HANDBOOK ON WORKERS’ STATUTORY MONETARY BENEFITS

DEPARTMENT OF LABOR AND EMPLOYMENT

BUREAU OF WORKING CONDITIONS
SILVESTRE H. BELLO III
Secretary

COMPLIANCE GUIDE

Subsidized Meals and Snacks

The employer may provide subsidized meals and snacks to his employees provided that the subsidy shall not
be less than 30% of the fair and reasonable value of such facilities. In such case, the employer may deduct from
the wages of the employees not more than 70% of the value of the meals and snacks enjoyed by the employees,
provided further that such deduction is with the written authorization of the employees concerned.

Salary of Kasambahay who Works as Salesclerk

A kasambahay who works as salesclerk should receive salary in accordance with the prescribed
minimum wage which is applicable in the retail and service establishments, under existing Wage Orders.

Minimum Wage
Republic Act No. 6727 or the “Wage Rationalization Act” mandates the fixing of the minimum wages
applicable to different industrial sectors, namely, non-agriculture, agriculture plantation, and non-plantation,
cottage/handicraft, and retail/service, depending on the number of workers or capitalization or annual gross
sales in some sectors.

The Rules Implementing RA 6727 define the industrial sectors as follows:

“Agriculture” refers to farming in all its branches and, among others, includes the cultivation and tillage
of the soil, production, cultivation, growing and harvesting of any agricultural or horticultural commodities,
dairying, raising of livestock or poultry, the culture of fish and other aquatic products in farms or ponds, and
any activities performed by a farmer or on a farm as an incident to or in conjunction with such farming
operations, but does not include the manufacturing and/or processing of sugar, coconut, abaca, tobacco,
pineapple, aquatic or other farm products.

“Retail Establishment” is one principally engaged in the sale of goods to end-users for personal or
household use. A retail establishment that regularly engages in wholesale activities loses its retail character.

“Service Establishment” is one principally engaged in the sale of service to individuals for their own or
household use and is generally recognized as such. The said law rationalized wage determination by
establishing the mechanism and proper standards through the creation of Regional Tripartite Wages and
Productivity Boards (RTWPBs) authorized to determine the daily minimum wage rates in the following
different regions based on established criteria:
National Capital Region (NCR) or Metro Manila
Cordillera Administrative Region (CAR)
Region I - Northern Luzon or Ilocos
Region II - Cagayan Valley
Region III - Central Luzon
Region IV-A - CALABARZON (Cavite, Laguna, Batangas, Rizal, Quezon)
Region IV-B - MIMAROPA (Mindoro, Marinduque, Romblon, Palawan)
Region V - Bicol
Region VI - Western Visayas
Region VII - Central Visayas
Region VIII - Eastern Visayas
Region IX - Western Mindanao or Zamboanga Peninsula
Region X - Northern Mindanao
Region XI - Southern Mindanao or Davao
Region XII - Central Mindanao or SOCCSKSARGEN (South Cotabato, North Cotabato, Sultan Kudarat,
Sarangani, General Santos)
Region XIII – Caraga
Bangsamoro Autonomous Region in Muslim Mindanao (BARMM)

The Regional Wage Orders prescribe the daily minimum wage rates per industry per locality within the
region and in some instances depending on the number of workers and the capitalization of enterprises. The
Wage Orders likewise provide the basis and procedure for application for exemption from compliance
therefrom. Some
Wage Orders grant allowances instead of wage increases.

Coverage
The wage increases prescribed under Wage Orders apply to all private sector workers and employees
receiving the daily minimum wage rates or those receiving up to a certain daily wage ceiling, where applicable,
regardless of their position, designation, or status of employment, and irrespective of the method by which their
wages are paid, except workers of duly registered Barangay Micro Business Enterprises (BMBEs) with
Certificate of Authority pursuant to Republic Act No. 10644.
Rules in Determining Compensable Working Hours
The basis of the minimum wage rates prescribed by law shall be the normal working hours of 8 hours a day.

Hours worked: The following shall be considered as compensable hours worked:

 All time during which an employee is required to be on duty or to be at the employer's premises or to be
at a prescribed work place;
 All time during which an employee is suffered or permitted to work.

Principles in determining hours worked: The following general principles shall govern in determining whether
the time spent by an employee is considered hours worked:
 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.
 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.
 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.
 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
employee's presence at the place of work or if the interval is too brief to be utilized effectively and
gainfully in the employee's own interest.

Treatment on 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.
 An employee who is required to remain on call in the employer's 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. 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.

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:
 Attendance is outside of the employee's regular working hours;
 Attendance is in fact voluntary; and
 The employee does not perform any productive work during such attendance.

Meal and Rest Periods. Every employer shall give his employees, regardless of sex, not less than one (1) hour
time-off for regular meals, except in the following cases when a meal period of not less than twenty (20)
minutes may be given by the employer provided that such shorter meal period is credited as compensable hours
worked of the employee:
 Where the work is non-manual work in nature or does not involve strenuous physical exertion;
  Where the establishment regularly operates not less than sixteen (16) hours a day;
 In case of actual or impending emergencies or there is urgent work to be performed on machineries,
equipment or installations to avoid serious loss which the employer would otherwise suffer; and
 Where the work is necessary to prevent serious loss of perishable goods.

Rest periods or coffee breaks running from five (5) to twenty (20) minutes shall be considered as compensable
working time.

Monthly-Paid Employees and Daily-Paid Employees. “Monthly-paid employees” are those who are paid every
day of the month, including unworked rest days, special days, and regular holidays. Factor 365 days in a year is
used in determining the equivalent monthly salary of monthly-paid employees.

“Daily-paid employees” are those who are paid on the days they actually worked and on unworked regular
holidays.

Computation of the Estimated Equivalent Monthly Rate (EEMR) of Monthly-Paid and Daily-Paid Employees
1. For monthly-paid employees: Factor 365 days in a year is used in determining the equivalent annual and
monthly salary of monthly-paid employees. To compute their Estimated Equivalent Monthly Rate
(EEMR), the procedure is as follows:

Applicable Daily Rate ( ADR)× 365

=EEMR
12months

Where 365 days/year = 295 Ordinary working days

52 Rest days
12 Regular holidays
6 Special non-working days
365 Total equivalent no. of days/year

2. For daily-paid employees: The following factors and formula may be used in computing the EEMR of
different
groups of daily-paid employees for purposes of entitlement to minimum wages and allied benefits under
existing laws:

a. For those who are required to work every day, including Sundays or rest days, special days and regular
holidays

Applicable Daily Rate ( ADR ) × 394.4

=EEMR
12 months

Where 394.4 days/year = 295 Ordinary working days

67.6 Rest days (52 x 1.3)
24 Regular holidays (12 x 2)
7.8 Special non-working days (6 x 1.3)
394.4 Total equivalent no. of days/year
b. For those who do not work and are not considered paid on Sundays or rest days

Applicable Daily Rate ( ADR ) × 313

=EEMR
12 months

Where 313 days/year = 295 Ordinary working days

12 Regular holidays
6 Special non-working days (7.8 if worked)
313 Total equivalent no. of days/year

c. For those who do not work and are not considered paid on Saturdays and Sundays or rest days

Applicable Daily Rate ( ADR ) × 313

=EEMR
12 months

Where 261 days/year = 243 Ordinary working days

12 Regular holidays
6 Special non-working days (7.8 if worked)
261 Total equivalent no. of days/year

Without prejudice to existing company policies, practices and/or agreements, the above formula are merely
suggestions and may be used as guides in determining the equivalent monthly minimum wage rates.

Minimum Wage and Rights of Kasambahay

After one year from the effectivity of the Batas Kasambahay and periodically thereafter, the Regional
Tripartite Wages and Productivity Boards (RTWPBs) shall review and if proper, determine and adjust the
minimum wage rates of Kasambahay.

Mandatory Benefits of Kasambahays

 Monthly minimum wage;
 An aggregate of 8 hours daily rest period;
 Weekly rest period of 24 (uninterrupted) hours;
 5 days annual service incentive leave with pay;
 13th month pay;
 SSS benefit;
 PhilHealth benefit; and
 Pag-IBIG benefit.

Rights and Privileges of Kasambahays

 Freedom from employers’ interference in wage disposal;
 Standard of treatment;
  Board, lodging, and medical attendance;
 Right to privacy;
 Access to outside communication;
 Access to education and training;
 Right to be provided a copy of the employment contract;
 Right to Certificate of Employment;
 Right to form, join, or assist labor organization;
 Right to terminate employment based on just cause; and
 Right to exercise religious beliefs and cultural practices.

Effect of Reduction of Workdays on Wages

In situations where the employer has to reduce the number of regular working days to prevent serious
losses, such as when there is a substantial slump in the demand for his/her goods or services or when there is
lack of raw materials, the employer may deduct the wages corresponding to the days taken off from the
workweek, consistent with the principle of “no work, no pay.” This is without prejudice to an agreement or
company policy which provides otherwise.

Penalty and Double Indemnity for Violation of the Prescribed Increases or Adjustments in the Wage Rates (RA
8188)
Any person, corporation, trust, firm, partnership, association or entity which refuses or fails to pay any
of the prescribed increases or adjustments in the wage rates made in accordance with RA 6727, shall be
punished by a fine of not less than Twenty-five Thousand Pesos (P25,000.00) nor more than One Hundred
Thousand Pesos (P100,000.00) or imprisonment of not less than two (2) years nor more than four (4) years, or
both such fine and imprisonment at the discretion of the court: Provided, That any person convicted hereof shall
not be entitled to the benefits provided for under the Probation Law.
The employer concerned shall be ordered to pay an amount equivalent to double the unpaid benefits
owing to the employees: Provided, that payment of indemnity shall not absolve the employer from the criminal
liability imposable hereof. If the violation is committed by a corporation, trust, firm, partnership, association or
any other entity, the penalty of imprisonment shall be imposed upon the entity’s responsible officers, including,
but not limited to, the president, vice-president, chief executive officer, general manager, managing director or
partner.

Barangay Micro Business Enterprises (BMBEs). BMBEs or business enterprises engaged in the production,
processing or manufacturing of products or commodities including agro-processing, trading and services whose
total assets, excluding the land on which the particular business entity’s office, plant and equipment are situated,
are not more than Three Million Pesos (P3,000,000.00) shall be exempt from the coverage of the Minimum
Wage Law: Provided, that all employees shall still be entitled to the same benefits given to regular employees
such as social security and health care benefits. The DTI, through the Negosyo Center in the city or
municipality level, shall have the sole power to issue the Certificate of Authority for BMBEs to avail of the
benefits provided by R.A. No. 9178, otherwise known as the “Barangay Micro Business Enterprises (BMBE’s)
Act of 2002” The BMBE workers and owners shall agree on the acceptable wage rates based on the wage
advisories issued by the RTWPBs.
Minimum Wage of Workers Paid by Results. All workers paid by results, including homeworkers and those
who are paid on piece rate, takay, pakyaw or task basis, shall receive not less than the prescribed minimum
wage rates under the Regional Wage Orders for normal working hours which shall not exceed eight (8) hours a
day, or a proportion thereof. The wage rates of workers who are paid by results may be determined through time
and motion studies or consultation with representatives of employers’ and workers’ organizations in a tripartite
called by the DOLE Secretary.
Minimum Wage of Apprentices, Learners, and Persons with disability
Wage of apprentices and learners shall in no case be less than seventy-five (75%) percent of the
applicable minimum wage rates. Apprentices and learners are those who are covered by apprenticeship and
learnership agreements duly approved by the Technical Education and Skills Development Authority (TESDA).
A qualified employee with disability shall be subject to the same terms and conditions of employment and the
same compensation, privileges, benefits, fringe benefits or allowances as a qualified able-bodied person.

Coverage from Income Tax of Minimum Wage Earners

Effective January 1, 2018, salaried individuals earning annual gross compensation of ₱250,000.00 or
below per year are exempted from paying income taxes. The following income of MWEs shall also be exempt
from income tax:
 Statutory Minimum Wage (SMW) inclusive of the COLA;
 Holiday pay;
 Overtime pay;
 Night shift differential pay;
 Hazard pays

HOLIDAY PAY. Holiday pay refers to the payment of the regular daily wage for any unworked regular
holiday.
This benefit applies to all employees except:
 Government employees, whether employed by the National Government or any of its political
subdivisions, including those employed in government-owned and/or controlled corporations with
original charters or created under special laws;
 Those of retail and service establishments regularly employing less than ten (10) workers;
 Kasambahay and persons in the personal service of another;
 Managerial employees, if they meet all of the following conditions:
 Their primary duty is to manage the establishment in which they are employed or of a
department or subdivision thereof;
 They customarily and regularly direct the work of two or more employees therein; and
 They have the authority to hire or fire other employees of lower rank; or their suggestions
and recommendations as to hiring, firing, and promotion, or any other change of status of
other employees are given particular weight.
 Officers or members of a managerial staff, if they perform the following duties and responsibilities:
 Primarily perform work directly related to management policies of their employer;
 Customarily and regularly exercise discretion and independent judgment;
(a) Regularly and directly assist a proprietor or managerial employee in the management
of the establishment or subdivision thereof in which he or she is employed; or
 (b) execute, under general supervision, work along specialized or technical lines
requiring special training, experience, or knowledge; or
(c) execute, under general supervision, special assignments and tasks; and
 Do not devote more than twenty percent (20%) of their hours worked in a workweek to
activities which are not directly and closely related to the performance of the work
described above.
 Field personnel and other employees whose time and performance are unsupervised by the employer,
including those who are engaged on task or contract basis, purely commission basis or those who are
paid a fixed amount for performing work irrespective of the time consumed in the performance thereof.

Regular Holidays. Every employee covered by the Holiday Pay Rule is entitled to the minimum wage rate
(daily basic wage and COLA). This means that the employee is entitled to at least 100% of his/her minimum
wage rate even if he/she did not report for work, provided he/she is present or is on leave of absence with pay
on the work day immediately preceding the holiday. Work performed on that day merits at least twice (200%)
the daily wage of the employee.
Where the holiday falls on the scheduled rest day of the employee, work performed on said day merits at
least an additional 30% of the employee’s regular holiday rate of 200% or a total of at least 260%
When a regular holiday falls on a Sunday, the following Monday shall not be a holiday, unless a
proclamation is issued declaring it a special day.

Absences
 All covered employees shall be entitled to holiday pay when they are on leave of absence with pay on
the workday immediately preceding the regular holiday. Employees who are on leave of absence
without pay on the day immediately preceding a regular holiday may not be paid the required holiday
pay if they do not work on such regular holiday.
 Employers shall grant the same percentage of the holiday pay as the benefit granted by competent
authority in the form of employee’s compensation or social security payment, whichever is higher, if the
employees are not reporting for work while on such leave benefits.
 Where the day immediately preceding the holiday is a non-work day in the establishment or the
scheduled rest day of the employee, he/she shall not be deemed to be on leave of absence on that day, in
which case he/she shall be entitled to the holiday pay if he/she worked on the day immediately
preceding the nonwork day or rest day.

Successive Regular Holidays

Where there are two (2) successive regular holidays, like Maundy Thursday and Good Friday, an
employee may not be paid for both holidays if he/she absents himself/herself from work on the day immediately
preceding the first holiday, unless he/she works on the first holiday, in which case he/she is entitled to his/her
holiday pay on the second holiday.

Temporary or Periodic Shutdown/Cessation of Work

In cases of temporary or periodic shutdown and temporary cessation of work of an establishment, as
when a yearly inventory or when the repair or cleaning of machineries and equipment is undertaken, the regular
holidays falling within the period shall be compensated in accordance with the Rules Implementing the Labor
Code, as amended.
Holiday Pay of Certain Employees
 Where the covered employee is paid on piece-rate basis, his/her holiday pay shall not be less than his/her
average daily earnings for the last seven (7) actual work days preceding the regular holiday; provided,
however, that in no case shall the holiday pay be less than the applicable statutory minimum wage rate.
 Seasonal workers may not be paid the required holiday pay during off-season when they are not at work.
 Workers who do not have regular working days, such as stevedores, shall be entitled to this benefit.
PREMIUM PAY. Premium pay refers to the additional compensation for work performed within eight (8)
hours on non-work days, such as rest days and special days.
This benefit applies to all employees except:
 Government employees, whether employed by the National Government or any of its political
subdivisions, including those employed in government-owned and/or controlled corporations with
original charters or created under special laws;
 Managerial employees, if they meet all of the following conditions:
 Their primary duty is to manage the establishment in which they are employed or of a
department or subdivision thereof;
 They have the authority to hire or fire other employees of lower rank; or their suggestions
and recommendations as to hiring, firing, and promotion, or any other change of status of
other employees are given particular weight.
 Officers or members of a managerial staff, if they perform the following duties and responsibilities:
 Primarily perform work directly related to management policies of their employer;
 Customarily and regularly exercise discretion and independent judgment;
(a)Regularly and directly assist a proprietor or managerial employee in the
management of the establishment or subdivision thereof in which he or she is
employed; or
(b) execute, under general supervision, work along specialized or technical lines
requiring special training, experience, or knowledge; or
(c) execute, under general supervision, special assignments and tasks; and
 Do not devote more than twenty percent (20%) of their hours worked in a workweek to
activities which are not directly and closely related to the performance of the work
described in paragraphs above.
 Kasambahay and persons in the personal service of another;
 Workers who are paid by results, including those who are paid on piece rate, takay, pakyaw, or task
basis, and other non-time work, if their output rates are in accordance with the standards prescribed in
the regulations, or where such rates have been fixed by the Secretary of Labor and Employment; and
 Field personnel, if they regularly perform their duties away from the principal or branch office or place
of business of the employer and whose actual hours of work in the field cannot be determined with
reasonable certainty.

