prejudice to the business or operations of the employer; 6) When overtime work is necessary to avail of favorable weather or environmental conditions where performance or quality of work is dependent thereon. Can an employee insist on working overtime? The employee cannot compel his employer to allow him to work overtime when the circumstances does not require him to do so as when there is actually no work to be performed. Under time cannot be offset by overtime Under time work on any particular day shall not be offset by overtime work on any other day (Article 88, LCP). The reason behind this is fairness. If the employee works for less than eight hours, he will be paid only for the corresponding number of hours he had actually worked. If on another day he works beyond the maximum hours, he should be given additional compensation.

Non-payment of overtime pay is not only illegal but also contrary to public policy. The employer cannot use the overtime to offset the under time because payment of overtime pay is mandatory. However, he may either deduct the under time from the wage of the employee, or through other approaches. Although these methods are not provided by law, these may be found in company policies or established by company practices. Computation of wages The computation of overtime pay, pay for work done on holidays, premium on nightshift and 13th month pay are set out by the following rules: Computing Overtime: On Ordinary Days Number of hours in excess of 8 hours (125% x hourly rate) On a rest day, special day or regular holiday Number of hours in excess of 8 hours (130% x hourly rate) Computing pay for work done on: A special day (130% x basic pay) A special day, which is also a scheduled rest day (150% x basic pay) A regular holiday (200% x basic pay) A regular holiday, which is also a scheduled rest day (260% x basic pay) Computing Night Shift Premium Where Night Shift is a Regular Work: On Ordinary day (110% x basic hourly rate) On a rest day, special day, regular holiday (110% of regular hourly rate for a rest day, special day, regular holiday) Computing Overtime on Night Shift: On ordinary day (110%) x overtime hourly rate) On rest day, special day or regular holiday (110% x overtime hourly rate for rest days, special days, regular holidays) Computing 13th Month Pay: Total basic salary earned for the year exclusive of overtime, holiday, and night shift differential pay divided by 12 = 13th month pay. Presidential Decree No. 851 (otherwise known as Thirteenth Month Pay Law), as amended by Memorandum Order No. 28, requires all employers to pay their employees a 13th month pay not later than December 24 of every year. Historical Backdrop. Originally, when PD 851, issued by Pres. Marcos, took effect on December 16, 1975, only employees receiving a basic salary of not more than P1,000 a month were entitled to 13th pay. On August 13, 1986, Pres. Aquino, through Memorandum Order No. 28, removed the salary ceiling of P1,000. With the removal of the salary ceiling, all rank and file employees become entitled to a 13th month pay regardless of the amount of their monthly basic salary (unless their employers are exempted from the application of PD 851). Employees Covered by 13th Month Pay Law.

All rank-and-file employees, regardless of their designation or employment status, and irrespective of the method by which their wages are paid, who have worked at least one month during the calendar year are entitled to 13th month pay. Rank and File Employees Meaning. As stated above, only rank-and-file employees are entitled to 13th month pay. Managerial employees are excluded from the coverage of the law. The Labor Code distinguishes a rank-and-file employee from a managerial employee. It provides that a managerial employee is one who is vested with powers of prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay-off, recall discharge, assign or discipline employees, or to effectively recommend such managerial actions. All employees not falling within this definition are considered rank-and-file employees. Amount of 13th Month Pay. The 13th month pay shall be in the amount not less than 1/12 of the total basic salary earned by the employee within the calendar year. Computation Only basic salary is included in the computation of 13th month pay. Allowances and monetary benefits which are not considered or integrated as part of the regular or basic salary, such as the cash equivalent of unused vacation and sick leave credits, overtime, premium, night differential and holiday pay, and cost-of-living allowances, shall be excluded from the computation. However, these salary-related benefits should be included as part of the basic salary in the computation of the 13th month pay if by individual or collective agreement, company practice or policy, the same are treated as part of the basic salary of the employees. Time of Payment of 13th Month Pay. The required 13th month pay shall be paid not later than December 24 of each year. An employer, however, may give to his employees one half of the required 13th month pay before the opening of the regular school year and the other half on before the 24th of December of every year. The frequency of payment of this monetary benefit may be the subject of agreement between the employer and the recognized/collective bargaining agent of the employees. Employees excluded from coverage of 13th month pay law. Managerial employees; Those covered under the civil service law; Those already receiving 13th month pay or its equivalent. Christmas bonus, mid-year bonus, cash bonuses and other payments amounting to not less than 1/12 of the basic salary are treated as equivalent of 13th month pay; Household helpers and persons in the personal service of another; and Those paid on purely commission, boundary, or task basis, and those who are paid fixed amount for performing specific work except those paid on a piece-rate basis. 13th Month Pay of Certain Types of Employees Employees paid on commission basis. Employees paid on a purely commission basis are not entitled to 13th month pay. They are expressly excluded from the coverage of PD 851. However, employees paid on partly commission basis, i.e., those guaranteed with a fixed wage aside from the commission, are entitled to 13th month pay. Computation. In the computation of the basic salary of employees paid partly on commission basis, we must distinguish between the two types of commission: 1. Commission as an incentives or encouragement to ensure productivity, i.e., productivity bonus; and 2. Commission as a direct remuneration for service rendered. Commission that take the form of an incentives or encouragement to ensure productivity, e.g., productivity bonus, does not form part of the basic salary. As such, it may be excluded from the computation of 13th month pay. Only the fixed or guaranteed wage is required to be included in the computation (see Boie Takeka case, 1993.) Basic salary = Fixed wage (commission is excluded)

