Staff Policies

Introduction

The services that MicroSourcing provides are documented in the Master Services Agreement (MSA) and the Statement of Work (SOW) or Project Outline (PO) documents. All MicroSourcing employees that are assigned to Client’s operations or project (SOW Staff ) are employees of MicroSourcing Philippines Inc. (MPI), working from the Philippines and subject to the Philippine Labor Code (www.dole.gov.ph/labor_codes) and other pertinent Philippine laws and regulations. This document describes a selection of the most common manpower related scenarios that may play out and how these scenarios will be handled by MicroSourcing.

MicroSourcing’s Human Resources department (MicroSourcing HR) is in charge of human resources management and all the processes outlined in this document will be executed by MicroSourcing HR in close cooperation with MicroSourcing’s operations management group and the client.

Legalities

• This document is explicitly referred to in the MSA and SOW and the policies outlined herein are an integral part of MicroSourcing’s terms of service. By signing the MSA, the client signifies full knowledge and adherence to the stipulations contained in this document.
• Capitalized terms used in this document, and not otherwise defined, will have the same meaning as set forth in the MSA.
• The SOW and PO documents may contain additional manpower related terms and processes. Where this document and an SOW or PO hold conflicting statements, the SOW or PO will govern. All these documents are still subject to the stipulations of the Philippine Labor Code.
• MicroSourcing’s HR policies and manpower related terms of service are dependent on the Philippines Labor Code and are subject to change outside of the control of MicroSourcing. MicroSourcing will make sure to inform the client in cases of such changes and MicroSourcing will issue a new version of this document to Client whenever changes are made to the policies described herein. For any conflict between the Philippine Labor Code and this document, the former will prevail.

I. Working hours

The Philippine Labor Code defines a working day as consisting of 8 hours excluding a 1 hour lunch break but including short rest periods. MicroSourcing operates 24 hours per day, 7 days per week and 365 per year and Client is free to request their own specific working hours and schedule as part of their SOW or PO. These schedules are subject to the following policies and restrictions:

• Normal working hours cannot surpass 40 hours per week.
• Employees are entitled to a minimum of at least two 15 minute breaks during their scheduled shift and a one hour lunch or dinner break.
• Employees are entitled to at least one period of 24 consecutive hours of rest per week.

II. Overtime

The Philippine Labor Code provides additional compensation for work performed on non-working days such as rest days and special holidays. Likewise, payment of the regular daily salary for any unworked regular holiday is mandated by law. Salary rates are summarized as follows:

Working during regular scheduled hours

Working during regular scheduled hours

Furthermore, the Philippine Labor Code mandates payment of overtime premium in cases where employees work beyond the regular scheduled working hours.

Working during regular scheduled hours

Furthermore, the Philippine Labor Code mandates payment of overtime premium in cases where employees work beyond the regular scheduled working hours.

As an example, if an employee earns Php 18,000.00 per month:

MicroSourcing has the following processes for overtime work:

• The Philippine Labor code identifies two types of rank classification:
  • Rank and File - these are non-managerial employees.
  • Managerial - these are typical manager, supervisor and team leader positions.
• All MicroSourcing employees are clearly marked as being rank and file (non-exempt) or Managerial (exempt) employees by MicroSourcing HR.
• Managerial employees are not entitled to overtime pay.
• Overtime can be requested by Client or by the operations management team in charge of the client’s operations. In either case overtime always needs to be pre-approved by the client.
• All overtime, rest day, special and regular holiday premiums are charged to the client at cost without additional mark-up or services fee.
• In cases of extended periods of overtime, MicroSourcing may charge an additional fee to cover the costs of utilities and extended working hours of shared services staff to enable the over-time. Such costs must be presented to the client and approved by the client prior to billing.

III. Night differential

As per Philippine Labor Code, all hours worked between 10pm and 6am are subject to a 10% night differential premium. This means that employees working those hours receive 10% additional base salary for the hours worked between 10pm and 6am. MicroSourcing typically already computes for the night differential in the cost per SOW Staff member in the SOW Cost Sheet. For SOW Staff that was assigned to day shift but is later asked to work night shift MicroSourcing will charge the night differential premium to Client at cost. Managerial employees are not entitled to night shift differential.

Using the same example as above, the night shift differential is computed as:

Monthly Salary = Php 18,000.00 Daily rate = Php 827.56

Same rule applies to examples (c ) to (e) in Overtime pay.