Special Days
The “no work, no pay” principle applies during special days and on such other special days as may be
proclaimed by the President or by Congress. Workers who are not required or permitted to work on special days
are not entitled to any compensation. This, however, is without prejudice to any voluntary practice or provision
in the Collective Bargaining Agreement (CBA) providing for payment of wages and other benefits for days
declared as special days even if unworked. On the other hand, work performed on special days merits additional
compensation of at least thirty percent (30%) of the basic wage or a total of one hundred thirty percent (130%).
Where the employee works on a special day falling on his rest day, he/she shall be entitled to an additional
compensation of at least fifty percent (50%) of his/her basic wage or a total of one hundred fifty percent
(150%).

Premium Pay Rates

The COLA shall not be included in the computation of premium pay. The minimum statutory premium
pay rates are as follows:

For work performed on rest days or on special days: Plus 30% of the daily basic wage of 100% or a total of
130%.
Sector/Industry Rate Amount
Non-agriculture ₽537.00 ₽537 x 130% = ₽698.10
Retail/Service Establishment ₽500.00 ₽500 x 130% = ₽650.00

For work performed on a rest day which is also a special day: Plus 50% of the daily basic wage of 100% or a
total of 150%.
Sector/Industry Rate Amount
Non-agriculture ₽537.00 ₽537 x 150% = ₽805.50
Retail/Service Establishment ₽500.00 ₽500 x 150% = ₽750.00

For work performed on a regular holiday which is also the employee’s rest day (not applicable to employees
who are not covered by the holiday-pay rule): Plus 30% of the regular holiday rate of 200% based on his/her
daily basic wage rate or a total of 260%.
Sector/Industry Rate Amount
Non-agriculture ₽537.00 (₽537.00 x 260%) = ₽1,396.20
Retail/Service Establishment ₽500.00 Not covered by holiday pay rule

OVERTIME PAY. Overtime pay refers to the additional compensation for work performed beyond
eight (8) hours a day.

Overtime Pay Rates. The COLA shall not be included in the computation of overtime pay. The minimum
overtime pay rates vary according to the day the overtime work is performed, as follows:

For work in excess of eight (8) hours performed on ordinary working days: Plus 25% of the hourly rate.
Sector/Industry Rate Amount
Non-agriculture ₽537.00 ₽537/8 x 125% = ₽67.125 x 125%
x number of hours OT work
Retail/Service Establishment ₽500.00 ₽500/8 x 125% = ₽62.50 x 125%
x
number of hours OT work

For work in excess of eight (8) hours performed on a scheduled rest day or a special day: Plus 30% of the
hourly rate on said days.
 Sector/Industry Rate Amount
Non-agriculture ₽537.00 ₽537/8 x 130% x 130% = ₽67.125
x 130% x 130% x number of hours
OT work
Retail/Service Establishment ₽500.00 ₽500/8 x 130% x 130% = ₽62.50
x
130% x 130% x number of hours
OT work

For work in excess of eight (8) hours performed on a special day which falls on a scheduled rest day: Plus 30%
of the hourly rate on said days.
Sector/Industry Rate Amount
Non-agriculture ₽537.00 ₽537/8 x 150% x 130% = ₽67.125
x 150% x 130% x number of hours
OT work
Retail/Service Establishment ₽500.00 ₽500/8 x 150% x 130% = ₽62.50
x 150% x 130% x number of hours
OT work

For work in excess of eight (8) hours performed on a regular holiday: Plus 30% of the hourly rate on said days.
Sector/Industry Rate Amount
Non-agriculture ₽537.00 ₽537/8 x 200% x 130% = ₽67.125
x 200% x 130% x number of hours
OT work
Retail/Service Establishment ₽500.00 Not covered by the rule on holiday
pay

For work in excess of eight (8) hours performed on a regular holiday which falls on a scheduled rest day: Plus
30% of the hourly rate on said days.
Sector/Industry Rate Amount
Non-agriculture ₽537.00 ₽537/8 x 260% x 130% = ₽67.125
x 260% x 130% x number of hours
OT work
Retail/Service Establishment ₽500.00 Not covered by the rule on holiday
pay

Stipulated Overtime Rates. Generally, the premium pay for work performed on rest days, special days, or
regular holidays is included as part of the regular rate of the employee in the computation of overtime pay for
overtime work rendered on said days, especially if the employer pays only the minimum overtime rates
prescribed by law.
The employees and employer, however, may stipulate in their collective agreement the payment for overtime
work at rates higher than those provided by law.
NIGHT SHIFT DIFFERENTIAL. Night Shift Differential (NSD) refers to the additional compensation of ten
percent (10%) of an employee’s regular wage for each hour of work performed between 10 p.m. and 6 a.m.

This benefit applies to all employees except:

 Government employees, whether employed by the National Government or any of its political
subdivisions, including those employed in government-owned and/or controlled corporations with
original charters or created under special laws;
 Those of retail and service establishments regularly employing not more than five (5) workers;
 Kasambahay and persons in the personal service of another;
 Managerial employees, if they meet all of the following conditions:
 Their primary duty is to manage the establishment in which they are employed or of a
department or subdivision thereof;
 They customarily and regularly direct the work of two or more employees therein; and
 They have the authority to hire or fire other employees of lower rank; or their suggestions
and recommendations as to hiring, firing, and promotion, or any other change of status of
other employees are given particular weight.
 Officers or members of a managerial staff, if they perform the following duties and responsibilities:
 Primarily perform work directly related to management policies of their employer;
 Customarily and regularly exercise discretion and independent judgment;
(a)Regularly and directly assist a proprietor or managerial employee in the management of the
establishment or subdivision thereof in which he or she is employed; or
(b) execute, under general supervision, work along specialized or technical lines requiring
special training, experience, or knowledge; or
(c) execute, under general supervision, special assignments and tasks; and
 Do not devote more than twenty percent (20%) of their hours worked in a workweek to activities which
are not directly and closely related to the performance of the work described in paragraphs above
 Field personnel and those whose time and performance are unsupervised by the employer.

Computation of Night Shift Differential

The minimum night shift pays rates vary according to the day the night shift work is performed.
Sector/Industry Rate Amount
Non-agriculture ₽537.00 P537/8 x *110% = ₱67.125 x
110% x number of hours work
₽500.00 P500/8 x *110% = ₱62.50 x 110%
Retail/Service Establishment x number of hours work
* This value may be substituted based on the above rates depending on the day the night shift work is performed.

Guide Computations for Holiday Pay, Premium Pay, Overtime Pay, and Night Shift Differential. The COLA
shall not be included in the computation of night shift pay. The table below may be used to guide computations:

Work on: Equivalent pay:

Ordinary day 1 or 100%
Sunday or rest day 1.3 or 130%
Special day 1.3 or 130%
Special day falling on rest day 1.5 or 150%
 Regular Holiday 2 or 200%
Regular Holiday falling on rest day 2.6 or 260%
Double holiday 3 or 300%
Double holiday falling on rest day 3.9 or 390%

Work on: Equivalent pay:

Ordinary day, night shift 1 x 1.1 = 1.1 or 110%
Rest day, night shift 1.3 x 1.1 = 1.43 or 143%
Special day, night shift 1.3 x 1.1 = 1.43 or 143%
Special day, rest day, night shift 1.5 x 1.1 = 1.65 or 165%
Regular Holiday, night shift 2 x 1.1 = 2.2 or 220%
Regular Holiday, rest day, night shift 2.6 x 1.1 = 2.86 or 286%
Double holiday, night shift 3 x 1.1 = 3.3 or 330%
Double holiday, rest day, night shift 3.9 x 1.1 = 4.29 or 429%

Work on: Equivalent pay:

Ordinary day, overtime (OT) 1 x 1.25 = 1.25 or 125%
Rest day, overtime 1.3 x 1.3 = 1.69 or 169%
Special day, overtime 1.3 x 1.3 = 1.69 or 169%
Special day, rest day, overtime 1.5 x 1.3 = 1.95 or 195%
Regular Holiday, overtime 2 x 1.3 = 2.6 or 260%
Regular Holiday, rest day, 2.6 x 1.3 = 3.38 or 338%
overtime
Double holiday, overtime 3 x 1.3 = 3.9 or 390%
Double holiday, rest day, overtime 3.9 x 1.3 = 5.07 or 507%

Work on: Equivalent pay:

Ordinary day, night shift, overtime 1 x 1.1 x 1.25 = 1.375 or 137.5%

Rest day, night shift, overtime 1.3 x 1.1 x 1.3 = 1.859 or 185.9%
Special day, night shift, overtime 1.3 x 1.1 x 1.3 = 1.859 or 185.9%
Special day, rest day, night shift, 1.5 x 1.1 x 1.3 = 2.145 or 214.5%
overtime
Regular Holiday, night shift, 2 x 1.1 x 1.3 = 2.86 or 286%
overtime
Regular Holiday, rest day, night 2.6 x 1.1 x 1.3 = 3.718 or 371.8%
shift, overtime
Double holiday, night shift, 3 x 1.1 x 1.3 = 4.29 or 429%
overtime
Double holiday, rest day, night 3.9 x 1.1 x 1.3 = 5.577 or 557.7%
shift, overtime

SERVICE CHARGES. All establishments collecting service charges such as hotels, restaurants, and other
similar establishments, including those entities operating primarily as private subsidiaries of the Government.
Covered Employees- All employees, except managerial employees as defined by law, under the direct employ
of the covered establishment, regardless of their positions, designations or employment status, and irrespective
of the method by which their wages are paid.

Distribution of Service Charges. All service charges actually collected shall be distributed completely and
equally,
based on actual hours or days of work or service rendered, among the covered employees, including those
already receiving the benefit of sharing in the service charges.

Frequency of Distribution. The service charges collected shall be distributed and paid to the covered employees
once every two (2) weeks or twice a month at intervals not exceeding sixteen (16) days.
Increase in Minimum Wage. In the event that the minimum wage is increased by law or wage order, the service
charges paid to the employees shall not be considered in determining the establishment’s compliance with the
increased minimum wage.

SERVICE INCENTIVE LEAVE. Every employee who has rendered at least one (1) year of service is entitled
to Service Incentive Leave (SIL) of five (5) days with pay. This benefit applies to all employees except:
 Government employees, whether employed by the National Government or any of its political
subdivisions, including those employed in government-owned and/or controlled corporations with
original charters or created under special laws;
 Persons in the personal service of another;
 Managerial employees, if they meet all of the following conditions:
 Their primary duty is to manage the establishment in which they are employed or of a
department or subdivision thereof;
 They customarily and regularly direct the work of two or more employees therein; and
 They have the authority to hire or fire other employees of lower rank; or their suggestions and
recommendations as to hiring, firing, and promotion, or any other change of status of other
employees are given particular weight.
 Officers or members of a managerial staff, if they perform the following duties and responsibilities:
 Primarily perform work directly related to management policies of their employer;
 Customarily and regularly exercise discretion and independent judgment;
(a)Regularly and directly assist a proprietor or managerial employee in the management of the
establishment or subdivision thereof in which he or she is employed; or
(b) execute, under general supervision, work along specialized or technical lines requiring
special training, experience, or knowledge; or
(c) execute, under general supervision, special assignments and tasks; and
 Do not devote more than twenty percent (20%) of their hours worked in a workweek to activities
which are not directly and closely related to the performance of the work described in paragraphs
above;
 Field personnel and those whose time and performance is unsupervised by the employer;
 Those already enjoying this benefit;
 Those enjoying vacation leave with pay of at least five (5) days; and
 Those employed in establishments regularly employing less than ten (10) employees.
Meaning of “one year of service”
The phrase “one year of service” of the employee means service within twelve (12) months, whether
continuous or broken, reckoned from the date the employee started working. The period includes authorized
absences, unworked weekly rest days, and paid regular holidays. If through individual or collective agreement,
company practice or policy, the period of the working days is less than twelve (12) months, said period shall be
considered as one year for the purpose of determining the entitlement to the service incentive leave.

Usage/Conversion to Cash
The service incentive leave may be used for sick and vacation leave purposes. The unused service
incentive leave is commutable to its money equivalent at the end of the year. In computing, the basis shall be
the salary rate at the date of conversion. The use and conversion of this benefit may be on a pro rata basis.

MATERNITY LEAVE. This benefit applies to all covered female employees, regardless of civil status,
employment status, and the legitimacy of her child.

The Maternity Leave Benefit

The maternity leave benefit shall be for one hundred five (105) days with full pay, and additional fifteen
(15) days with full pay in case the female employee qualifies as a solo parent under RA 8972, or the “Solo
Parents’ Welfare Act of 2000”. In case of miscarriage or emergency termination of pregnancy, the maternity
leave shall be for sixty (60) days with full pay. In cases of live childbirth, an additional maternity leave of thirty
(30) days without pay, can be availed of, at the option of the female employee, provided that the employer shall
be given due notice.

Eligibility. To qualify for the maternity leave benefit, the female employee must have at least three-monthly
contributions to the SSS in the twelve-month period immediately preceding the semester of childbirth,
miscarriage, or emergency termination of pregnancy, and she shall have notified her employer of her pregnancy
and the probable date of her childbirth, which notice shall be transmitted to SSS in accordance its rules
and regulations.

Salary Differential. The employer shall pay for the difference between the full salary and the actual cash
benefits received from the SSS.

PATERNITY LEAVE (RA 8187). Paternity Leave is granted to all married male employees in the private
sector, regardless of their employment status (e.g., probationary, regular, contractual, project basis). The
purpose of this benefit is to allow the husband to lend support to his wife during her period of recovery and/or
in nursing her newborn child. Government employees are also entitled to the paternity leave benefit. They shall
be governed by the Civil Service rules.

The Paternity Leave Benefit. Paternity leave benefit shall apply to the first four (4) deliveries of the employee’s
lawful wife with whom he is cohabiting. For this purpose, “cohabiting” means the obligation of the husband and
wife to live together. If the spouses are not physically living together because of the workstation or occupation,
the male employee is still entitled to the paternity leave benefit. The paternity leave shall be for seven (7)
calendar days, with full pay, consisting of basic salary and mandatory allowances fixed by the Regional Wage
Board, if any, provided that his pay shall not be less than the mandated minimum wage. Usage of the paternity
leave shall be after the delivery, without prejudice to an employer’s policy of allowing the employee to avail of
the benefit before or during the delivery, provided that the total number of days shall not be more than seven (7)
calendar days for each covered delivery.

Conditions for Entitlement. A married male employee shall be entitled to paternity leave benefit provided that
he has met the following conditions:
 He is an employee at the time of the delivery of his child;
 He is cohabiting with his spouse at the time that she gives birth or suffers a miscarriage;
 He has applied for paternity leave with his employer within a reasonable period of time from the
expected date of delivery by his pregnant spouse, or within such period as may be provided by company
rules and regulations, or by collective bargaining agreement; and
 His wife has given birth or suffered a miscarriage.

Application for Paternity Leave

The married male employee shall apply for paternity leave with his employer within a reasonable period
of time from the expected date of delivery by his pregnant spouse, or within such period as may be provided by
company rules and regulations, or by collective bargaining agreement. In case of a miscarriage, prior
application for paternity leave shall not be required.

Non-conversion to Cash. In the event that the paternity leave is not availed of, it shall not be convertible to cash
and shall not be cumulative.

Crediting of Existing Benefits. If the existing paternity leave benefit under the collective bargaining agreement,
contract, or company policy is greater than seven (7) calendar days as provided for in RA 8187, the greater
benefit shall prevail. On the other hand, if the existing paternity leave benefit is less than that provided in RA
8187, the employer shall adjust the existing benefit to cover the difference. Where a company policy, contract,
or collective bargaining agreement provides for an emergency or contingency leave without specific provisions
on paternity leave, the employer shall grant to the employee seven (7) calendar days of paternity leave.

PARENTAL LEAVE FOR SOLO PARENTS (RA 8972)

Parental leave for solo parents is granted to any solo parent or individual who is left alone with the
responsibility of parenthood due to:
 Giving birth as a result of rape or, as used by the law, other crimes against chastity;
 Death of spouse;
 Spouse is detained or is serving sentence for a criminal conviction for at least one (1) year;
 Physical and/or mental incapacity of spouse as certified by a public medical practitioner;
 Legal separation or de facto separation from spouse for at least one (1) year: Provided that he/she is
entrusted with the custody of the children;
 Declaration of nullity or annulment of marriage as decreed by a court or by a church: Provided, that
he/she is entrusted with the custody of the children;
 Abandonment of spouse for at least one (1) year;
 Unmarried father/mother who has preferred to keep and rear his/her child/children, instead of having
others care for them or give them up to a welfare institution;
  Any other person who solely provides parental care and support to a child or children: Provided, that
he/she is duly licensed as a foster parent by the Department of Social Welfare and Development
(DSWD) or duly appointed legal guardian by the court; and
 Any family member who assumes the responsibility of head of family as a result of the death,
abandonment, disappearance, or prolonged absence of the parents or solo parent: Provided, that such
abandonment, disappearance, or prolonged absence lasts for at least one (1) year.

“Parental leave” shall mean leave benefits granted to a solo parent to enable him/her to perform parental duties
and responsibilities where physical presence is required.

“Child” refers to a person living with and dependent on the solo parent for support. He/she is unmarried,
unemployed, and below eighteen (18) years of age, or even eighteen (18) years old and above but is incapable
of self-support because he/she is mentally- and/or physically-challenged.

The Parental Leave Benefit. The parental leave, in addition to leave privileges under existing laws, shall be for
seven (7) work days every year, with full pay, consisting of basic salary and mandatory allowances fixed by the
Regional Wage Board, if any, provided that his/her pay shall not be less than the mandated minimum wage.

Conditions for Entitlement. A solo parent employee shall be entitled to the parental leave, provided that:
 He/she has rendered at least one (1) year of service, whether continuous or broken;
 He/she has notified his/her employer that he/she will avail himself/herself of it, within a reasonable
period of time; and
 He/she has presented to his/her employer a Solo Parent Identification Card, which may be obtained from
the DSWD office of the city or municipality where he/she resides.