1. 2. 3. 4. 5.

On the other hand, commission that takes the form of a direct remuneration for services rendered should be included in the computation of the basic salary. That is, it should be added to the guaranteed wage of the employee in computing his basic salary (see Philippine Duplicators v. NLRC, 1993.) Basic salary = Fixed wage + Commission 13th Month Pay of Employees with Multiple Employers. Employees with multiple employers are entitled to 13th month pay from all their private employers. Thus, if an employee works in two or more private firms, he is entitled to the pay from both or all of them. If he is a government employee, but works part time in a private enterprise, he is entitled to 13th month pay from the private enterprise. 13th Month Pay of Private School Teachers. Private school teachers are entitled to 13th month pay regardless of the numbers of months they work in a year, provided it is at least one month. Payment of 13th Month Pay to Resigned or Separated Employees. Employees who resigned or were separated during the calendar year shall be entitled to 13th month pay in proportion to the length of time he worked during the year, provided it is at least one month. The payment may be demanded by the employee upon the cessation of employment. Example 1. Assuming an employee earning a basic salary of P12,000.00 per month had worked for at least 9 months at the time of his separation, how much is his 13th month pay? Answer: P9,000.00. Computation: (P12,000.00 x 9 months) 12 = P9,000.00 Cases 1. For 2 to 3 years, Sevilla Trading, allegedly by mistake, added the night premium, maternity leavepay, etc., in the computation 13th month pay. The court ruled that the inclusion may no longer be withdrawn if it has already ripened into a company practice. Nota bene: There is no specific rule as to how many years are necessary to constitute company practice. (Sevilla Trading v. AVA Tomas, GR No. 152456.) 2. Employees paid according to boundary system are not entitled to 13th mo pay. Boundary system is where the employees do not receive fixed wages, but retain only those sums in excess of the boundary or fee they pay to the owners or operators of their vehicles. They are akin to employees paid on purely commission basis. (R&E Transport v. Latag, G.R. No. 155214.) 3. Drivers who are paid on commission basis, but with guaranteed minimum wage in case their commission be less than their basic minimum, are entitled to 13th month pay. (PACIWU v. NLRC, GR No 107994.) References 1. Presidential Decree No. 851, effective December 16, 1975. 2. Revised Rules and Regulations Implementing Presidential Decree No. 851 Last Edited: Sunday, December 18, 2011 Caveat: Subsequent court and administrative rulings, or changes to, or repeal of, laws, rules and regulations may have rendered the whole or part of this article inaccurate or obsolete. Premium Pay Meaning Premium pay refers to the additional compensation required by law to be paid to employees for work performed on nonworking days, such as rest days and special days. No Work, No Pay Rule During rest and special days, the principle of no work, no pay applies. Workers who were not required or permitted to work on those days are not by law entitled to any compensation. This is consistent with the definition above that premium pay is to be paid for work performed. Performance of work is necessary for entitlement to premium pay.