IV. Benefits

MicroSourcing provides all its employees with all the government mandated benefits and a number of company provided benefits:

Government mandated benefits

These are the benefits that are government mandated:

• 13th Month Salary – all rank and file employees are entitled to a 13th month salary payable yearly before December 24 of each calendar year. Managerial employees are not entitled to 13th month pay but it is an industry practice to still award 13th month to managerial employees and MicroSourcing follows this practice.
• SSS – government managed social security system which provides employees with loan facilities and provides them with maternity, health, retirement, and disability benefits.
• PagIBIG – government managed national savings program which seeks to provide affordable housing financing for employees.
• PhilHealth - government managed insurance which provides financial support for healthcare services.
• Retirement benefit - government mandated policy to be given to employees with at least five (5) years uninterrupted service and a minimum age of 60 years.

Company provided benefits

These are the benefits that MicroSourcing provides to its employees on top of the government mandated benefits:

• Medical insurance and life insurance – MicroSourcing provides its employees with healthcare insurance and life insurance. It’s MicroSourcing’s policy to provide a premium package to managerial staff. Upon request we can provide the client with the policy and coverage details for both packages.
• Paid time off (PTO) – MicroSourcing provides its employees with paid time off which can be applied towards sick leave or vacation leave. PTO will be described in more details in the leaves & absences section.

V. Vacation & sick leaves

The Philippine Labor Code dictates that all employees are entitled to 5 paid service incentive leave days per year after their first year of employment. MicroSourcing provides all its employees with Paid-Time-Off (PTO) credits which are built up according to the following schedule:

MicroSourcing’s PTO policies are as follows

• Managers, Supervisors and Team Leaders receive more PTO credits as they are not entitled to any over-time pay or night differential premiums.
• PTO credits can be utilized for both vacation and sick leaves and any other type of authorized leave. In later sections we will introduce other leave types which are not part of PTO.
• An employee can carry over up to 5 PTO days to the next year. All unused credits above 5 are lost.
• Employees must submit a leave request form through MicroSourcing’s MicroStatus.com management web tool. All requests are addressed to the direct supervisor of the employee. All PTO requests are also shared with Client and are subject to their approval unless Client has authorized their SOW Operations Manager at MicroSourcing to make these decisions. Approval and disapproval by Client of leave applications must be coursed through MicroSourcing, and not communicated directly to the employee.
• PTO requests can be denied by Client through MicroSourcing but must not be unreasonably withheld. Leaves can be delayed though to serve the demands of Client’s operational targets and deadlines.
• PTO credits are a company provided benefit and MicroSourcing does not reimburse Client for days when SOW Staff utilize their PTO leave credits, nor will MicroSourcing provide free replacements to fill-in the gap the employees leave in their absence.
• Employees start earning PTO credits on the first day of their employment. They are allowed to start availing of their PTO credits once they reach their 6th month of employment. All leaves made before their 6th month will be deducted from their salary.
• Once an employee runs out of PTO credits, they can still file for leaves but any leaves that are granted will be deducted from the employee’s salary. In these cases, MicroSourcing will deduct the salary deduction from Client’s invoice.

VI. Maternity, paternity and special leaves

MicroSourcing follows the Philippine Labor Code which entitles MicroSourcing employees to maternity and paternity leave and a few other special types of leave. Requests to avail of these special types of leaves need to be accompanied by the right formal documentation:

• All female employees are entitled to 105 days paid maternity leave in cases of a normal (including Cesarean section) delivery or miscarriage Maternity benefits are only granted for the first four deliveries or miscarriages. Maternity leave entitlements can be increased by 15 days if the employee is a solo parent as defined under the Solo Parent Act. An employee may opt to extend her maternity leave for another 30 days but the extension shall not be paid.
• Employees are mandated to report pregnancies to MicroSourcing HR within the first trimester of their pregnancy.
• This leaves MicroSourcing and the client with enough time to plan for upcoming absences.
• Workers availing of the maternity benefit leave period and benefits must receive their full pay. Employers from the private sector shall be responsible for payment of the salary differential between the actual cash benefits received from the SSS covered female workers and their average weekly or regular wages during the maternity leave. Such compensation will be billed to the client at cost without any mark-up
• Solo parent employees who rendered service of at least one year are entitled to a parental leave of up to 15 working days every year. This is a government mandated leave which is on top of the PTO credits that MicroSourcing gives to its employees.
• Female employees who are victims of physical, sexual or psychological violence are entitled to paid leave of up to 10 working days per calendar year.
• Female employees, who undergo surgery caused by gynaecological disorders, provided they have rendered continuous aggregate employment service of at least 6 months for the last 12 months, are entitled to 2 months leave with pay as mandated by the Magna Carta for Women.
• All paid Paternity, Solo Parent, Victims of Violence and Special Benefits for Women will be treated by MicroSourcing as days that are fully billable to client.