Non-conversion to Cash. In the event that the parental leave is not availed of, it shall not be convertible to cash,
unless specifically agreed on previously.

Crediting of Existing Leave. If there is an existing or similar benefit under a company policy or a collective
bargaining agreement, the same shall be credited as such. If the same is greater than the seven (7) days provided
for in RA 8972, the greater benefit shall prevail. Emergency or contingency leave provided under a company
policy or a collective bargaining agreement shall not be credited as compliance with the parental leave provided
for under RA 8972.

Termination of the Benefit. A change in the status or circumstance of the parent claiming the benefit under the
law, such that he/she is no longer left alone with the responsibility of parenthood, shall terminate his/her
eligibility for this benefit.

Protection Against Work Discrimination. No employer shall discriminate against any solo parent employee with
respect to terms and conditions of employment on account of his/her being a solo parent.

LEAVE FOR VICTIMS OF VIOLENCE AGAINST WOMEN AND THEIR CHILDREN (RA 9262)
“Violence against women and their children” as used in Republic Act 9262 (the “Anti-Violence Against
Women and Their Children Act of 2004”), refers to any act or a series of acts committed by any person against
a woman who is his wife, former wife, or against a woman with whom the person has or had a sexual or dating
relationship, or with whom he has a common child, or against her child whether legitimate or illegitimate,
within or without the family abode, which will result in or is likely to result in physical, sexual, psychological
harm or suffering, or economic abuse including threats of such acts, battery, assault, coercion, harassment or
arbitrary deprivation of liberty.

Coverage and Purpose. Private sector women employees who are victims as defined in RA 9262 shall be
entitled to the paid leave benefit under such terms and conditions provided herein. The leave benefit shall cover
the days that the woman employee has to attend to medical and legal concerns.

Requirement for Entitlement. To be entitled to the leave benefit, the only requirement is for the victim-
employee
to present to her employer a certification from the barangay chairman (punong barangay) or barangay councilor
(barangay kagawad) or prosecutor or the Clerk of Court, as the case may be, that an action relative to the matter
is pending.

Benefit. In addition to other paid leaves under existing labor laws, company policies, and/or collective
bargaining agreements, the qualified victim-employee shall be entitled to a leave of up to ten (10) days with full
pay, consisting of basic salary and mandatory allowances fixed by the Regional Wage Board, if any. The said
leave shall be extended when the need arises, as specified in the protection order issued by the barangay or the
court.

Usage of the Benefit. The usage of the ten-day leave shall be at the option of the woman employee. In the event
that the leave benefit is not availed of, it shall not be convertible into cash and shall not be cumulative.

SPECIAL LEAVE FOR WOMEN (RA 9710). Any female employee regardless of age and civil status shall
be entitled to a special leave benefit under such terms and conditions provided herein.

“Gynecological disorders” refers to disorders that would require surgical procedures such as, but not limited to
dilatation and curettage and those involving female reproductive organs such as the vagina, cervix, uterus,
fallopian tubes, ovaries, breast, adnexa and pelvic floor, as certified by a competent physician. It shall also
include
hysterectomy, ovariectomy and mastectomy.

Conditions for Entitlement

 She has rendered at least six (6) months continuous aggregate employment service for the last twelve
(12) months prior to surgery;
 She has filed an application for special leave with her employer within a reasonable period of time from
the expected date of surgery or within such period as may be provided by company rules and regulations
or collective bargaining agreement; and
 She has undergone surgery due to gynecological disorders as certified by a competent physician.

The employee is entitled to special leave benefit of two (2) months with full pay based on her gross monthly
compensation. Gross monthly compensation refers to the monthly basic pay plus mandatory allowances fixed
by the regional wage boards.
Usage. The special leave shall be granted to the qualified employee after she has undergone surgery without
prejudice to an employer allowing an employee to receive her pay before or during the surgery.

Non-conversion to Cash. The special leave shall be non-cumulative and non-convertible to cash unless
otherwise provided by a collective bargaining agreement (CBA).

THIRTEENTH-MONTH PAY (PD 851). All employers are required to pay their rank-and-file employees
thirteenth-month pay, regardless of the nature of their employment and irrespective of the methods by which
their wages are paid, provided they worked for at least one (1) month during a calendar year. The thirteenth-
month pay should be given to the employees not later than December 24 of every year.

Minimum Amount. The thirteenth-month pay shall not be less than one-twelfth (1/12) of the total basic salary
earned by an employee in a calendar year.

The "basic salary" of an employee for the purpose of computing the thirteenth-month pay shall include all
remunerations or earnings paid by his or her employer for services rendered. It does not include 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 shift differential and holiday
pay, and cost of living allowance (COLA). However, these salary-related benefits should be included as part of
the basic salary in the computation of the thirteenth-month pay if these are treated as part of the basic salary of
the
employees, through individual or collective agreement, company practice or policy.

Formula and Computation of 13th Month Pay

Total basic salry earned during the year

=proportionate 13 th month pay
12months

Exempted Employers. The following employers are not covered by PD 851:

 The government and any of its political subdivisions, including government- owned and controlled
corporations, except those corporations operating essentially as private subsidiaries of the government;
 Employers who are already paying their employees thirteenth- month pay or more in a calendar year or
its equivalent at the time of the issuance of PD 851;
 Persons in the personal service of another in relation to such workers; and
 Employers of those who are paid on purely commission, boundary or task basis, and those who are paid
a fixed amount for performing specific work, irrespective of the time consumed in the performance
thereof (except those workers who are paid on piece-rate basis, in which case their employer shall grant
them thirteenth-month pay).

Time of Payment of Thirteenth Month Pay. The thirteenth-month pay shall be paid not later than December 24
of every year. An employer, however, may give to his or her employees one-half (1/2) of the thirteenth-month
pay before the opening of the regular school year and the remaining half on or before December 24 of every
year. The frequency of payment of this monetary benefit may be the subject of an agreement between the
employer and the recognized/collective bargaining agent of the employees.
Thirteenth-Month Pay for Certain Types of Employees
 Employees who are paid on piecework basis are entitled to the thirteenth-month pay.
 Employees who are paid a fixed or guaranteed wage plus commission are also entitled to the thirteenth-
month pay, based on their earnings during the calendar year (i.e., on both their fixed or guaranteed wage
and commission).

Employees with multiple employers. Government employees working part-time in a private enterprise,
including private educational institutions, as well as employees working in two or more private firms, whether
on full-time or part-time basis, are entitled to the thirteenth- month pay from all their private employers,
regardless of their total earnings from each of their employers.

Thirteenth-Month Pay of Resigned or Separated Employee. An employee who has resigned or whose services
are terminated at any time before the time of payment of the thirteenth-month pay is entitled to this monetary
benefit in proportion to the length of time he or she has worked during the year.

Thirteenth-Month Pay of Female Employee who is on Maternity Leave. The salary differential shall be included
as part of the basic salary for purposes of computation of the 13th month pay of the rank-and-file employee.
Coverage from Income Tax of Thirteenth Month Pay and Other Benefits. The following are exempted from the
requirement of withholding tax on compensation but may be subject to income tax depending on the
nature/sources of income earned by the individual recipient:
(a) Thirteenth month pay equivalent to the mandatory one (1) month basic salary of official and employees of
the government (whether national or local), including government-owned or controlled corporations, and/or
private offices received after the twelfth month pay; and
(b) Other benefits such as Christmas bonus, productivity incentives, loyalty award, gift in cash or in kind, and
other benefits of similar nature actually received by officials and employees of both government and private
offices, including the Additional

No Exemption or Deferment. No request or application for exemption from payment of 13th month pay, or for
deferment of the payment thereof shall be accepted and allowed.

Report of Compliance. Employers shall make a report of their compliance through the DOLE Establishment
Report System at reports.dole.gov.ph not later than January 15 of the following year.

SEPARATION PAY. Separation pay is given to employees in instances covered by Articles 298 and 299
(formerly Articles 283 and 284) of the Labor Code of the Philippines. An employee’s entitlement to separation
pay depends on the reason or ground for the termination of his or her services. An employee may be terminated
for just cause (i.e., gross and habitual neglect of duty, fraud, or commission of a crime), and other similar causes
as enumerated under Article 297 (formerly Article 282) of the Labor Code and, generally, may not be entitled to
separation pay. On the other hand, where the termination is for authorized causes, separation pay is due.

One-Half (1/2) Month Pay per Year of Service. An employee is entitled to receive a separation pay equivalent
to one-half (1/2) month pay for every year of service, a fraction of at least six (6) months being considered as
one (1) whole year, if his/her separation from the service is due to any of the following authorized causes:
 Retrenchment to prevent losses (i.e., reduction of personnel effected by management to prevent losses);
  Closure or cessation of operation of an establishment not due to serious losses or financial reverses; and
 When the employee is suffering from a disease not curable within a period of six (6) months and his/her
continued employment is prejudicial to his/her health or to the health of his/her co-employees.
 Lack of service assignment of security guard for a continuous period of six (6) months.

One-Month Pay per Year of Service. An employee is entitled to separation pay equivalent to his/her one-month
pay for every year of service, a fraction of at least six (6) months being considered as one whole year, if his/her
separation from service is due to any of the following:
 Installation by employer of labor-saving devices;
 Redundancy, as when the position of the employee has been found to be excessive or unnecessary in the
operation of the enterprise; and
 Impossible reinstatement of the employee to his or her former position or to a substantially equivalent
position for reasons not attributable to the fault of the employer, as when the reinstatement ordered by a
competent authority cannot be implemented due to closure or cessation of operations of the
establishment/employer, or the position to which he or she is to be reinstated no longer exists and there
is no substantially equivalent position in the establishment to which he or she can be assigned.
 Lack of service assignment of security guard by reason of age.

Notice of Termination. The employer may terminate the employment of an employee due to the above-
mentioned authorized causes by serving a written notice on the employee and the Department of Labor and
Employment through its regional office having jurisdiction over the place of business at least one (1) month
before the intended date thereof.

Basis of Separation Pay. The computation of separation pay of an employee shall be based on his/her latest
salary rate.

Inclusion of Regular Allowance in the Computation. In the computation of separation pay, it would be error not
to integrate the allowance with the basic salary. The salary base properly used in computing the separation pay
should include not just the basic salary but also the regular allowances that an employee has been receiving.

RETIREMENT PAY. Employees shall be retired upon reaching the age of sixty (60) years or more but not
beyond sixty-five (65) years old [and have served the establishment for at least five (5) years.

This benefit applies to all employees except:

 Government employees; and
 Employees of retail, service and agricultural establishments/ operations regularly employing not more
than ten (10) employees.

Amount of Retirement Pay. The minimum retirement pay shall be equivalent to one-half (1/2) month salary for
every year of service, a fraction of at least six (6) months being considered as one (1) whole year.

For the purpose of computing retirement pay, "one-half month salary" shall include all of the following:
1. Fifteen (15) days salary based on the latest salary rate;
2. Cash equivalent of five (5) days of service incentive leave; and
3. One-twelfth (1/12) or 2.5 days of the thirteenth-month pay.

Retirement Benefit under a Collective Bargaining Agreement or Applicable Contract. Any employee may retire
or be retired by his or her employer upon reaching the retirement age established in the collective bargaining
agreement (CBA) or other applicable agreement/contract and shall receive the retirement benefit granted
therein;
provided, however, that such retirement benefit shall not be less than the retirement pays required under RA
7641, and provided further that if such retirement benefit under the agreement is lesser, the employer shall pay
the difference.

Retirement Benefit of Workers who are Paid by Results. For covered workers who are paid by results and do
not have a fixed monthly salary rate, the basis for the determination of the salary for fifteen (15) days shall be
their average daily salary (ADS). The ADS is derived by dividing the total salary or earnings for the last twelve
months reckoned from the date of retirement by the number of actual working days in that particular period,
provided that the determination of rates of payment by results are in accordance with the established
regulations.

Retirement Benefit of Part-time Workers. Part-time workers are also entitled to retirement pay of “one-half
month salary” for every year of service under RA 7641 after satisfying the following conditions precedent for
optional retirement:
(a) there is no retirement plan between the employer and the employee and
(b) the employee should have reached the age of sixty (60) years, and should have rendered at least five (5)
years of service with the employer.

Retirement Benefit of Underground or Surface Mine Employees. The retirement age of underground or surface
mine employees has been reduced from Sixty (60) to Fifty (50) Years, to a much lower age. For this purpose, an
underground or surface mine employee refers to any person employed to extract mineral deposits underground
or in the surface, or to work in excavations or workings such as shafts, winzes, tunnels, drifts, crosscuts, raises,
working places whether abandoned or in use beneath or in the earth’s surface for the purpose of searching for
and extracting mineral deposits. Moreover, surface mine workers shall only include mill-plant workers,
electrical, mechanical and tailings pond personnel.

Retirement Benefit of Racehorse Jockeys. The compulsory retirement age of professional racehorse jockeys
who are duly licensed by the Philippine Racing Commission (PHILRACOM) is fifty-five (55) years old,
provided that he/she has served for at least five (5) years as racehorse jockey and has paid additional premium
to the SSS.

Other Benefits upon Retirement. The retirement benefits under RA 7641 and RA 8558 are separate and distinct
from those granted by the Social Security System. Under the law, upon optional or compulsory retirement, the
employee is also entitled to the proportionate thirteenth-month pay for the calendar year and to the cash
equivalent of accrued leave benefits.

EMPLOYEES’ COMPENSATION PROGRAM (PD 626).

The Employees’ Compensation Program (ECP) is a government program designed to provide a compensation
package to public and private sector employees or their dependents in the event of work-related sickness, injury,
or death.

The following are the workers covered under the ECP:

 Private sector workers who are compulsory members of the Social Security System (SSS) and sea-based
Overseas Filipino Workers (OFWs) Employees shall be covered starting on the first day of their
employment.
 Government sector employees who are members of the Government service Insurance System (GSIS),
including members of the Armed Forces of the Philippines, elective government officials who are
receiving regular salary and all casual, emergency, temporary and substitute or contractual employees.
 Active self-employed members of the SSS

Conditions of Compensability. A sickness, injury, disability or death resulting from an employment accident is
compensable if:
 The employee is injured at the workplace;
 The employee is performing official functions; and
 If the injury is sustained elsewhere, the employee is executing an order for the employer.

No compensation will be allowed to an employee or the dependents if the injury, sickness, disability or death is
due to:
 Drunkenness;
 Willful intention to injure or kill himself or another; or
 Notorious negligence.
The conditions for the compensability of COVID-19 are the following:
 There must be a direct connection between the offending agent or event and the worker based on
epidemiologic criteria and occupational risk (g., healthcare workers, screening and contact tracing
teams, etc.);
 The tasks assigned to the worker would require frequent face-to-face and close proximity interactions
with the public or with confirmed cases for healthcare workers;
 Transmission occurred in the workplace; or
 Transmission occurred while commuting to and from work.

Benefits. The following are the benefits under the EC Program:

 Loss of income benefits – Under the ECP, it is the disability, or the incapacity to work, which is being
compensated and not the illness or the injury. There are three types of loss of income benefit, namely:
o Temporary Total Disability (TTD) - For a disability that prevents an employee from performing his
work for a continuous period not exceeding 120 days. The amount of daily income benefit shall be
ninety percent (90%) of the employee’s average daily salary credit as determined by the Systems.
o Permanent Total Disability (PTD) - A monthly income benefit granted for disabilities, such as, but
not limited to, complete loss of sight of both eyes, loss and function loss of both limbs, and brain
injury resulting to imbecility or insanity. The amount of monthly income benefit for PTD shall be
determined by the Systems based on the average monthly salary credit or average monthly
compensation (AMSC/AMC).
 o Permanent Partial Disability (PPD) - A monthly income benefit is granted for disabilities that result
in physical loss (amputation) or functional loss of a body part.
 Medical services – It includes reimbursement of the cost of medicines for the illness or injury, payment
to providers of medical care, hospital care, surgical expenses, and the costs of rehabilitation appliances
and supplies. The medical services are limited to ward services of hospitals duly accredited by the
Department of Health (DOH).
 Carers’ allowance – A supplemental pension of P1,000/month is provided to pensioners under the ECP
who suffer from work-connected PPD and PTD.
 Rehabilitation Services/KaGabay Program (Katulong at Gabay sa Manggagawang May Kapansanan) –
Persons with work-related disabilities (PWRD) with an approved EC TTD, PPD or PTD are qualified to
avail of the benefits and services under the Katulong at Gabay sa Manggagawang May Kapansanan, or
KaGabay Program.
 Death benefit – The beneficiaries of the deceased employee are entitled to an income benefit if the
employee died as a result of a work-related injury or sickness. They shall receive an income benefit paid
at the beginning of the month of death of the member and will continue for as long as they are entitled
thereto.
 Funeral benefit – An amount of ₽30,000 may be granted for the Private and Public Sectors upon the
death of an employee who died as a result of a work-related accident or disease.

Notification and Filing of Claims. The employer should be notified of the member's sickness, injury or death
within five days from the occurrence of the contingency. Notice is not necessary if the contingency occurred
during working hours, at the place of work and with the knowledge of the employer or representative. Claims
for EC benefits are filed at any SSS branch or representative office nearest the member's residence or place of
work.

Contribution. Employers pay for the EC contributions of their employees. For a covered employee in the private
sector, his or her employer shall remit to the SSS a monthly contribution in accordance with the following
schedule:

Range of Compensation Employers’ Contribution

₽900.00 - ₽14,749.00 ₽10.00
₽14,750 - ₽30.00
When a covered employee dies during employment, or is separated from employment, his employer’s
obligation to pay the monthly contribution arising from that employment shall cease on the last day of the
month of contingency. Likewise, when a covered employee becomes disabled during employment, his
employer’s obligation to pay the monthly contribution shall be suspended during such months that he is not
receiving salary or wages.