Premium Pay For Rest Days As a general rule, where an employee is made or permitted to work on his scheduled rest day, whether it is a regular day or a holiday, he shall be paid an additional compensation of at least 30% of his regular wage for that day. The rule is different for work performed on a rest day which is also a special day, in which case, 50% of the regulary daily rate is added, instead of 30% of the daily rate for special day. In sum, the premium pay rates for rest days are as follows: 1. For work performed on rest days, an additional 30% of the daily rate or a total of 130%; 2. For work performed on a rest day which is also a special day, an additional of 50% of the daily rate or a total of 150%; and 3. For work performed on a regular holiday which is also the employees rest day, an additional 30% of the regular holiday rate of 200% or a total of 260%. Computation For work performed on rest day, using P250.00 as Basic pay, the rate may be determined as follows: Rate on Rest day = Basic pay + Premium pay Where, Premium pay = 30% of Basic pay = 30% of P250.00 = 0.3 x P250.00 = P75.00 Thus, Rate on Rest day = Basic pay + Premium pay = P250.00 + P75.00 = P325.00 For work performed on a regular holiday which is also the employees rest day, the rate may be determined as follows: Rate = Daily rate on holiday + Premium pay Where, Premium pay = 30% of Daily rate on holiday, and Daily rate on holiday = 200% of Basic pay = P500.00 Thus, Premium pay = 0.3 x Daily rate on holiday = 0.3 x P500.00 = P150.00 Thus, the rate on rest day falling on a holiday is: Rate = Daily rate on holiday + Premium pay = P500.00 + P150.00 = P650.00 Or, Rate = 260% of Basic pay = 2.6 x P250.00 = P650.00 Premium pay for Special Days There are two national special days observed in the Philippines: 1. All Saints Day (November 1); and 2. The last day of the year (December 31). Work performed on special days merits additional compensation of not less than 30% on top of the basic pay or a total of 130%.

Computation Using P250.00 as daily rate (Basic pay), the Rate on special day may be determined as follows: Rate on special day = Basic pay + Premium Where, Premium = 30% of Basic pay = 30% of P250.00 = P75.00 Thus, Rate on special day = Basic pay + Premium = P250.00 + P75.00 = P325.00 Or, Rate on special day = 130% of Basic pay = Basic pay x 1.3 = P250.00 x 1.3 = P325.00 Premium Pay For Special Day falling on Rest Day. If the special day falls on employees scheduled rest day, he is entitled to at least 50% over and above the basic pay or a total of 150%. Computation Rate for work on special days which is also the employees rest day entitles him to an additional 50% of the daily rate (Basic pay). Rate = Basic pay + Premium pay Where, Premium pay = 50% of Basic pay = P250.00 x 0.5 = P125.00 Thus, Rate = Basic pay + Premium pay = P250.00 + P125.00 = P375.00 Or, Rate = 150% of Basic pay = Basic pay x 1.5 = P250.00 x 1.5 = P375.00 If no regular workdays and no scheduled regular rest days Where the nature of the work of the employee is such that he has no regular workdays and no regular rest days can be scheduled, he shall be paid an additional compensation of at least 30% of his regular wage for work performed on Sundays and holidays. Premium Pay and Holiday Pay Comparison Using the definition of premium pay above, holiday pay is not a premium pay because it does not requireperformance of work by the employee. In case of holiday pay, the employee is entitled payment even if he does not work. The same cannot be said of premium pay. Thus, unlike in premium pay, the principle no work, no pay does not similarly apply to holiday pay. Last Edited: Friday, August 19, 2011