PHILHEALTH BENEFITS (RA 7875, as amended by RA 9241 and RA 10606). The National Health
Insurance Program (NHIP) is a compulsory health insurance program of the government established to provide
universal health insurance coverage and ensure affordable, acceptable, available and accessible health care
services for all citizens of the Philippines.
Coverage. Pursuant to Republic Act No. 11223 or the Universal Health Care (UHC) Act, all Filipinos are now
members of PhilHealth. Families who are not yet registered/enlisted with PhilHealth will be assisted by their
health care provider with the next steps.

The Benefits
 Inpatient Benefits
 Outpatient Benefits
 Z Benefits
 SDG Related

Contribution. Pursuant to PhilHealth Circular No. 2020-0005, below is the premium contribution table for direct
contributors:
Premium Monthly Basic Salary Premium Monthly Premium
Rate Rate
₽10,000.00 ₽400.00
2022 ₽10,000.01 to ₽79,999.99 4.00% ₽400.00 to ₽3,200.00
₽80,000.00 ₽3,200.00
₽10,000.00 ₽450.00
2023 ₽10,000.01 to ₽89,999.99 4.50% ₽450.00 to ₽4,050.00
₽90,000.00 ₽4,050.00

Direct Contributors are the following:

 Employees with formal employment;
 Kasambahays;
 Self-earning individuals and professional practitioners;
 Overseas Filipino Workers;
 Filipinos living abroad and those with dual citizenship;
 Lifetime members; and
 All Filipinos aged 21 years and above with capacity to pay.
The premium of Employed members in the government and private sector, including household help and sea
based OFWs, shall be computed straight based on the monthly basic salary of the employee to be equally shared
between the employee and employer.
For those whose basic monthly salary is below the income floor, the premium contribution shall be
computed based on the income floor, while those whose basic monthly income is above the income ceiling, the
premium contribution shall be computed based on the income ceiling in accordance with the DBM Circular
Letter No. 2019-8. Employers shall ensure that premium contribution of women who are on maternity leave
shall be regularly remitted to PhilHealth pursuant to DOLE Department Advisory No. 1, Series of 2019.

SOCIAL SECURITY BENEFITS (RA 1161, as amended by RA 11199)

Social Security Benefits. Covered employees are entitled to a package of benefits under the Social Security and
Employees' Compensation (EC) Programs in the event of death, disability, sickness, maternity and old age.
Self-employed and voluntary members also get the same benefits as covered employees, except those benefits
under the EC program. Basically, the SSS provides for a replacement of income lost on account of the
aforementioned contingencies.
Compulsory Coverage
 Employer (Business or Household Employer);
 Employee;
 Self-Employed;
 Househelper or Kasambahay; and
 Overseas Filipino Workers (land-based and sea-based, except for Filipino permanent migrants, including
Filipino immigrants, permanent residents, and naturalized citizens of their host countries, who may be
covered on a voluntary basis).

Benefits. If you are regularly paying your contributions, you will be entitled to these social security benefits:
 Sickness– a daily cash allowance paid for the number of days a member is unable to work due to
sickness or injury.
 Maternity– a daily cash allowance granted to a female member in every instance of pregnancy resulting
in childbirth, miscarriage or emergency termination of pregnancy, regardless of frequency, her civil
status, employment status or the legitimacy of her child.
 Retirement – a cash benefit granted—either as a monthly pension or a lump sum amount—to a member
who can no longer work due to old age.
 Disability – a cash benefit granted—either as a monthly pension or a lump sum amount—to a member
who becomes permanently disabled, either partially or totally.
 Death – a cash benefit granted—either as a monthly pension or a lump sum amount—to the beneficiaries
of a deceased member.
 Funeral – a cash benefit given to whomever paid for the burial expenses of the deceased member or
pensioner.
 Unemployment- a cash benefit granted to eligible employees – including house helpers and OFWs –
who were involuntarily separated from employment.
An employee shall not be qualified to receive the benefit if he/she has been involuntarily separated from
employment due to the following:
 Serious misconduct;
 Willful disobedience to lawful orders;
 Gross and habitual neglect of duties;
 Fraud or willful breach of trust/loss of confidence;
 Commission of a crime or offense; or
 Analogous cases like abandonment, gross inefficiency, disloyalty/ conflict of interest/ dishonesty.

PAG-IBIG BENEFITS (RA 9679). The Home Development Mutual Fund (HDMF). The Home Development
Mutual Fund, otherwise known as Pag-IBIG (Pagtutulungan sa kinabukasan: Ikaw, Bangko, Industriya at
Gobyerno) Fund is a mutual provident savings system for private and government employees and other earning
groups, supported by matching mandatory contributions of their respective employers with housing as the
primary investment.

Mandatory Coverage
  All employees who are or ought to be covered by the Social Security System (SSS), provided that actual
membership in the SSS shall not be a condition precedent to the mandatory coverage in the Fund. It
shall include, but are not limited to:
o A private employee, whether permanent, temporary, or provisional who is not over sixty (60) years
old.
o A household helper earning at least ₱1,000.00 a month. A household helper is any person who
renders domestic services exclusively to a household such as a driver, gardener, cook, governess,
and other similar occupations.
o A Filipino seafarer upon the signing of the standard contract of employment between the seafarer
and the manning agency, which together with the foreign ship owner, acts as the employer.
o A self-employed person regardless of trade, business or occupation, with an income of at least
₱1,000.00 a month and not over sixty (60) years old.
o An expatriate who is not more than sixty (60) years old and is compulsorily covered by the Social
Security System (SSS), regardless of citizenship, nature and duration of employment, and the
manner by which the compensation is paid. In the absence of an explicit exemption from SSS
coverage, the said expatriate, upon assumption of office, shall be covered by the Fund. An expatriate
shall refer to a citizen of another country who is living and working in the Philippines.
 All employees who are subject to mandatory coverage by the Government Service Insurance System
(GSIS), regardless of their status of appointment, including members of the judiciary and constitutional
commissions;
 Uniformed members of the Armed Forces of the Philippines, the Bureau of Fire Protection, the Bureau
of Jail Management and Penology, and the Philippine National Police;
 Filipinos employed by foreign-based employers, whether they are deployed here or abroad or a
combination thereof.

The Programs and Benefits. The Fund offers its members the following programs and benefits:
 Housing Loans
o Pag-IBIG Housing Loan
o Special Housing Loan Restructuring 2
o Pag-IBIG Home Equity Appreciation Loan (HEAL)
o Affordable Housing Loan for Minimum-Wage Earners
o Home Savers Programs
 Short-Term Loans
o Multi-Purpose Loan
o Calamity Loan
 Other Services
o Pag-IBIG Savings Claim (Regular & MP2 Savings)
o Loyalty Card Plus

Membership Contribution. The contribution rate of all members, except for non-working spouses of Pag-IBIG
members, shall be as follows:
Monthly Compensation Contribution Rate
Employee Employer (if any)
₽1,500 and below 1% 2%
 Over ₽1,500 2% 2%
Monthly Compensation shall refer to the basic salary and other allowances, where basic salary includes,
but is not limited to, fees, salaries, wages, and other similar items received in a month. It shall mean the
remuneration of earnings, however designated, capable of being expressed in terms of money, whether fixed or
ascertained on a time, task, or piece or commission basis, on other method of calculating the same, which is
payable by an employer to an employee or by one person to another under a written or unwritten contract of
employment for work done or to be done, or for services rendered or to be rendered.
The maximum monthly compensation to be used in computing the employee and employer contributions
shall not be more than ₽5,000.00. Employers shall remit two percent (2%) of the monthly compensation of the
contributing member as counterpart of or, otherwise, to recover from the employee the employer’s contribution.

The Bureau of Working Conditions (BWC) is responsible for the formulation and development of labor
standards in the areas of hours of work, occupational safety and health, and other conditions of employment.
In May 1982, the Bureau of Labor Standards, which was created in June 1957 under Reorganization Plan No.
20-A, was renamed the Bureau of Working Conditions. The BWC performs all functions in relation to the
formulation of policies and enforcement of labor standards performed by the then Wage Administrative Service
and the Industrial Safety Division of the Bureau of Labor.

PERFORMANCE MANAGEMENT AND APPRAISAL

EMPLOYEE ENGAGEMENT refers to the level of commitment workers make to their employer, seen in
their willingness to stay at the firm and to go beyond the call of duty.
 Firms want employees that are highly motivated and feel they have a real stake in the company’s
success.
 Empowered employees work hand in hand with employers in an atmosphere of mutual trust.
 Companies with engaged workforces have also reported less absenteeism, more engagement with
customers, greater employee satisfaction, less mistakes, fewer employees leaving, and naturally higher
profits.
 They also identified significant barriers to engagement such as a lack of appreciation for the concept of
employee engagement by some companies and managers. Full participation by line managers is
particularly crucial.
PERFORMANCE MANAGEMENT (PM) is a goal-oriented process directed toward ensuring that
organizational processes are in place to maximize the productivity of employees, teams, and ultimately, the
organization. It is a major player in accomplishing organizational strategy in that it involves measuring and
improving the value of the workforce.
 PM includes incentive goals and the corresponding incentive values so that the relationship can be
clearly understood and communicated. There is a close relationship between incentives and
performance.
 Whereas performance appraisal occurs at a specific time, performance management is a dynamic,
ongoing, continuous process.
 If a worker’s skills need to be improved, training is needed.

PERFORMANCE APPRAISAL (PA) is a formal system of review and evaluation of individual or team task
performance. A critical point in the definition is the word formal, because in actuality, managers should be
reviewing an individual’s performance on a continuing basis.
 PA is especially critical to the success of performance management. Although performance appraisal is
but one component of performance management, it is vital, in that it directly reflects the organization’s
strategic plan.
 Although evaluation of team performance is critical when teams exist in an organization, the focus of
PA in most firms remains on the individual employee.
 An effective appraisal system evaluates accomplishments and initiates plans for development, goals, and
objectives.

USES OF PERFORMANCE APPRAISAL

The primary goal of an appraisal system is to improve individual and organizational performance.
 Human Resource Planning- In assessing a firm’s human resources, data must be available to identify
those who have the potential to be promoted or for any area of internal employee relations. Through
performance appraisal it may be discovered that there is an insufficient number of workers who are
prepared to enter management. Plans can then be made for greater emphasis on management develop-
o Succession planning is a key concern for all firms. A well-designed appraisal system
provides a profile of the organization’s human resource strengths and weaknesses to support
this effort.
 Recruitment and Selection- Performance evaluation ratings may be helpful in predicting the
performance of job applicants.
 Training and Development- Performance appraisal should point out an employee’s specific needs for
training and development.

 Career Planning and Development

o Career planning is an ongoing process whereby an individual sets career goals and identifies
the means to achieve them.
o Career development is a formal approach used by the organization to ensure that people with
the proper qualifications and experiences are available when needed.
o Performance appraisal data is essential in assessing an employee’s strengths and weaknesses
and in determining the person’s potential. Managers may use such information to counsel
subordinates and assist them in developing and implementing their career plans.
  Compensation Programs. Performance appraisal results provide a basis for rational decisions regarding
pay adjustments. Most managers believe that you should reward outstanding job performance tangibly
with pay increases.
o Rewarding behaviors necessary for accomplishing organizational objectives is at the heart of a
firm’s strategic plan.
o To encourage good performance, a firm should design and implement a reliable performance
appraisal system and then reward the most productive workers and teams accordingly.

 Internal Employee Relations. Performance appraisal data are also used for decisions in several areas of
internal employee relations, including promotion, demotion, termination, layoff, and transfer.

 Assessment of Employee Potential. Some organizations attempt to assess an employee’s potential as

they appraise his or her job performance. Although past behaviors may be a good predictor of future
behaviors in some jobs, an employee’s past performance may not accurately indicate future performance
in other jobs.

PERFORMANCE APPRAISAL ENVIRONMENTAL FACTORS

External and internal environmental factors can influence the appraisal process. The labor union is
another external factor that might affect a firm’s appraisal process. Unions have traditionally stressed seniority
as the basis for promotions and pay increases. They may vigorously oppose the use of a management-designed
performance appraisal system used for these purposes. Factors within the internal environment can also affect
the performance appraisal process.

PERFORMANCE APPRAISAL PROCESS

The starting point for the PA process is identifying specific performance goals. An appraisal system
probably cannot effectively serve every desired purpose, so management should select the specific goals it
believes to be most important and realistically achievable.

Identify Specific Performance Appraisal Goals Establish Performance Criteria and Communicate Them to
Employees Examine Work Performed Appraise Performance Discuss Appraisal with Employee

At the end of the appraisal period, the appraiser and the employee together review work performance
and evaluate it against established performance standards. This review helps determine how well employees
have met these standards, determines reasons for deficiencies, and develops a plan to correct the problems. At
this meeting, goals are set for the next evaluation period, and the cycle repeats.

ESTABLISH PERFORMANCE CRITERIA (STANDARDS)

The most common appraisal criteria are traits, behaviors, competencies, goal achievement, and
improvement potential.
 Traits- Certain employee traits such as attitude, appearance, and initiative are the basis for some
evaluations. In a performance appraisal system, general characteristics such as leadership, public
acceptance, attitude toward people, appearance and grooming, personal conduct, outlook on life, ethical
habits, resourcefulness, capacity for growth, mental alertness, and loyalty to organization are susceptible
 to partiality and to the personal taste, whim, or fancy of the evaluator as well as patently subjective in
form and obviously susceptible to completely subjective treatment by those conducting the appraisals.

 Behaviors- When an individual’s task outcome is difficult to determine, organizations may evaluate the
person’s task-related behavior or competencies. For individuals working in teams, developing others,
teamwork and cooperation, or customer service orientation might be appropriate. Desired behaviors may
be appropriate as evaluation criteria because if they are recognized and rewarded, employees tend to
repeat them. If certain behaviors result in desired outcomes, there is merit in using them in the
evaluation process.

 Competencies- Competencies include a broad range of knowledge, skills, traits, and behaviors that may
be technical in nature, relate to interpersonal skills, or are business-oriented. Some managers
recommend that cultural competencies such as ethics and integrity be used for all jobs. There are also
competencies that are job-specific.

Research conducted by the University of Michigan Business School and sponsored by the Society for
Human Resource Management (SHRM) and the Global Consulting Alliance determined that success in HR is
dependent on competency and specific skills in the following five key areas:
o Strategic contribution: Connecting firms to their markets and quickly aligning employee behaviors
with organizational needs.
o Business knowledge: Knowing how businesses are run and translating this into action.
o Personal credibility: Demonstrating measurable value; being part of an executive team.
o HR delivery: Providing efficient and effective service to customers in the areas of staffing,
performance management, development, and evaluation.
o HR technology: Using technology and Web-based means to deliver value to customers.

 Goal Achievement- If organizations consider ends more important than means, goal achievement
outcomes become an appropriate factor to evaluate. The outcomes established should be within the
control of the individual or team and should be those results that lead to the firm’s success. At upper
levels, the goals might deal with financial aspects of the firm such as profit or cash flow, and market
considerations such as market share or position in the market. At lower organizational levels, the
outcomes might be meeting the customer’s quality requirements and delivering according to the
promised schedule.

 Improvement Potential- When organizations evaluate their employees’ performance, many of the
criteria used focus on the past. From a performance management viewpoint, the problem is that you
cannot change the past. Unless a firm takes further steps, the evaluation data become merely historical
documents. Therefore, firms should emphasize the future, including the behaviors and outcomes needed
to develop the employee, and, in the process, achieve the firm’s goals. This involves an assessment of
the employee’s potential. Including potential in the evaluation process helps to ensure more effective
career planning and development.

RESPONSIBILITY FOR APPRAISAL Often the human resource department is responsible for coordinating
the design and implementation of performance appraisal programs. However, it is essential that line managers
play a key role from beginning to end. These individuals usually conduct the appraisals, and they must directly
participate in the program if it is to succeed. Several possibilities exist with regard to the person who will
actually rate the employee.
 Immediate Supervisor- has traditionally been the most logical choice for evaluating performance and
this continues to be the case. The supervisor is usually in an excellent position to observe the employee’s
job performance and the supervisor has the responsibility for managing a particular unit. On the negative
side, the immediate supervisor may emphasize certain aspects of employee performance and neglect
others. Also, managers have been known to manipulate evaluations to justify pay increases and
promotions and vice versa.
When geography separates subordinates from their supervisors, evaluation becomes increasingly
difficult. In other cases, the appraised employee may be more technically knowledgeable than the boss,
and this presents another potential problem. One suggestion for overcoming these disadvantages is to
bring subordinates into the process more closely. Have them suggest ways to fairly evaluate their
performance and then use their suggestions as part of the appraisal criteria.

 Subordinates- Some firms conclude that evaluation of managers by subordinates is both feasible and
needed. They reason that subordinates are in an excellent position to view their superiors’ managerial
effectiveness. Advocates believe that this approach leads supervisors to become especially conscious of
the work group’s needs and to do a better job of managing.

 Peers and Team Members- A major strength of using peers to appraise performance is that they work
closely with the evaluated employee and probably have an undistorted perspective on typical
performance, especially in team assignments. Organizations are increasingly using teams, including
those that are self-directed. The rationale for evaluations conducted by team members includes the
following:
o Team members know each other’s’ performance better than anyone and can, therefore,
evaluate performance more accurately.
o Peer pressure is a powerful motivator for team members.
o Members who recognize that peers within the team will be evaluating their work show
increased commitment and productivity.
o Peer review involves numerous opinions and is not dependent on one individual.
Problems with peer evaluations include the reluctance of some people who work closely
together, especially on teams, to criticize each other. On the other hand, if an employee has been at odds
with another worker he or she might really “unload on the enemy,” resulting in an unfair evaluation.
Another problem concerns peers who interact infrequently and lack the information needed to make an
accurate assessment.

 Self-Appraisal- If employees understand their objectives and the criteria used for evaluation, they are in
a good position to appraise their own performance. Many people know what they do well on the job and
what they need to improve. If they have the opportunity, they will criticize their own performance
objectively and take action to improve it. Also, because employee development is self-development,
employees who appraise their own performance may become more highly motivated.

 Customer Appraisal- Customer behavior determines a firm’s degree of success. Therefore, some
organizations believe it is important to obtain performance input from this critical source. Organizations
 use this approach because it demonstrates a commitment to the customer, holds employees accountable,
and fosters change. Customer-related goals for executives generally are of a broad, strategic nature,
whereas targets for lower-level employees tend to be more specific.

APPRAISAL PERIOD. Formal performance evaluations are usually prepared at specific intervals. In most
organizations they occur either annually or semiannually. Even more significant, however, is the continuous
interaction (primarily informal), including coaching and other developmental activities, that continues
throughout the appraisal period.
Changes occur so fast that employees need to look at objectives and their own roles throughout the year
to see whether changes are in order. In high-tech organizations, the speed of change mandates that a
performance period be shorter, perhaps every three or four months. Some organizations use the employee’s date
of hire to determine the rating period. At times a subordinate’s first appraisal may occur at the end of a
probationary period, anywhere from 30 to 90 days after his or her start date.
However, in the interest of consistency, it may be advisable to perform evaluations on a calendar basis
rather than on anniversaries. If firms do not conduct all appraisals at the same time, it may be impossible to
make needed comparisons between employees.

PERFORMANCE APPRAISAL METHODS. The type of performance appraisal system used depends on its
purpose. If the major emphasis is on selecting people for promotion, training, and merit pay increases, a
traditional method, such as rating scales, may be appropriate. Collaborative methods, including input from the
employees themselves, may prove to be more suitable for developing employees.
 360-Degree Feedback Evaluation Method- is a popular performance appraisal method that involves
evaluation input from multiple levels within the firm as well as external sources.
o The 360-degree method is unlike traditional performance reviews, which provide employees
with feedback only from supervisors. In this method, people all around the rated employee may
provide ratings, including senior managers, the employee himself or herself, supervisors,
subordinates, peers, team members, and internal or external customers.
o The 360-degree feedback focuses on skills needed across organizational boundaries. Also, by
shifting the responsibility for evaluation to more than one person, many of the common appraisal
errors can be reduced or eliminated.
o The 360-degree feedback method may provide a more objective measure of a person’s
performance. Including the perspective of multiple sources results in a broader view of the
employee’s performance and may minimize biases that result from limited views of behavior.
o Having multiple raters also makes the process more legally defensible. However, it is important
for all parties to know the evaluation criteria, the methods for gathering and summarizing the
feedback, and the use to which the feedback will be put.
o The biggest risk with 360-degree feedback is confidentiality. Many firms outsource the process
to make participants feel comfortable that the information they share and receive is completely
anonymous, but the information is very sensitive and, in the wrong hands, could impact careers.

 Rating Scales Method- is a performance appraisal method that rates employees according to defined
factors. Using this approach, evaluators record their judgments about performance on a scale.
o The scale includes several categories, normally 5–7 in number, defined by adjectives such as
outstanding, meets expectations, or needs improvement. Although systems often provide an
overall rating, the method generally allows for the use of more than one performance criterion.
 o One reason for the popularity of the rating scales method is its simplicity, which permits quick
evaluations of many employees. When you quantify the ratings, the method facilitates
comparison of employees’ performances.
o The factors chosen for evaluation are typically of two types: job-related and personal
characteristics.
o The more precise the definition of factors and degrees, the more accurately the rater can evaluate
worker performance.

 Critical Incident Method- is a performance appraisal method that requires keeping written records of
highly favorable and unfavorable employee work actions.
o When such an action, a “critical incident,” affects the department’s effectiveness significantly,
either positively or negatively, the manager writes it down. At the end of the appraisal period, the
rater uses these records along with other data to evaluate employee performance.
o With this method, the appraisal is more likely to cover the entire evaluation period and not focus
on the past few weeks or months.

 Essay Method- is a performance appraisal method in which the rater writes a brief narrative describing
the employee’s performance.
o This method tends to focus on extreme behavior in the employee’s work rather than on routine
day-to-day performance.
o Ratings of this type depend heavily on the evaluator’s writing ability. Supervisors with excellent
writing skills, if so inclined, can make a marginal worker sound like a top performer.

 Work Standards Method- is a performance appraisal method that compares each employee’s
performance to a predetermined standard or expected level of output.

 Ranking Method- is a performance appraisal method in which the rater ranks all employees from a
group in order of overall performance.
o Paired comparison is a variation of the ranking method in which the performance of each
employee is compared with that of every other employee in the group.
o A single criterion, such as overall performance, is often the basis for this comparison. The
employee who receives the greatest number of favorable comparisons receives the highest
ranking.

 Forced distribution method- Performance appraisal method in which the rater is required to assign
individuals in a work group to a limited number of categories, similar to a normal frequency distribution.

 Behaviorally Anchored Rating Scale (BARS)- method performance appraisal method that combines
elements of the traditional rating scale and critical incident methods; various performance levels are
shown along a scale with each described in terms of an employee’s specific job behavior.

 Results-based System-a performance appraisal method in which the manager and subordinate jointly
agree on objectives for the next appraisal period; in the past a form of management by objectives.
PROBLEMS IN PERFORMANCE APPRAISAL
 Appraiser Discomfort- If a performance appraisal system has a faulty design, or improper
administration, employees will dread receiving appraisals and the managers will despise giving them. In
fact, some managers have always loathed the time, paperwork, difficult choices, and discomfort that
often accompanies the appraisal process.

 Lack of Objectivity- Although subjectivity will always exist in appraisal methods, employee appraisal
based primarily on personal characteristics may place the evaluator and the company in untenable
positions with the employee and equal employment opportunity guidelines. The firm may be hard-
pressed to show that these factors are job-related.

 Halo/ Horn effect

o Halo error- Evaluation error that occurs when a manager generalizes one positive performance
feature or incident to all aspects of employee performance, resulting in a higher rating.
o Horn error- Evaluation error that occurs when a manager generalizes one negative performance
feature or incident to all aspects of employee performance, resulting in a lower rating.

 Leniency/Strictness
o Leniency- Giving an undeserved high-performance appraisal rating to an employee. This
behavior is often motivated by a desire to avoid controversy over the appraisal. It is most
prevalent when highly subjective (and difficult to defend) performance criteria are used, and the
rater is required to discuss evaluation results with employees.
o Strictness- Being unduly critical of an employee’s work performance.

 Central tendency- is an evaluation appraisal error that occurs when employees are incorrectly rated near
the average or middle of a scale.

 Recent Behavior Bias- It is only natural for a rater to remember recent behavior more clearly than
actions from the more distant past. However, formal performance appraisals generally cover a specified
time, and an individual’s performance over the entire period should be considered. Maintaining records
of performance throughout the appraisal period helps avoid this problem.

 Personal Bias (stereotyping)- If these are factors to avoid such as gender, race, or age, not only is this
problem detrimental to employee morale, but it is blatantly illegal and can result in costly litigation. The
effects of cultural bias, or stereotyping, can definitely influence appraisals.38 Managers establish mental
pictures of what are considered ideal typical workers, and employees who do not match this picture may
be unfairly judged.

 Manipulating the evaluation- In some instances, managers control virtually every aspect of the appraisal
process and are therefore in a position to manipulate the system. For example, a supervisor may want to
give a pay raise to a certain employee or the supervisor may just “favor” one worker more than another.
In order to justify this action, the supervisor may give the employee an undeserved high-performance
evaluation and perhaps a less favored, but productive, employee a lower rating.40 or, the supervisor may
 want to get rid of an employee and so may give the individual an undeserved low rating. In either
instance, the system is distorted and the goals of performance appraisal cannot be achieved.

 Employee Anxiety- This may take the form of discontent, apathy, and turnover. In a worst-case
scenario, a lawsuit is filed based on real or perceived unfairness. Opportunities for promotion, better
work assignments, and increased compensation may hinge on the results. This could cause not only
apprehension, but also outright resistance.

CHARACTERISTICS OF AN EFFECTIVE APPRAISAL SYSTEM

The basic purpose of a performance appraisal system is to improve performance of individuals, teams,
and the entire organization. The system may also serve to assist in making administrative decisions concerning
pay increases, promotions, transfers, or terminations. The following factors assist in accomplishing these
purposes:
 Job-Related Criteria- Job-relatedness is perhaps the most basic criterion needed in employee
performance appraisals. More specifically, evaluation criteria should be determined through job
analysis.

 Performance Expectations- if employees clearly understand the expectations, they can evaluate their
own performance and make timely adjustments as they perform their jobs, without having to wait for the
formal evaluation review.

 Standardization- Firms should use the same evaluation instrument for all employees in the same job
category who work for the same supervisor. Supervisors should also conduct appraisals covering similar
periods for these employees. Regularly scheduled feedback sessions and appraisal interviews for all
employees are essential.

 Trained Appraisers- A common deficiency in appraisal systems is that the evaluators seldom receive
training on how to conduct effective evaluations. Unless everyone evaluating performance receives
training in the art of giving and receiving feedback, the process can lead to uncertainty and conflict.

 Continuous Open Communication- Most employees have a strong need to know how well they are
performing. A good appraisal system provides highly desired feedback on a continuing basis. There
should be few surprises in the performance review. Continuous feedback is vitally important to help
direct, coach, and teach employees to grow and improve performance.

 Conduct Performance Reviews- A special time should be set for a formal discussion of an employee’s
performance. Since improved performance is a common goal of appraisal systems, withholding
appraisal results is absurd. Employees are severely handicapped in their developmental efforts if denied
access to this information. A performance review allows them to detect any errors or omissions in the
appraisal, or an employee may disagree with the evaluation and want to challenge it.

Due Process- If the company does not have a formal grievance procedure, it should develop one to
provide employees an opportunity to appeal appraisal results that they consider inaccurate or unfair.
They must have a procedure for pursuing their grievances and having them addressed objectively.
LEGAL IMPLICATIONS
 Employee lawsuits may result from negative evaluations. A review of court cases makes it clear that
legally defensible performance appraisal systems should be in place. However, the courts normally require these
conditions:
o Either the absence of adverse impact on members of protected classes or validation of the process.
o A system that prevents one manager from directing or controlling a subordinate’s career.
o The appraisal should be reviewed and approved by someone or some group in the organization.
o The rater, or raters, must have personal knowledge of the employee’s job performance.
o The appraisal systems must use predetermined criteria that limit the manager’s discretion.

Mistakes in appraising performance and decisions based on invalid results can have serious
repercussions. In settling cases, courts have held employers liable for back pay, court costs, and other costs
related to training and promoting certain employees in protected classes. An employer may also be vulnerable
to a negligent retention claim if an employee who continually receives unsatisfactory ratings in safety practices.
In these instances, firms might reduce their liability if they provide substandard performers with training
designed to overcome the deficiencies.
It is unlikely that any appraisal system will be immune to legal challenge. However, systems that
possess the characteristics discussed above are more legally defensible. At the same time, they can provide a
more effective means for achieving performance management goals.

APPRAISAL INTERVIEW- The appraisal interview is the Achilles’ heel of the entire evaluation process. In
fact, appraisal review sessions often create hostility and can do more harm than good to the employee–manager
relationship. To minimize the possibility of hard feelings, the face-to-face meeting and the written review must
have performance improvement, not criticism, as their goal.
The appraisal interview definitely has the potential for confrontation and undermining the goal of
motivating employees. The situation improves considerably when several sources provide input, including
perhaps the employee’s own self-appraisal. Regardless of the system used, employees will not trust a system
they do not understand.
 Scheduling the Interview- Supervisors usually conduct a formal appraisal interview at the end of an
employee’s appraisal period. It should be made clear to the employee as to what the meeting is about.
Employees typically know when their interview should take place, and their anxiety tends to increase if
their supervisor delays the meeting. Interviews with top performers are often pleasant experiences for all
concerned. However, supervisors may be reluctant to meet face-to-face with poor performers. They tend
to postpone these anxiety-provoking interviews.

 Interview Structure- A successful appraisal interview should be structured in a way that allows both the
supervisor and the subordinate to view it as a problem-solving rather than a fault-finding session. The
manager should consider three basic purposes when planning an appraisal interview:
1. Discuss the employee’s performance. Focus on specific accomplishments.
2. Assist the employee in setting goals and personal-development plans for the next appraisal
period.
3. Suggest means for achieving established goals, including support from the manager and firm.
During performance reviews, managers might ask employees whether their current duties and roles are
effective in achieving their goals. In addition to reviewing job-related performance, they might also discuss
subjective topics, such as career ambitions. Although costs are a consideration, there is merit in conducting
separate interviews for discussing: (1) employee performance and development and (2) pay.
  Use of Praise and Criticism- Praise is appropriate when warranted, but it can have limited value if not
clearly deserved. If an employee must eventually be terminated because of poor performance, a
manager’s false praise could bring into question the “real” reason for being fired. Criticism, even if
warranted, is especially difficult to give. The employee may not perceive it as being constructive. It is
important that discussions of these sensitive issues focus on the deficiency, not the person.

 Employees’ Role- From the employees’ side, two weeks or so before the review, they should go through
their diaries or files and make a note of all projects worked on, regardless of whether or not they were
successful. The best recourse for employees in preparing for an appraisal review is to prepare a list of
creative ways they have solved problems with limited resources.

CONCLUDING THE INTERVIEW

Ideally, employees will leave the interview with positive feelings about management, the company, the
job, and themselves. If the meeting results in a deflated ego, the prospects for improved performance will be
bleak. Although you cannot change past behavior, future performance is another matter. The interview should
end with specific and mutually agreed-upon plans for the employee’s development. Managers should assure
employees who require additional training that it will be forthcoming and that they will have the full support of
their supervisor. When management does its part in employee development, it is up to the individual to perform
in an acceptable manner.

TRAINING AND DEVELOPMENT

 An Instructional System is composed of (1) Problem Diagnosis (Performance Analysis, Need Analysis
or Skills Gapping), (2) Program Design, (3) Program Delivery, and (4) Program Evaluation.
The systems approach gives important impetus to the establishment of objectives and evaluation criteria.
A small pilot test may be conducted to validate the program before it is fully implemented.
Training/development is never a finished product. There are always continued revisions to meet goals,
situations change, and goals also change. It should be kept in mind that there may be a "sleeper effect" where it
takes time for results to show up back on the job. One also does not know how long the impact will last. Interest
in training and development has
risen due to the need for a wider array of skills, awareness of the entire production system, the need to be
responsive to mishaps, changing customer needs, interest in building clusters of internal team experts, more
vocal concern over employment security, career growth, and retraining costs.

HR Training and Development Methods

 Employee Orientation (Onboarding)- Basic background information is provided. The history of the
organization, culture and the basics of various HR subjects are covered. The aim is to make the
employee feel welcome, provide a general understanding of the organization, and start to socialize them
with regard to the policies and procedures (how one should act).

 Job Instruction- The trainer explains the job in its proper sequence and demonstrates how it should be
done. The trainee tries to replicate the methods, and receives feedback from the trainer.

 Coaching (Understudy Method)- On a day-to-day basis the manager notes what the employee is doing
properly and improperly. The trainer should provide advice on how the trainee can do his/her job more
easily and effectively. Some supervisors, however, are reluctant to challenge or criticize.

 Informal Learning (The Buddy System)- Employees learn much from peers. Surveys have found as
much as 80% of what employees learn on the job, they learn informally.

 Project Teams (Action Learning)- A temporary team, often consisting of people from different areas or
functions, that works on real projects. The results are taught to others.

 Mentoring- A figure who is often 8 to 15 years older, and 2 or 3 levels above provides career advice,
hints on how to tackle problems, and demonstrates interpersonal/political skills by example. The trainee
often picks up the mentor's friends and enemies (i.e. "guilt by association"). The process should be
monitored so the trainee is not exploited (e.g. the mentor taking credit for his/her ideas).

 Apprenticeship- This normally involves craft positions (plumbers, carpenters, electricians, linemen,
etc.). It normally lasts 2 to 5 years (the average being four years). It primarily involves on the job
training under the direction of an experienced person. It also frequently has a classroom component. The
skilled workmen may want to limit the number of new craftsmen to further their own interests. A client
may be charged the craftsman's rate despite the fact a trainee did some of the work.

 Business (Management) Games- Simulations of what it is like to make top management decisions. Each
organization was represented by a team of 5 to 6 students. These students were selected from different
disciplinary backgrounds. The students had to organize themselves. The students' grades were
 determined by their finish (stock price, dividends, etc.). Board meetings were held with students from
other industries so the team could explain their strategy and get new ideas. Political fights did break out
in the team discussions due to the composition of the groups and the stakes involved. Some students
attempted to spy on other groups.

 Case Studies - Trainees are given in-depth descriptions (5 to 30 pages) of the experiences of disguised
organizations. This allows them to see the experiences of numerous managers in a short period of time.
Hopefully, the trainees will not repeat the same mistakes as the characters in the case. The case,
however, is pre-gathered information. Therefore, the trainees do not practice researching problems. They
do normally try to analyze the given information, diagnose problems, and pose solutions. They never see
an actual implementation, nor have a chance to enact revisions. Essentially, the middle stages of
handling problems are stressed, while the initial and final steps are left out.

 Discussion Method (Incident Method)- One can learn from the experiences of others, and should come
to better appreciate others' views. The trainee should also develop his/her analytic skills and
management style. Some people who long for exact answers dislike the disorganized and open-ended
nature of these discussions. This method can only be effectively carried out in small groups. The nature
of the feedback needs to be monitored.

 In-basket Exercises- The trainee is given a stack of memos, phone messages and letters. In the upcoming
time frame (one week), the person has too much to do. Therefore, the problems must be prioritized.
Time management must be exercised. In some cases, responses must be drafted. If the material is really
job related, this can be a very useful developmental tool.