Caveat: Subsequent court and administrative rulings, or changes to, or repeal of, laws, rules and regulations may have rendered the whole or part of this article inaccurate or obsolete. Basis. All employees required to work beyond eight hours in one workday is entitled to overtime pay. The basis of overtime pay is found in Article 87 of the Labor Code. Article 87. Overtime work. Work may be performed beyond eight hours a day provided that theemployee is paid for the overtime work an additional compensation equivalent to his regular wage plus at least twenty-five percent thereof. Work performed beyond eight hours on a holiday or rest day shall be paid an additional compensation equivalent to the rate for the first eight hours on a holiday or rest day plus at least 30 percent thereof. Terminology. Overtime Pay. Overtime pay is the additional compensation payable to employee for services or work rendered beyond the normal eight hours of work. It is computed by multiplying the overtime rate with the number of hours in excess of the regular eight hours of work. Overtime Work. Any work performed beyond the normal 8 hours of work in one workday is considered as overtime work. Workday. A workday is the consecutive 24-hour period which commences from the time the employee starts to work and ends at the same time the following day. To illustrate, if the employee regularly works from 8AM to 4PM, his regular workday is the 24-hour period from 8AM to 8AM of the following day. Workdays do not necessarily corresponds to calendar days. Overtime Pay Rates. Overtime pay rates depend upon the day the work is performed, whether it is ordinary working day, special day, holiday or rest day. For ordinary working day, an additional compensation equivalent to his regular hourly rate plus at least 25% thereof. For holiday, special day and rest day, an additional compensation equivalent to the rate for the first eight hours on a holiday or rest day plus at least 30% thereof. Computation of Overtime Pay Assuming that the mininum wage rate is P250, how much is the overtime rate per hour? On ordinary day On an ordinary day, the overtime rate per hour is determined as follows: First, compute the hourly rate of the employee: Regular hourly rate = Minumum wage rate 8 hours = P250 8 hours = P31.25 per hour Now to determine overtime rate per hour: Overtime rate = Regular hourly rate + 25% of Regular hourly rate Overtime rate = P31.25 + (25% of P31.25) = P31.25 x 1.25 = P39.06 per hour On rest day and special day Compute the hour rate of the employee on a rest day or special day: Hourly rate = 130% of Regular hourly rate = P31.25 x 1.30

= P40.625 per hour (Note: The hourly rate on rest day and special day is 130% of the regular rate.) To determine overtime rate per hour: Overtime rate = Hourly rate on rest day + 30% Hourly rate on rest day = P40.625 + (30% of P40.625) = P40.625 x 1.30 = P52.81 per hour On rest day which falls on a special day Compute the hourly rate of the employee on a rest day which falls on a special day: Hourly rate = 150% of Regular hourly rate = P31.25 x 1.50 = P46.875 per hour To determine overtime rate per hour: Overtime rate = Hourly rate + 30% of Hourly rate = P46.875 + (30% of P46.875) = P46.875 x 1.30 = P60.94 per hour On a regular holiday Compute the hourly rate on regular holiday: Hourly rate = 200% of Regular hourly rate = P31.25 x 2 = P62.5 per hour To determine overtime rate per hour: Overtime rate = Hourly rate + 30% of Hourly rate = P62.50 + (30% of P62.50) = P62.50 x 1.30 = P81.25 per hour On a rest day which falls on a regular holiday Compute the hourly rate: Hourly rate = 260% of Regular hourly rate = P31.25 x 2.60 = P81.25 per hour To determine overtime rate per hour: Overtime rate = Hourly rate + 30% of Hourly rate = P81.25 + (30% of P81.25) = P81.25 x 1.30 = P105.625 per hour Work need not be Continuous. Work performed by the employee need not be continuous as long as it falls within the same work day. For example, an employee who works in two shifts, one from 8AM to 12AM (four hours), and another from 4PM to 8PM of the same work day (another four hours), suffers a total of 8 hours of work. If he is required to work for another hour within the same work day (from 8AM to 8AM of the following day), then such work is subject to overtime pay. Undertime cannot be Offset by Overtime.