 Sensitivity Training (T-groups) [Ropes Course, Outward Bound Program, Team Building]- This method
is intended to change interpersonal relationships. A series of somewhat bizarre exercises will be carried
out. The trainee will then discuss the experiences with the other participants (group analysis). Later, the
trainee will put his/her reflections in writing (self-analysis). These multiple analytic processes are
intended to give the trainees greater insight into the behavior of others and themselves. Ideally, it will
build greater understanding and tolerance. People should be able to develop new ways of interacting.

 Lecture- The most common training method. This is an economical way to convey information to large
numbers of trainees with a small number of trainers. The amount of content for the time consumed is
generally very high. Normally, this consists of a simple one-way presentation of information. The lack
of social interaction and individualized material is a drawback. The extensive usage of lectures
sometimes results in boredom. The lack of reinforcement and the ability to practice can pose problems
in skill training.

 Programmed Instruction (Auto Instructional Techniques)- Modules like the SRA reading program and
computer software packages (CDs, Web sites, Learning Portals, etc.) that promote self-paced learning.
Ideally, this method will be challenging and individualized. Computers and modules do not get
impatient. Travel time to human presentations is eliminated. Advocates assert the same amount of
material can be learned in one-third the time. The immediate feedback the employee can receive from
self-tests, and the branching the software programs provide to locate the person's level and build him/her
up from there are a plus. Unfortunately, trainees may cheat on the self-tests. Why? They may want to
 impress or keep up with peers in classroom situations. The lack of social interaction raises questions
about whether critical interpersonal skills are being neglected. Overall, the costs of the manuals or
software can be compared to the benefits of accelerated learning.

 Role Playing- Simulations where the trainees learn by doing. They carry out their prescribed roles and,
in the process, develop their interpersonal skills. Some of the exercises have superiors and subordinates
switch roles so they can better understand each other (i.e. put oneself in the other's shoes). In any event,
you should get feedback on what you are doing well and what you are doing poorly from your
counterparts. Since people can become very competitive, bluff, lie, etc, one needs to monitor the process
to make sure things do not get out of hand.

 Behavioral Modeling- First, the trainees are exposed to "model behavior." After observing, they practice
the techniques, get feedback as well as praise, and make revisions. This training should then be
transferred back to the job.

 Vestibules/Simulators -Train on the same or at least similar equipment in order to learn how to operate
planes, ships, or autos. You should have an opportunity to practice, sequenced learning, knowledge of
results and reinforcement. It is costly to build realistic simulators. Those used in the military are great,
whereas most auto simulators are lame. The investment is justified where the cost of an accident is high
in terms of lives, material and bad publicity. Some of the military simulators are so sophisticated it is
possible to use them for other purposes, such as tracing the reasons for accidents. A simulator saves on
maintenance costs, pilot cost, fuel cost, and the cost of not having a plane or ship in regular service.
Video game simulations have even been created by the US Army to develop urban warfare skills

Common Concerns and Suggestions for Improvement

(1) A lack of ongoing measurement and revision has long been a major problem. A Hay Associates study found
that fewer than 1 in 100 (a sample of 1200 major firms) even claimed to assess the millions spent on training.
Another study of training and development directors that revealed 75% had no formal methods to evaluate their
activities. Do many people use a “quasi experimental design” with pretests and post-tests as well as a test group
and a control group? One survey found less than half of the companies responding used before and after
measures and only a negligible number utilized control. Ideally, the desired outcomes should be linked to the
organization’s mission and the objectives based on this. Currently, only 10-35% of are transferring what they
learned to their jobs one year after their training was conducted

Good intentions and large sums of money do not necessarily equal good education. What are some possible
evaluation criteria?
o knowledge acquisition
o changing attitudes
o problem solving skills
o interpersonal skills
o participant acceptance (trainees’ reactions- enjoyment?)
o knowledge retention
o knowledge transfer
 One might simplify this to considering measures of participant reactions, what was learned, changed
behaviors, and end results. Still, people are reluctant to criticize a program the boss is associated with, or one
that will help them move up. A study of 100 firms who have tried to evaluate found 75% measured employee
reactions, 20% behavior changes, and 15% results in terms of supervisory ratings. Evidently only a few
measures are being examined, and the most popular is "employee acceptance" which is the hardest to properly
interpret. Trainee reactions do not tell you much about what they learned or how it will transfer back to the way
they will behave at work. Using a narrow spectrum of measurement could easily produce deceptive results.

(2) Big ticket training involves a very real risk that you will become the talent supplier for your competitors.
Firms with good training programs may well attract better candidates. The question is whether they retain most
of them and recoup their training investment. Competitors may feel it is best to let others do the training and
then they can skim off the cream. One would certainly want to monitor turnover rates, who was leaving (your
best or your worst), and explore "string options" to hold people long enough to make it worthwhile (e.g. you
must stay on X years, or you can’t go to a direct competitor for Y years).

(3) Some consultants or outside trainers may be more interested in delivering their "tried and true" program than
in sensing the organization's needs. A key question is whether the trainer is supplying his/her own limited
knowledge or what the organization really wants and needs. Managers must beware of trainers who become
"instant experts" to obtain jobs (your money). Ask the trainer what his/her area of expertise is before
mentioning the specific project you have in mind. Try to find some former clients to check on the trainer's prior
work.

(4) One should not send mixed or improper signals. Ideally, training should produce improved performance that
will be reinforced via subsequent rewards. Trainees should certainly not be punished for performing more work.
Yet, this often happens when added work is dumped on the desks of the most capable and hardworking
subordinates, while the deadwood sits idly by. Why learn new skills if it will only result in a further
exaggeration of an already inequitable situation?

(5) One needs to try to strike the right balance. Utilizing a variety of training methods is usually praised as
being stimulating. Nevertheless, some employees may be confused or feel overwhelmed by the unfamiliar
waters. People learn in different ways and at different speeds. It is obviously easier to properly design material
and appropriately pace programs in smaller classes.

(6) Efforts can be made to enhance the meaningfulness of programs. Some trainees criticize training as being
unrealistic in that they cannot apply it on their jobs. Some trainers are also not actual practitioners, or have been
removed from the field for such a long period that they have little useful knowledge to convey. A few
organizations have addressed these concerns by periodically rotating in experienced people from the field to
conduct training programs. For example, IBM rotates in some of their best salespeople to conduct its sales
training classes. While the meaningfulness of the material and participant acceptance should be enhanced, there
are still some concerns. Just because a person is a good salesperson does not necessarily make him/her a good
trainer. Is the person interested in training? Is the person a capable trainer? Will the person be willing to convey
all of the tricks of the trade it took him/her years to discover? Is the person essentially training competitors? Of
course, as one nears retirement, such concerns may be alleviated. Other issues must also be considered, such as
who will service the person's accounts in the interim, and will the person be losing money by foregoing his/her
sales commissions?
We will conclude with a list of Human Resource Development Principles. Many of these principles
were mentioned in the discussion above. These are important factors to consider in each situation.
 Distributed Learning- conducting the program over a long enough period of time for the trainees to be
able to digest and apply the material (not trying to do too much, too fast).

 Rewards- The trainees should be able to see what is in it for them (praise, recognition, promotion, etc.).

 Feedback- Trainees need to know what progress they are making and what mistakes need correction.

 Motivation- Trainees must want to learn. Some people do not believe it is very easy to motivate people.
If so, you better pick people who are already motivated.

 Transfer-The training should apply to the job activities.

 Opportunity to Practice- Trainees should be able to try the techniques they are being taught in order to
make these methods part of their repertoire.

 Learning from Many Sources- This heightens the probability you will get the material through by
(a) hitting the mode, the person computes on, and
(b) providing a broad base for the points being made which provides helpful reinforcement.

 Individual Differences- The trainee's intelligence, motivation, aptitudes and interests should be taken
into account.
 RECRUITMENT AND SELECTION

In any kind of organization, recruitment and selection processes are considered useful, because they help
in finding the most suitable candidates for the jobs. Recruitment and selection are important operations in
human resource management, designed to make best use of employee strength in order to meet the strategic
goals and objectives of the employers and of the organization as a whole. It is a process of screening, sourcing,
shortlisting, and selecting the right candidates for the vacant positions. The employers put into practice
recruitment strategies and methods that would be the most beneficial to achieve organizational goals and
objectives. The main purpose of this research paper is to understand recruitment and selection procedures. The
main areas that have been taken into account include, significance of recruitment and selection, principles of
recruitment and selection, factors affecting recruitment and selection, posting vacancies, recruitment and
selection process, types of recruitment and types of interview.

INTRODUCTION
Recruitment is the process of identifying, screening, shortlisting and hiring of the potential human
resources for the purpose of filling up the positions within the organizations. It is the central function of human
resource management. Recruitment is the process of selecting the right person, for the right position at the right
time. The educational qualifications, experience, abilities and skills of the individuals need to be taken into
consideration when recruitment takes place. It is the process of attracting, selecting and appointing potential
candidates to meet the needs and requirements of the organizations. Recruitment takes place internally, i.e.
within the organization and externally, i.e. from the usage of external sources. Internal factors include, the size
of the organization, recruiting policy, image of organization and image of job. External factors include,
demographic factors, labor market, unemployment rate, labor laws, legal considerations and competitors.
Efficiency in the recruitment processes generates productivity and builds a good working environment and good
relations between the employees.

Selection is the process of picking or choosing the right candidate, who is most suitable for the job. It is
the process of interviewing the candidates and evaluating their qualities, which are necessary for a specific job
and then selection of the candidates is made for the right positions. The selection of right candidates for the
right positions will help the organization to achieve its desired goals and objectives. When selection of the
employees
takes place, it is vital to ensure that they possess the desired qualifications, skills and abilities
that are required to perform the job duties in a well-organized manner

Recruitment is called a positive process with its approach of attracting as many candidates as possible
for the vacant positions. It is the process of identifying and making potential candidates to apply for the jobs.
On the other hand, selection is called a negative process with the elimination of many candidates as possible.
There are numerous individuals, who apply for the jobs, but selection is made only of those individuals, who are
qualified and proficient. Selection is important, the reason being, hiring of good resources can help in increasing
the overall performance of the organization. Both the processes of recruitment and selection are considered
important for the effective functioning of the organizations and they take place simultaneously. They are
imperative for growth and development of the organization.

SIGNIFICANCE OF RECRUITMENT AND SELECTION

 The recruitment and selection of the individuals within the organizations result from a thorough and a
systematic process. The employees need to possess complete knowledge of the strategies and methods that are
required to get implemented for recruitment and selection. Legislation and good practice and the range of
recruitment sources and selection methods as well as possessing the skills and abilities in interviewing and
evaluating potential employees highlight the significance of recruitment and selection. The areas that highlight
the significance of recruitment and selection have been stated as follows:
 When job vacancies arise within the organizations, then the employers give due consideration to the
recruitment and selection processes. These processes enable the employers to identify and analyze the
positions that are required to get filled in order to achieve the desired goals and objectives. Vacant
positions within the organizations signify the lack of human resources and these are regarded as barriers
within the course of implementation of tasks and in the achievement of goals and objectives. Thus,
whether it may take place on an immediate basis or may be a time-consuming process, importance of
these processes is recognized during the time of job vacancies.

 Resources are considered as the most important asset of any organization, hence, hiring the personnel
with appropriate skills and abilities is important. The patterns of recruitment and selection differ from
one company to another. When machines, equipment and devices are made use of to enhance
productivity, then it is the human resources that operate them. The machines, devices and other
equipment are made use of in an effective way, when they are put into operation by skilled and
proficient personnel. It is vital that individuals should possess complete knowledge regarding how to
make use of machines and enhance productivity. In some cases, this job may be manageable, whereas in
others it may be tedious and demanding. Therefore, recruitment and selection are considered as
important aspects in any organization and should be made of appropriate personnel.

 The significance of recruitment is recognized by the fact that organization gets satisfied with more
productive employees. It not only enhances productivity and profitability, but also encourages good
relationships among the employers and the employees. It contributes towards growth and development
of the organization. It determines the current and future job requirements. It helps in increasing the
success rate of selecting the right candidates, who are able to make efficient use of their skills and
abilities in leading to growth and development. It helps in evaluating the effectiveness of various
recruitment methods. It determines the present future requirements of the organizations and formulate
plans accordingly. Recruitment strategies contribute in the implementation of managerial functions in an
operative manner.

 The significance of selection is recognized, because it helps in choosing the most suitable and qualified
candidates, who can meet the requirements of the jobs within an organization. For meeting the goals and
objectives of the organization, it is vital to evaluate the various attributes of each candidate, such as their
qualifications, skills, abilities, experiences, personality, nature and overall attitude. The other candidates,
who have not found to be suitable to carry out the job duties are eliminated. The organization is required
to follow appropriate selection processes, the reason being, if the selection is not carried out in an
appropriate manner, then it would impose unfavorable effects upon the organization and loss would be
incurred to the employer in terms of money, time, and efforts.

PRINCIPLES OF RECRUITMENT AND SELECTION

The principles of recruitment and selection have been stated as follows:
  The first point to identify about recruitment is that it is a process with a number of key stages, all of
which work in co-operation to improve one’s chances of finding the best candidates available for any
advertised position. The candidates are required to go through various stages and they are given certain
tasks or go through various rounds of interviews, which they have to accomplish in order to get selected.
In some cases, final round of interviews, include only two people, one is selected and the other one gets
rejected.

 It is worth giving indications that in terms of leading, guiding and managing employees, if one is not
recruiting the best people available, then it is always going to be challenging to manage them on daily
basis.

 Another general rule is, when seeking to fill any job vacancy, one should always consider the internal
candidates that could be encouraged to the available post and then recruit externally for the junior
position.

 Too often senior managers pay less attention to the recruitment process and only become actively
involved when a senior post is being filled, or at the end of the process for the final interview. This is an
error and one should be concerned with the eminence and appropriateness of every employee, who joins
the business.

 It is often assumed that interviewing is something that any experienced manager can carry out. It
involves open ended as well as close ended questions. Interviews can be conducted by anybody, but it is
important that individuals can do it well, if they are appropriately trained and possess effective
communication skills. It is not worthwhile to conduct interviews without acquiring proper training.

 There are many legal issues that are associated with the recruitment process and it is necessary for all the
individuals to familiarize oneself with the relevant legislation. It is vital for the members of the
organization to become familiar with the policies and procedures that are required in the recruitment and
selection processes.

FACTORS AFFECTING RECRUITMENT AND SELECTION

The factors affecting recruitment and selection are organized into the internal and the external
categories. The internal factors have been stated as follows:
 Size of the Organization - The size of the organization is one of the most important factors affecting the
recruitment process. To develop business, recruitment planning is mandatory for hiring more resources,
which will be crucial in the management of future operations.

 Recruitment Policy- Recruitment policy of an organization, includes hiring from the internal or external
sources of organization. It is an important factor, which affects the recruitment process. It identifies the
objectives of recruitment and provides a framework for the implementation of recruitment programs.
 Image of the Organizations- Organizations having a good positive image in the market can easily attract
competent and proficient resources. Maintaining good public relations, providing public services, and
leading to goodwill of the organizations, definitely helps an organization in improving its reputation in
the market, and thereby draw the best possible human resources.
  Image of Jobs- Just like the image of the organization, the image of jobs contributes a critical role in the
recruitment and selection processes. Jobs having a positive image in terms of better remuneration,
promotions, recognition, and amiable working environment with career development opportunities are
considered as the characteristics to arouse interest and enthusiasm within qualified candidates.

The external factors have been stated as follows:

 Demographic Factors- are related to the characteristics of potential employees such as, their age,
religion, educational qualifications, gender, occupation, economic status, and place of location.

 Labor market – Labor market exercises control on the demand and supply of labor. For example, if the
supply of people having specific skills and abilities is less than the demand, then the hiring will require
more efforts. On the other hand, if the demand is less than the supply, then hiring will be relatively more
manageable.

 Unemployment rate – If the unemployment rate is high in a specific area, hiring of human resources will
be simple and manageable, as there will be an increase in the number of applicants. For various job
positions in all types of organizations, large number of applications are received. In contrast, if the
unemployment rate is low, then recruiting tends to be difficult due to lesser number of resources.

 Labor laws – Labor laws reflect the social and political environment of the market, which are created by
the central and the state governments. These laws dictate the compensation, working environment,
safety and health regulations, and the job duties of the workforce, for different types of employments.
As the governments undergo transformations, there are transformations that come about in the labor
laws.

 Legal considerations – Job reservations for different castes such as Scheduled Tribes, Scheduled Castes,
and Other Backward Classes are the best examples of legal considerations. These considerations, passed
by government, will have a positive or negative impact on the recruitment policies of the organizations.

 Competitors – When organizations in the same industry are competing for the best qualified resources,
there is a need to analyze the competition and make provision of the resources packages that are finest in
terms of the industry standards.

 Equal Opportunity – When recruitment and selection of the employees take place, then it is vital to take
into consideration, equal employment opportunities for the individuals. Equal opportunity results when
all the applicants are treated on an equal basis and consistently at every stage of recruitment. There
should not be any discrimination against anybody on the basis of factors, such as, caste, creed, race,
religion, ethnicity, gender and socio-economic background. Fairness and justness is of principal
significance in the recruitment and the selection processes.