Some employers has the practice of offsetting undertime and overtime. For example, if an employee work for only 7 hours on any given day (one hour undertime), he will be required to make up for his undertime by requiring him to render additional one hour work on another day. This practice is prohibited under Article 87 of the Labor Code, viz: Article 87. Undertime not offset by overtime. Undertime work on any particular day shall not be offset by overtime work on any other day. x x x The rationale for provision is quite obvious. Offsetting undertime against overtime is improper because the employee would be deprived of the additional compensation for the overtime work he has rendered. Note that undertime is covered only by the regular hourly rate whereas overtime is subject to additional overtime rate. If the two are to be offset, the employee loses overtime pay to which he is entitled. Emergency Overtime Work. As a general rule, employees may not be compelled to work in excess of eight hours or to render overtime work on any given day against his will. The exception to this rule is found in Artile 89 of the Labor Code. Under the said article, employees may be compelled to perform overtime work in any of the following cases: 1. 2. 3. 4. 5. 6. When the country is at war or under any national or local emergency; When overtime work is necessary to prevent loss of life or property, or in case of imminent danger to public safety; When there is urgent work to be performed on machines, etc., in order to avoid serious loss or damage to the employer; When the work is necessary to prevent loss or damage to perishable goods; When the completion or continuation of work is necessary to prevent serious obstruction or prejudice to the business; or When overtime work is necessary to avail of favorable weather or environmental conditions. Managerial Employees not Entitled to Overtime Pay. Article 82 of the Labor Code states that the provisions of the Labor Code on working conditions and rest periods shall not apply to managerial employees. This includes overtime pay for overtime work. Thus managerial employees are not entitled to overtime pay for services rendered in excess of eight hours a day. Cases 1. Supervisory employees are considered as officers or members of the managerial staff, and hence are not entitled to overtime, rest day and holiday pay. (Natl Sugar Refineries Corp. vs. NLRC, G.R. No. 101761. March 24, 1993) Last Edited: Friday, August 19, 2011 Caveat: Subsequent court and administrative rulings, or changes to, or repeal of, laws, rules and regulations may have rendered the whole or part of this article inaccurate or obsolete. Normal Hours of Work The normal hours of work under the Labor Code is 8 hours in one work day. Work day is understood to mean one 24-hour cycle which starts from the time the employee is engaged to work and ends on the same time the following day. For example, if the employee is engaged to work from 8:00am to 5:00pm, his work day is the 24-hour cycle that starts from 8:00am and ends at 8:00am of the following day. The employer is free to adopt what time in a day the work shall start as long as the total number of hours worked will not exceed 8 hours. If the number of hours worked exceed 8 hours, the employee must be paidovertime pay for the excess. How to compute overtime pay? Hours worked definition Hours worked refers to all compensable period of work. Hours work includes: 1. All the time during which an employee is required to be on duty or to be at a prescribed workplace; and 2. All the time during which an employee is suffered or permitted to work. Meal periods The employer must give his employees not less than 60 minutes or one hour time-off for their meals. This period in noncompensable, which means that it is not to be included in the computation of hours worked. For example, if an employees work is from 8:00am to 5:00 with one hour meal break from 12:00nn to 1:00pm, the total compensable hours

of the employee is 8 hours, i.e., from 8:00am 12:00nn and 1:00pm 5:pm. The period from 12:00nn to 1:00pm is noncompensable. Shortened meal periods Under exceptional circumstances, the employer may give the employee a meal period of not less than 20 minutes, provided that such shorter meal period is credited as compensable hours worked of the employee. Shortened meal period may be allowed under the following cases: 1. Where the work is non-manual work in nature or does not involve strenuous physical exertion; 2. Where the establishment regularly operates not less than 16 hours a day; 3. In case of actual or impending emergencies or there is urgent work to be performed on machineries, equipment or installations to avoid serious loss; and 4. Where the work is necessary to prevent serious loss of perishable goods. Rest periods The employer may give their employees rest periods or coffee breaks during working hours in order to beef them up or to make them more productive. Unlike meal periods, rest periods running from 5 to 20 minutes is compensable as hours worked. Rest period running for more that 20 minutes may or may not be compensable depending on the situation. See letter (b) under Principles in determining hours worked. The giving of rest period, however, is not required under the Labor Code, and is largely a management prerogative. Principles in determining hours worked The following general principles may be used to determine whether the time spent by an employee is considered hours worked or not: 1. All hours are hours worked which the employee is required to give his employer, regardless of whether or not such hours are spent in productive labor or involve physical or mental exertion. 2. An employee need not leave the premises of the work place in order that his rest period shall not be counted, it being enough that he stops working, may rest completely and may leave his work place, to go elsewhere, whether within or outside the premises of his work place. 3. If the work performed was necessary, or it benefited the employer, or the employee could not abandon his work at the end of his normal working hours because he had no replacement, all time spent for such work shall be considered as hours worked, if the work was with the knowledge of his employer or immediate supervisor. 4. The time during which an employee is inactive by reason of interruptions in his work beyond his control shall be considered working time either if the imminence of the resumption of work requires the employees presence at the place of work or if the interval is too brief to be utilized effectively and gainfully in the employees own interest. Waiting time Waiting time spent by an employee shall be considered as working time if waiting is an integral part of his work or the employee is required or engaged by the employer to wait. On call duty An employee who is required to remain on call in the employers premises or so close thereto that he cannot use the time effectively and gainfully for his own purpose shall be considered as working while on call. The employee must be required to leave a word where he may be reached. An employee who is not required to leave word at his home or with company officials where he may be reached is not working while on call. Lectures, meetings, training programs Attendance at lectures, meetings, training programs, and other similar activities shall not be counted as working time if all of the following conditions are met: 1. Attendance is outside of the employees regular working hours; 2. Attendance is in fact voluntary; and 3. The employee does not perform any productive work during such attendance. References 1. Chapter 1, Title I, Book Three, Labor Code of the Philippines (Article 82 to 85)