POSTING VACANCIES
Job posting refers to the practice of publicizing and displaying advertisements of an open job to the
employees. In most cases, internet, newspapers, notices and bulletin boards are the areas where job postings are
found. These include, listing of the attributes, such as, designation, criteria of knowledge, qualifications, skills
and experience. In some cases, they also specify the salary package. The purpose of posting vacancies is to
bring to the attention of the interested persons, they may be internal or external to the organization and the jobs
that
are to be filled. Before posting vacancies, important areas that need to be taken into consideration by the
employers include:
Whether the retention of the job is done in the present form with the title, remuneration or status or
whether any changes are required to be brought about.
Each hiring unit is responsible for determining its hiring needs, requirements and the scope and
responsibilities of the proposed individuals. The nature of the recruitment options will vary based on the
purpose for which hiring is carried out. The various positions within the organizations or educational
institutions include, clerical, technical, administrative, managerial and so forth. The skills, abilities and
experience of the employees would remain the same or any changes are required to be brought about in the
personality characteristics of the individuals, before the processes of recruitment and selection takes place.
Are there efficient, competent, practiced and experienced applicants serving in other positions within the
organization, who may be potential candidates for the job. Job rotation is considered vital in all types of
organizations to improve employee morale, so that they do not find their job duties monotonous and tedious.
Job rotation helps in the development of skills and abilities of the employees and make them familiar with other
functions and tasks within the organization. It helps the employees in gaining knowledge and experience.
Whether the existing organizational policy for recruitment is still applicable. For example, referrals of
the employees by the staff members, friends or family members are still an acceptable way of filling vacancies.
Whether the organization considers external sources as the most effectual means of recruitment.
Whether external sources are regarded as more beneficial to the organizations in the long term, when they are
recruiting individuals from external sources.
Necessary is the availability of the functional human resource information system that supports
recruitment. In the present existence, there has been extensive utilization of technology in the recruitment and
selection procedures. A computerized system would have the following features:
Forthcoming vacancies within the organizations need to ensure that capable and proficient individuals
are recruited on time, in order to avoid any kind of delay in the production processes.
In some cases, recruitment and selection processes require number of rounds, which the individuals have
to go through. They may even take 10 to 15 days of time, especially for leadership and higher-level positions
within the organizations. It needs to be ensured that candidates systematically move through the process and are
kept informed of their status.
Ensure that qualified candidates, whose applications are pending should be communicated with to
maintain their interest within the organization. As these candidates are valuable and would be dedicated towards
the accomplishment of goals and objectives.
Assist in analyzing appointment, transfer and exit trends and provide other data that leads to the
facilitation of planning, organizing, evaluating and assessing the recruitment process.
Identify any antagonistic impacts of the recruitment process on vulnerable and marginalized groups. For
example, minorities, especially where Equal Opportunity, Affirmative Action legislation exists.
For internal recruiting, control of the internal job posting process, creation of the notices, and then
matching the internal applicant qualifications with job specifications is crucial. Where jobs are not being posted,
creation of a list of qualified internal candidates is necessary.

RECRUITMENT AND SELECTION PROCESS

 It is important that the job announcements should be made available to all the employees. The weakness
to the job positing is employee pessimism that occurs when jobs are posted as open, but in reality, the
organization
has already selected a strong internal candidate. Such practices generate antipathy and disbelief among
employees, when they believe the job posting is just a formality with less real opportunity for advancement. The
elements in the recruitment and selection processes:
 Job Vacancy – The first step is when vacancy arises within the organization. One should be aware of the
vacant positions and by when they should get filled with capable employees. Job vacancy enables the
individuals to determine the factors, such as, redesigning, or initiating part time employment
opportunities for the individuals. In some cases, vacant positions may get filled with qualified candidates
rapidly, whereas in others, it may be a time-consuming process. One should implement measures to
reduce the risks associated with recruitment. The existing employees should see that there is a potential
career path within the organization, which may motivate them to stay longer.

 Job Analysis – Two main factors need to be taken into consideration regarding job analysis. First is
expectation of the employers from their employees, within the organization, the employers have certain
expectations from their employees regarding performance of job duties, and they expect them to
inculcate the traits of regularity, diligence, resourcefulness, conscientiousness and creativity. The other
areas that need to be taken into consideration are the characteristics of the job. These include, training,
work experience, skills and knowledge, physical attributes, personality traits, communication skills and
personal circumstances. Development and utilization of well-structured questions based on the profile of
the employees will help in getting the better insight of the true personality of the candidate.

 Attracting Candidates – there are two important sources that need to be taken into consideration, internal
recruitment and external recruitment. In the case of internal recruitment, the following advantages are, it
reduces recruitment costs, internal employees are already familiar with all the aspects of the
organization, its goals, objectives etc. It can act as a motivating factor for others in the business by
displaying that it is possible to acquire promotional opportunities and the employers are already familiar
with the person, within the organization. Sources of external recruitment includes, websites,
advertisements in newspapers, journals, magazines, recruitment agencies, consultants, employment fairs,
and seminars.

 Screening Candidates – The purpose of the screening process is to narrow down the field, so that one is
able to spend more time with the candidates for formal interviews. Large numbers of applications are
received for the positions, and all the applicants are not called for the interviews, hence, it is vital for the
employers to screen the candidates to select the most suitable ones for the interviews. In the number of
applications received, screening is done on the basis of factors such as, educational qualifications,
experience, skills, and so forth. When this process has been effectively implemented, only then the
screening process takes place. After the screening process is implemented in an adequate manner, then
interviews are organized for the candidates.

 Interviewing Candidates – The important aspects that need to be taken into account for interviewing
candidates include, ensuring that proper notice is given regarding the date and time of the interview,
ensuring that the candidates are aware that they should reach the premises on time, ensuring that they are
clear where to go and whom they should contact on arrival and ensuring that they are aware of the
 documents that need to be brought along in the interview. These aspects contribute in preparing the
candidates on the complete basis for the interview. The employers or the interviewers need to review the
resume and all the job applications before interviewing the candidates. It is vital to implement time
management skills for the interview processes, so that they can be completed on time.

 Selecting and Appointing Candidates –The procedures generally include the steps, such as, the selection
of the candidate, verbal communication of his or her appointment, medical completed if appropriate,
sending of appointment letters and signing the contract. Selecting and appointing candidates depend
upon the urgency of getting the vacancy filled. When job vacancies are to be urgently filled, then
selecting and appointing of candidates may take place immediately after the interviews. In some
organizations, candidates are appointed on an immediate basis, after their selection and other formalities,
such as giving appointment letters or signing the contract.

 Induction and Training

o Induction is the process of receiving and welcoming of the employees, after they have been
selected and providing them the required training needed to settle down adequately. Induction
has three aims:
a. To smooth the early stages, when everything is likely to be extraordinary and unfamiliar
to the new employees.
b. To establish a positive attitude of the organization within the mind-sets of the employees,
so that they are likely to stay for a long term and
c. To obtain effective output from new employees in short period of time.
o Training is referred to making use of methods and strategies to enhance the awareness,
knowledge and information among the employees. Various training methods include, role plays,
vestibule training, field visits, and lectures. The employees should receive on the job and off the
job training to generate information regarding history, personnel, goals and performance of job
duties. The main purpose of training is to balance the needs and requirements of the
organizations and human resources.

 Employee Evaluation –It is necessary to evaluate the employees from time to time in order to monitor
enhancement of productivity and their performance. The methods of employee evaluation help in
identifying the limitations and the measures that are required to get implemented to improve them.
o Monitoring the performance of the employees is stated as an on-going activity and new
employees can be trained in a better way to enhance productivity. The evaluation process can tell
whether the recruitment process is working efficiently or are there any changes and
transformations that need to be brought about.

The main purpose is to ensure that the quality of the employees get enhanced that are recruited within
the organizations. This is imperative to improve employee productivity and to achieve the organizational goals
and objectives.

TYPES OF RECRUITMENT
Types of recruitment are broadly classified into two different categories. These are the internal sources
and the external sources.
 Internal sources of recruitment refer to the hiring of employees within the organization internally. In this
case, applicants are seeking different positions and are those who are currently employed within the same
organization. At the time of recruitment of employees, main consideration is given to those employees, who are
currently working within the organization. This is an important source of recruitment, which provides the
opportunities for progress and use of the existing resources within the organization. Internal sources of
recruitment are the finest and the stress-free way of selecting human resources as their work performance and
other qualities are already known to the organization. The internal sources have been stated as follows:
 Promotions - Promotion refers to advancement of the employees by evaluating their job performance.
When the employers, managers and supervisors feel satisfied with the performance of the employees,
they promote them to an upper level within the organization and it leads to an increase in pay and
benefits. It is the process of shifting an employee from a lower position to a higher position with more
responsibilities, remuneration, facilities, and status. Internally, many organizations fill the vacant
positions at higher levels with the process of promotions.

 Transfers –refers to the process of interchanging from one job to another without any change in the
designation and responsibilities. It can also be the shifting of the employees from one department to
another department or from one location to another, depending upon the requirement of the position.
Transfers are normally based on the job requirements and the capabilities of the employees. If the
organization has two branches, then it may take place between two branches. The internal shifting of the
employee from one branch to another is known as transfer.

 Recruitment of Former Employees - a process of internal sources of recruitment, wherein the ex-
employees are called back, depending upon the requirement of the positions. This process is cost
effective and saves plenty of time and money. The other major benefit of recruiting former employees is
that they are well aware of the organization, the roles and responsibilities of the job and personnel. The
employers are well versed with their personality traits and approaches and the organization is not
required to undertake much stress regarding their training and development.

 Internal Advertisements or Job Postings - Internal advertisements are referred to as the processes of
posting and advertising jobs within the organization. These job postings are an open invitation to all the
employees within the organization, where they can apply for the vacant positions. It makes provision of
equal opportunities to all the employees. Hence, the recruitment will be carried out from within the
organization and it involves less expenses.

 Employee Referrals - Employee referrals are an operative way of sourcing the right candidates at a low
cost. It is the process of hiring new capitals through the references of the employees, who are currently
employed within the organization. In this process, the present employees can refer their friends and
relatives for filling up the vacant positions. Organizations inspire employee referrals, the reason being, it
is lucrative and saves time as compared to hiring candidates from external sources. In most cases,
employees are stimulated and motivated towards the performance of job duties, by giving them benefits,
incentives and rewards for their performance.

 Previous Applicants – In this case, the hiring team examines the profiles of previous applicants from the
organizational recruitment database. These applicants are those, who have applied for jobs in the past.
These individuals can be easily contacted and the response will be positive in most cases. It saves cost
 and employees are well aware of all the features of the organization and the performance of their job
duties. It is also an economical way of filling up the vacant positions.

External sources of recruitment refer to hiring of the employees outside the organization externally. In other
words, the applicants seeking job opportunities in this case are those, who are external to the organization.
External employees bring innovativeness, resourcefulness, creativity and new thoughts and ideas to the
organization. Although hiring through external sources is an expensive and a difficult process, it has great
potential of driving the organization towards the achievement of goals and objectives. The external sources have
been stated as follows:
 Direct Recruitment - Direct recruitment refers to the external source of recruitment, where the
recruitment of qualified candidates is carried out by putting a notice regarding job vacancy on the notice
board of the organization. This method of sourcing is also called as factory gate recruitment. This is in
most cases used to recruit blue collar and technical workers.

 Employment Exchanges - As per the law, for certain job vacancies, it is compulsory that the
organization provides details to the employment exchange. Employment exchange is a government
entity, where the details of the job seekers are deposited and given to the employers for filling the vacant
positions. This source of external recruitment is accommodating in hiring of the unskilled, semi-skilled,
and skilled workers.

 Employment Agencies –are external sources of recruitment. They are functioned by various sectors,
such as private, public and government. It provides, unskilled, semi-skilled and skilled resources in
accordance to the needs and requirements of the organizations. The job seekers usually register
themselves with employment agencies and in this way, they have a database of qualified candidates and
organizations can use their services at the time of requirement.

 Advertisements - the most prevalent and common external sources of recruitment. The job vacancy is
displayed through various print and electronic media with a specific job description and specifications of
the requirements. Advertisements regarding jobs are displayed in newspapers, magazines and on the
websites. Making use of advertisements are the best way to source candidates in a short span and it
provides an efficient way of screening the specific requirements of the candidates.

 Professional Associations - Professional associations can help the organizations in hiring professional,
technical, and managerial personnel, however, they focus on sourcing mid-level and top-level resources.
There are many professional associations that perform the roles of facilitators between the organizations
and the job-seekers.

 Campus Recruitment - Campus recruitment is an external source of recruitment, where the educational
institutions such as, colleges and universities make provision of information to the students regarding
employment opportunities. It is when opportunities are made available for hiring students. In this
process, the organizations visit technical, management, and professional institutions for recruiting
students directly for new positions.

 Word of Mouth Advertising - Word of mouth is an imperceptible way of sourcing the candidates for
filling up the vacant positions. There are many reputed organizations with good image in the market.
 Such organizations only need a word of mouth advertising regarding a job vacancy to arouse interest and
enthusiasm among large number of candidates.

TYPES OF INTERVIEW
An interview is a determined exchange of notions, the answering of questions and communication
between two or more persons. Normally, an interview is a process of private conversation between people,
where questions are asked and answers are obtained. The main purpose of the interviews is to acquire
information about qualities, attitudes, prospectus and so forth. The primary purpose of an interview is to transfer
information from interviewee to interviewer.
 Structured Interview - In this type, the interview is planned, designed and detailed in advance. A
structured interview is pre-planned, precise, and reliable in hiring the candidates.

 Unstructured Interview - This type of interview is an unexpected one, where the interview questionnaire
is not prepared. The interviewers are not well prepared regarding the questions that are to be asked and
in obtaining accurate answers. Here, the usefulness of the interview is less and there is a waste of time
and effort of both the interviewer and the interviewee to a large extent.

 Group Interview – all the candidates or a group of candidates are interviewed together. Group interviews
are conducted to save time, when there are large number of applications received for limited job
vacancies. In this case, a subject will be given to the candidates to get engaged in group discussions and
the interviewer judges the innovativeness and behavior of each candidate within the group.

 Depth Interview - is a semi-structured interview, where the candidates have to give detailed information
about their educational qualifications, work experience, special interests, skills, aptitude and so forth. All
the information about the candidate is known first and then the interviewer takes a depth interview and
begins analyzing the expertise and proficiency of the candidate. This interview enables the interviewer
to acquire detailed information, so that the selection process becomes more manageable.

 Stress Interview - Stress interviews are conducted to ascertain how a candidate would react during the
time of stress and cope up with problems. The interviewer will come to know whether the candidate can
deal in an effective manner with the demands and needs of a complicated job. The candidate, who
maintains his self-control during a stress interview is normally the right person to handle a stressful job.

 Individual Interview - The interview takes place on a one to one basis. There will be a verbal and a
visual interaction between two people, an interviewer and a candidate. This is a two-way communication
interview, which helps in finding the right candidate for a vacant job position. In this case, an
interviewer may make use of open-ended and close-ended questions. Open-ended questions may involve
elaborate explanations of the answers and close-ended questions involve one-word answers.

 Informal Interview - the interview will be stable without any written communication and can be
arranged at any place. There are not any proper procedures of asking questions in this type of interview
and it is not adequately structured. It is more like an informal conversation between the individuals and
takes place in a friendly manner.
  Formal Interview - A formal interview is organized in an informal manner, i.e., the candidate will be
aware about the dates and timings of the interview well in advance and the interviewer plans and
prepares the questions for the interview. This is also called as a planned interview. In this case, the
interviewee is supposed to provide accurate answers to all the questions asked by the interviewer.

 Panel Interview - is being conducted by a group of people. In this type of interview, three to five
members of the selection committee will be asking questions to the candidates on various concepts. The
final decision of selection of the candidates will be taken by all the members of the panel collectively.

 Exit Interview - Exit interviews are conducted for those employees, who want to leave the organization.
The significance of the exit interview is to ascertain the reasons behind leaving the job. There are several
reasons for which the employees leave jobs, such as, transfer to another location, health problems,
promotional opportunities in other organizations, availability of rewards and incentives in other
organizations, family issues and so forth.

Conclusion
Human resources are stated to be an integral part of any organization. The jobs, functions, tasks and
operations can be adequately performed by proficient and skilled personnel. Therefore, within the
organizational structure, it is vital to implement effective recruitment strategies and selection processes. When
the members of the organization are aware of proper recruitment and selection processes, then they are able to
make selection of
human resources in an appropriate manner. There are numerous job duties and functions within the organization
and performance of all kinds of tasks and operations require skills and abilities, which can be honed by making
provision of adequate training to the personnel.
The individuals hired may be experienced and knowledgeable, but they do experience changes and
transformations within the organizations regarding various aspects, such as, the working environmental
conditions, performance of job duties, attitudes and behavioral traits of the employers, methods to enhance
productivity, utilization of innovative techniques and methods and so forth. When the employees are selected, it
is important that they should be loyal and dedicated towards the organizations. They should be committed
towards the performance of job duties and possess the traits of resourcefulness, diligence, and
conscientiousness. Finally, it can be stated that organizations are required to put into practice recruitment and
selection processes with accuracy, precision and truthfulness.
 HUMAN RESOURCE MANAGEMENT

CHAPTER 1- THE PRACTIVE OF HRM

Human Resource Management (HRM)- strategic approach to managing employment relations which
emphasizes that leveraging people’s capabilities is critical to achieving sustainable competitive advantage, this
being achieved through a distinctive set of integrated employment policies, programs, and practices (Bratton &
Gold, 2007).
-activities related to the management of people in organizational set-up

HRM is often associated with both:

 Personnel Management- role as proactive, system-wide interventions, linking HRM with strategic
planning and culture change
 Employment Relationship- embracing distinctive people centered values such as trust, commitment,
involvement and collaboration.
 PERFORMANCE MANAGEMENT AND APPRAISAL
Which one of the following terms refers to the process of evaluating an employee's current and/or past
performance relative to his or her performance standards?
a. employee selection
b. performance appraisal
c. employee orientation
d. organizational development

The primary purpose of providing employees with feedback during a performance appraisal is to motivate
employees to ________.
a. Apply for managerial positions
b. Remove any performance deficiencies
c. Revise their performance standards
d. Enroll in work-related training programs

All of the following are reasons for appraising an employee's performance EXCEPT ________.
a. Correcting any work-related deficiencies
b. Creating an organizational strategy map
c. Determining appropriate salary and bonuses
d. Making decisions about promotions

In most organizations, who is primarily responsible for appraising an employee's performance?

a. Employee's direct supervisor
b. Company appraiser
c. Human resources manager
d. Employee's subordinates

What is the first step of any performance appraisal?

a. Giving feedback
b. Setting work standards
c. Making plans to provide training
d. Assessing the employee's performance

What usually occurs when employees rate themselves for performance appraisals?
 a. Ratings are reliable but invalid.
b. Ratings are subject to halo effects.
c. Ratings are higher than when provided by supervisors.
d. Ratings are about the same as when determined by peers

Which one of the following terms refers to the process of allowing subordinates to rate their supervisor's
performance anonymously?
a. Supplemental evaluation
b. Upward feedback
c. Paired evaluation
d. Peer evaluation
Which one of the following terms refers to a performance appraisal based on surveys from peers, supervisors,
subordinates, and customers?
a. 360-degree feedback
b. Team appraisals
c. Upward feedback
d. Rating committee

Supervisors should provide employees with feedback, development, and incentives necessary to help employees
eliminate performance deficiencies or to continue to perform well.
True or False?

The HR department monitors the performance appraisal system, but it is typically not involved in rating
employees.
True or False?

In order to ensure that performance appraisals are effective, Felicia, a line supervisor, should make sure to
schedule a feedback session to address each subordinate's performance, progress, and future development plans
True or False?

Which one of the following is the easiest and most popular technique for appraising employee performance?
a. Alternation ranking
b. Graphic rating scale
c. Forced distribution
d. Constant sum rating scale

Rolf, the supervisor of the manufacturing department at a computer firm, is in the process of evaluating his
staff's performance. He has determined that 15% of the group will be identified as high performers, 20% as
above average performers, 30% as average performers, 20% as below average performers, and 15% as poor
performers. Which performance appraisal tool has John chosen to use?
a. Behaviorally anchored rating scale
b. Forced distribution
c. Alternation ranking
d. Paired comparison
Which term refers to ranking of employees from best to worst on a trait or traits, choosing highest than lowest
until all are ranked?
a. Performance management
b. Paired comparison
c. Alternation ranking
d. Direction sharing

Management by objectives requires a manager to set specific measurable, organizationally relevant goals with
each employee and then periodically discuss the employee's progress toward these goals
True or False?

TRAINING AND DEVELOPMENT

On Letitia's first day of work at a software firm, she attended a meeting with the HR manager and other new
employees. Letitia learned about employee benefits packages, personnel policies, and the structure of the
company. In which one of the following did Letitia most likely participate?
a. Recruitment
b. Selection
c. Employee orientation
d. Employee development

Which one of the following is most likely NOT one of the goals of a firm's employee orientation program?
a. Making new employees feel like part of a team
b. Helping new employees become socialized into the firm
c. Assisting new employees in selecting the best labor union
d. Teaching new employees about the firm's history and strategies

Employee orientation programs range from brief, informal introductions to lengthy, formal courses.
True or False?

Hiring highly-skilled employees with great potential eliminates the need to provide orientation and training.
True or False?

The methods used to give new or present employees the skills they need to perform their jobs are called
________
a. Orientation
b. Training
c. Development
d. Management

________ identifies the training employees will need to fill future jobs.
a. Competency modeling
b. Performance analysis
c. Strategic training needs analysis
d. Screening
What is the first step in the ADDIE training process?
a. Assessing the program's successes
b. Appraising the program's budget
c. Analyzing the training need
d. Acquiring training materials

Amy, an accounting supervisor, has been asked to provide training for her subordinates about new tax laws. In
order to motivate the individuals who, attend her training session, Amy should most likely do all of the
following EXCEPT ________.
a. Use as many visual aids as possible during the session
b. Provide an overview of the material to be covered
c. Use new terminology and technical concepts
d. Give information in logical, meaningful section

Employers will most likely use all of the following methods to identify training needs for new employees
EXCEPT ________.
a. Analyzing job descriptions
b. Reviewing performance standards
c. Questioning current job holders
d. Conducting a work sampling

Training sessions should be half-day or three-fourths day in length rather than a full day, because the learning
curve goes down late in the day. True or False?

Which one of the following would most likely occur during the fourth step of the ADDIE training process?
a. Holding on-the-job training sessions
b. Selecting employees for training
c. Preparing online training materials
d. Asking participants for feedback

Rebekah was hired soon after graduation and assigned to complete a management trainee program. She will
move to various jobs each month for a nine-month period of time. Her employer is utilizing the ________ form
of training.
a. Job rotation
b. Understudy
c. Job expansion
d. Informal learning

A structured process by which people become skilled workers through a combination of classroom instruction
and on-the-job training is called ________.
a) Job instruction training
b) Programmed learning
c) Apprenticeship training
d) Coaching technique
Ian is currently being trained on the job and is at the first step in the OJT process, which involves ________.
a. Showing the trainee how do the task
b. Verbalizing the steps of the task
c. Checking to make sure the task was learned by the trainee
d. Familiarizing the trainee with equipment, tools, and trade terms

When jobs consist of a logical sequence of steps and are best taught step-by-step, the most appropriate training
method to use is ________.
a. Job instruction training
b. Apprenticeship training
c. Programmed learning
d. Job rotation
PERSONNEL PLANNING AND RECRUITMENT
What is the first step in the recruitment and selection process?
a. Performing initial screening interviews
b. Building a pool of candidates
c. Performing candidate background checks
d. Deciding what positions to fill

Marcus, an HR manager for Samsung, must decide what positions the firm should fill in the next six months,
which means Marcus is currently working on ________.
a. screening job candidates
b. personnel planning
c. interviewing job candidates
d. writing job descriptions

The process of deciding how to fill executive positions at a firm is known as ________.
a. Internal recruiting
b. Succession planning
c. Long-term forecasting
d. Advanced interviewing

Which one of the following terms refers to studying a firm's past employment needs over a period of years to
predict future needs?
a. Ratio analysis
b. Trend analysis
c. Graphical analysis
d. Computer analysis

Newton Building Supplies hopes to generate an extra $4 million in sales next year. A salesperson traditionally
generates $800,000 in sales each year. Using ratio analysis, how many new salespeople should Newton hire?
a. 2
b. 5
c. 10
d. 20
Which one of the following contains data regarding employees' education, career development, and special
skills
and is used by managers when selecting inside candidates for promotion?
a. Computerized forecasting tools
b. Skills inventories
c. Trend records
d. Scatter plots

When managers need to determine which current employees are available for promotion or transfer, they will
most likely use ________.
a. Scatter plots
b. Skills inventories
c. Estimated sales trends
d. Personnel forecasts

All of the following are methods used by firms to develop high-potential candidates for future positions
EXCEPT
A. Providing internal training
B. Implementing job rotation
C. Offering global assignments
D. Developing skills inventories

Smith Industries is thinking of having another company take care of its benefits management. This is
called____.
a. Outsourcing
b. Recruiting
c. Telecommuting
d. Screening

Recruiting is necessary to ________.

a. Determine whether to use inside or outside candidates
b. Forecast the short-term supply of outside candidates
c. Create positive word-of-mouth about a firm
d. Develop an applicant pool

Which one of the following is the primary disadvantage of using internal sources of candidates to fill vacant
positions in a firm?
a. Lack of knowledge regarding a candidate's strengths
b. Potential to lose employees who aren't promoted
c. Questionable commitment of candidates to the firm
d. Significant training and orientation requirements

Maria Boyd has been hired by Barnum Hotels to manage staffing for the regional hotel chain. Barnum intends
to open two new hotels within the next three years and will have many job positions to fill. Historically,
employee turnover is high at Barnum as employees remain with the company for one or two years before
quitting. Maria realizes that Barnum needs to make significant changes in its personnel strategy in order to meet
the company's goals for the future and improve employee retention rates. All of the following questions are
relevant to Mari's decision to fill top positions at the new hotels with internal candidates EXCEPT:
a. What are the key managerial positions that are available at the new hotels?
b. What percentage of employers in the service industry use succession planning?
c. What skills, education, and training have been provided to potential candidates?
d. What is the designated procedure for assessing and selecting potential candidates?

Which one of the following is NOT a tool used by firms to recruit outside candidates?
a. Newspaper advertising
b. Intranet job postings
c. Employment agencies
d. Online job boards

Which one of the following factors plays the greatest role in determining the best medium for a job
advertisement?
a. Skills needed for the job
b. Job compensation and salary
c. Time allowed to fill the position
d. Graphics used in the advertisement

An employer will most likely use a private employment agency in order to ________.
a. Receive assistance writing job ads
b. Adhere to legal hiring practices
c. Fill a specific job opening quickly
d. Spend more time recruiting applicants

Newton Manufacturing is using a private employment agency to recruit individuals for management positions.
As the HR manager at Newton, you need to ensure that applicants are screened properly, so you should
________.
a. Provide the agency with an accurate job description
b. Post jobs on the firm's intranet and bulletin boards
c. Develop applicant screening software for internal hires
d. Send HR experts to monitor the agency's recruiting activities

Newton Manufacturing is using a private employment agency to recruit individuals for management positions.
As the HR manager at Newton, you need to ensure that applicants are screened properly, so you should
________.
a. Provide the agency with an accurate job description
b. Post jobs on the firm's intranet and bulletin boards
c. Develop applicant screening software for internal hires
d. Send HR experts to monitor the agency's recruiting activities
Kate works as a nurse on temporary assignment for hospitals throughout the region on an as-needed basis. Kate
is most likely ________.
a. Working as a contingent worker
b. Participating in a job rotation
c. Using job enlargement
d. Benchmarking jobs

What is an advantage of using employee referral campaigns?

a. Local, hourly workers can be recruited quickly.
b. Applicants have received realistic job previews.
c. Rewards and incentives are eliminated.
d. Applicants have community ties

Publicizing an open job to current employees through a firm's intranet or bulletin board is known as job posting.
True or False?

JOB ANALYSIS AND TALENT MANAGEMENT

In an effective talent management system, an employee's performance appraisal would initiate training and
development opportunities.
True or False?

Effective talent management focuses on developing employee competencies that align with strategic goals.
True or False?

All of the following types of information will most likely be collected by a human resources specialist through a
job analysis EXCEPT ________.
a. Job description
b. Job specification
c. Job analysis
d. Job context

All of the following types of information will most likely be collected by a human resources specialist through a
job analysis EXCEPT ________.
a. Work activities
b. Human behaviors
c. Performance standards
d. Employee benefits options

Jennifer, a manager at an engineering firm, has been assigned the task of conducting a job analysis. What
should
be Jennifer's first step in the process?
 a. Deciding how the gathered information will be used
b. Collecting data on job activities and working conditions
c. Selecting representative job positions to assess
d. Reviewing relevant background information

All of the following requirements are typically addressed in job specifications EXCEPT ________.
a. Desired personality traits
b. Required education levels
c. Necessary experience
d. Working conditions

Which one of the following indicates the division of work within a firm and the lines of authority and
communication?
a. Process chart
b. Employee matrix
c. Organizational chart
d. Corporate overview

Which one of the following is an example of business process reengineering?

a. Using computerized systems to combine separate tasks
b. Creating a visual chart for workflow procedures
c. Assigning additional activities to new employees
d. Developing employee skills and behaviors

While performing the fifth step of a job analysis, it is essential to confirm the validity of collected data with the
________.
a. EEOC representative
b. HR manager
c. Legal department
d. Worker

Which one of the following terms refers to systematically moving workers from one job to another?
a. Job rotation
b. Job enrichment
c. Job enlargement
d. Job adjustment

Conducting the job analysis is the sole responsibility of the HR specialist. True or False

Jerome, a manager at an electronics company, needs to gather job analysis information from a large number of
employees who perform similar work. Which one of the following would be most appropriate for Jerome?
a. Observing all employees
b. Interviewing the HR manager
 c. Holding a group interview with a supervisor
d. Conducting telephone surveys of all employees

One of the problems with direct observation is ________, which is when workers alter their normal activities
because they are being watched.
a. Flexibility
b. Falsification
c. Reactivity
d. Diversion

Informal interviews provide quantitative job analysis information, which is why they are frequently used by
managers who need to determine the relative worth of a job for pay purposes. True or False

Joaquin records every activity in which he participates at work along with the time it takes him to complete
each activity. Which of the following approaches to job analysis data collection is most likely being used at
Joaquin's workplace?
a. Diaries
b. Interviews
c. Observations
d. Questionnaires
EMPLOYEE TESTING AND SELECTION

A reliable employment test will most likely yield ________.

a. Consistent scores when a person takes two alternate forms of the test
b. Improved scores when a person takes the same test more than once in a single day
c. High scores when a person takes two alternate forms of the test on different occasions
d. Similar scores when two different people are administered the test at different times

Which one of the following terms refers to the accuracy with which a test fulfills the function for which it was
designed?
a. Reliability
b. Validity
c. Expectancy
d. Consistency

Selection tests should be used as supplements to other tools like interviews and background checks. True or
False

As part of the selection process for a position at UPS, Jack has been asked to lift weights and jump rope. which
one of the following is most likely being measured by UPS?
a. Motor ability
b. Personality
c. Cognitive
d. Interest
Carlos recently participated in a selection test for a position at Northern Aeronautics. The test measured Carlos's
finger dexterity and reaction time, so it was most likely a(n) ________ test.
a. Interpersonal skills
b. Cognitive skills
c. Physical abilities
d. Achievements

The Big Five personality dimensions include all of the following EXCEPT ________.
a. Neuroticism
b. Optimism
c. Extroversion
d. Conscientiousness

Which one of the following terms refers to training candidates to perform several of the job's tasks and then
assessing the candidates' performance prior to hire?
a. Achievement testing
b. Work sampling technique
c. Management assessment center
d. Miniature job training

Which one of the following is the primary reason that firms conduct background investigations of job
applicants?
a. Adhere to legal hiring practices
b. Limit the number of applicants
c. Uncover false information
d. Report criminals to police

A(n) ________ is a multi-day simulation in which candidates perform realistic tasks in hypothetical situations
and are scored on their performance
a. Work sampling event
b. Situational judgment test
c. Management assessment center
d. Applicant personality test
 INTRODUCTION TO HUMAN RESOURCE MANAGEMENT

The basic functions of the management process include all the following EXCEPT ___________.
a. Planning
b. Organizing
c. Outsourcing
d. Leading

Which of the following is the person responsible for accomplishing an organization’s goals by managing the
efforts of the organization’s people?
a. Manager
b. Entrepreneur
c. Generalist
d. Marketer

Which function of the management process requires a manager to establish goals and standards and to develop
the rules and procedures?
a. Planning
b. Organizing
c. Staffing
d. Leading
Consuela, a manager, delegates the authority for a project to Lee, her subordinate. Consuela is most likely
involved in which function of the management process?
a. Staffing
b. Organizing
c. Motivating
d. Leading

When a manager uses metrics to assess performance and then develop strategies for corrective action, they are
performing the ____________ function of management process.
a. Planning
b. Leading
c. Controlling
d. Organizing

In the management process, which one of the following is an activity associated with the leading function?
a. Motivating subordinates
b. Setting performance standards
c. Training new employees
d. Developing procedures

Personnel activities associated with human resource management most likely include all of the following
EXCEPT______________.
a. Orienting and training new employees
b. Appraising employee performance
c. Building employee commitment
d. Developing customer relationships

A line manager's human resource responsibilities most likely include all of the following EXCEPT ________.
a. Maintaining department morale
b. Controlling labor costs
c. Protecting employees' health
d. Marketing new products and services

Yuki works at a position in his organization where he maintains contacts within the local community and travels
to search for qualified job applicants. Yuki's position is best described as ________.
a. Recruiter
b. Manager
c. Labor relation specialist
d. Job analyst

Human resource managers generally exert ________ within the human resources department and ________
outside the human resources department.
a. Line authority; staff authority
b. Staff authority; line authority
c. Functional authority; line authority
 d. Staff authority; implied authority

Wilmer works in the HR department and is in charge of developing the plans for how people are paid and how
the employee benefits program is run. Wilmer is most likely holding the position of ________.
a. Training specialist
b. Recruiter
c. Compensation manager
d. Job analyst

An HR generalist at Wilson Manufacturing has been assigned to the sales department to provide HR
management assistance as needed. Which of the following best describes the structure of the HR services
provided at Wilson Manufacturing?
a. Shared HR teams
b. Embedded HR teams
c. Centers of expertise
d. Corporate HR teams

Which organization of the human resource function involves dedicated HR members that assist top management
in issues such as developing the personnel aspects of the company's long-term strategic plan?
a. Embedded HR teams
b. Corporate HR teams
c. Centers of expertise
d. Shared services

What term refers to the knowledge, skills, and abilities of a firm's workers?
a. Human resources
b. Human capital
c. Intangible assets
d. Contingent personnel

What is the term for workforces like those at the company Uber, where freelancers and independent contractors
work when they can, on what they want to work on, and when the company needs them?
a. Tele-commuters
b. Human capital
c. Job-analysts
d. On-demand workers

The recent trend where in some occupations (such as high-tech) unemployment rates are low, while in others
unemployment rates are still very high and recruiters in many companies can't find candidates, while in others
there's a wealth of candidates is called ________.
a. Talent analytics
b. Globalization
c. Unbalanced labor force
d. Human capital
Which one of the following best exemplifies recent trends in technology that are affecting human resource
management?
a. Listing open positions on Monster.com, Careerbuilder.com, and similar websites.
b. The use of gaming features to enhance training and performance appraisal
c. Allowing workers to Telecommute
d. Providing employees with laptops or tablets so they can work offsite

Evidence-based human resource management relies on all of the following types of evidence EXCEPT
________.
a. Scientific rigor
b. Existing data
c. Research studies
d. Qualitative opinions

In small organizations, line managers frequently handle all personnel duties without the assistance of a human
resource staff. True or False?

What are the two distinct functions carried out by human resource managers?
Line function and staff function