2. Rule I, Book Three, Omnibus Rules Implementing the Labor Code. Last Edited: Friday, August 19, 2011 Caveat: Subsequent court and administrative rulings, or changes to, or repeal of, laws, rules and regulations may have rendered the whole or part of this article inaccurate or obsolete. Concept The principle of non-diminution of benefits states that: any benefit and supplement being enjoyed by employees cannot be reduced, diminished, discontinued or eliminated by the employer.[1] This principle is founded on the Constitutional mandate to protect the rights of workers and promote their welfare, and to afford labor full protection. Said mandate in turn is the basis of Article 4 of the Labor Code which states that all doubts in the implementation and interpretation of this Code, including its implementing rules and regulations shall be rendered in favor of labor.[2] Benefit and supplement definition Employee benefits are compensations given to employees in addition to regular salaries or wages.[3] Some benefits are legally required, e.g., social security benefits, medicare, retirement benefits, maternity benefits,service incentive leave, etc. Other benefits are offered by the employer as an incentive to attract and retain employees as well as increase employee morale and improve job performance.[4] Supplements include those benefits or privileges granted to an employee for the convenience of the employer, e.g., board and lodging within the company premises. Common application In employment setting, the principle of non-diminution of benefits finds application when a change initiated by the employer to existing company policies, specially matters concerning employee benefits, results in reduction, diminution or withdrawal of some or all of the the benefits already enjoyed by the employees. For example, if the employees of a certain company is traditionally granted 14th month pay, and the employer subsequently withdrew such benefit, or reduced its amount, the reduction or withdrawal is objectionable on the ground that it would result to diminution of benefits. Requirements The application of the principle presupposes that a company practice, policy and tradition favorable to the employees has been clearly established; and that the payments made by the company pursuant to it have ripened into benefits enjoyed by them.[5] To ripen into benefits, the following requisites must concur: 1. It should have been practiced over a long period of time; and 2. It must be shown to have been consistent and deliberate.[6] With regard to the length of time the company practice should have been exercised to constitute voluntary employer practice which cannot be unilaterally withdrawn by the employer, the Court has not laid down any rule requiring a specific minimum number of years.[7] 1. In the case of Davao Fruits Corporation vs Associated Labor Unions (G.R. No. 85073, August 24, 1993), the company practice lasted for six years. 2. In Davao Integrated Port Stevedoring Services vs. Abarquez (G.R. No. 102132, March 19, 1993), the employer, for three years and nine months, approved the commutation to cash of the unenjoyed portion of the sick leave with pay benefits of its Intermittent workers. 3. In Tiangco vs Leogardo, Jr. (G.R. No. L-57636, May 16, 1983), the employer carried on the practice of giving a fixed monthly emergency allowance from November 1976 to February 1980, or three years and four months. 4. In the case of Sevilla Trading Company vs Semana, ibid., the employer kept the practice of including non-basic benefits such as paid leaves for unused sick leave and vacation in the computation of their 13th-month pay for at least two (2) years. In all these cases, the grant of benefits has been held to have ripened into company practice or policy which cannot be peremptorily withdrawn.