VII. Public holidays

The Philippine Labor Code distinguishes two different types of public holidays:

• Regular holidays
• Special holidays

In total there are 17 public holidays and the public holiday schedule is released by the Department of Labor and declared by the President of the Philippines before the start of each calendar year.

These are the annual public holidays:

MicroSourcing’s PTO policies are as follows

• MicroSourcing will typically follow the normal holiday schedule and encourage the client to do the same. Especially Easter and Christmas are highly valued holidays due to the religious significance they hold for employees.
• Client can request their SOW staff to work on public holidays, but in such cases, their SOW Staff is entitled to the over-time premiums outlined in the overtime section. These costs are billed to the client at cost without mark-up.

The Philippine government is known to move public holidays on short term notice. They may for instance move a holiday to a Monday or Friday to create long weekends. Whenever such a proclamation is made, MicroSourcing will inform the client as soon as possible.

VIII. Bereavement leave and financial assistance program

The company provides bereavement leave and financial assistance to employees who experience the loss of a family member.

• MicroSourcing will allow an employee to take a 1 to 3 day paid leaves depending on the relationship between the employee and the deceased family member. All paid leave, including bereavement leave is chargeable to the client.
• MicroSourcing will provide financial assistance to the employee. The amount depends on the relationship between the employee and the deceased family member. Bereavement assistance is paid by MicroSourcing and is not billed to the client. The client can provide additional financial assistance to their SOW staff.

IX. Performance management

Each SOW or PO should clearly define the workflow processes that the SOW staff will execute. Prior to the start of work, MicroSourcing’s operations group will work with the client on identifying the key performance indicators (KPIs), metrics and performance targets for the SOW staff members. This should enable MicroSourcing’s operations management group to measure and report on the individual performance of all SOW staff.

It is MicroSourcing company policy to make sure that all employees are treated fairly which in case of performance means that:

• KPIs and performance goals are clearly communicated to all SOW staff. It must be clear to all SOW staff what is expected from them.
• Performance must be measured frequently and shared openly with all SOW staff so they have a good understanding of how they are performing. MicroSourcing’s company standard is to work with a monthly scorecard and midyear and yearend performance reviews.
• Poor performer must be provided with ample opportunity to improve performance. MicroSourcing HR can work with the client on defining and executing performance improvement plans (PIPs). A typical PIP will include exact performance indicators and performance expectations and define a fixed evaluation period.
• MicroSourcing HR makes the final decision on whether or not an employee’s case of non-performance is strong enough to warrant termination. MicroSourcing HR ensures that proper documentation and due process are adhered to prior finalizing any decision. If termination is warranted based on investigation then MicroSourcing HR will serve the employee a termination notice. Termination will then become effective immediately. The client will be billed until the day that the SOW staff member’s termination becomes effective.

XI. Resignation

As per Philippine Labor Code, all employees can terminate their employment upon thirty (30) day notice without the need to provide a valid reason. MicroSourcing applies the following standards:

• Employees can resign by submitting a signed resignation letter to MicroSourcing HR. The client will be informed by their SOW Account Manager once a resignation letter is received. The 30 day notice period starts the moment MicroSourcing HR has accepted the letter. Informal resignations signified either through text message or verbal communication shall not be treated as an official tender of resignation and shall be treated as absence without leave if the employee does not report for work.
• Employees are not allowed to apply their paid time off balance towards the 30 day notice period and they are expected to continue their work for the complete 30 day period. If the employee requests to have a shorter notice period then MicroSourcing will ask the client if earlier or immediate effective date of resignation can be granted.
• MicroSourcing HR conducts an exit interview to identify the reasons for leaving. The results of this exit interview can be shared with the client upon request.
• MicroSourcing HR runs through the off-boarding process which includes the return of all assets, deactivation of all access provided to the employee, and the signing of a quit claim. The client can ask to include additional off-boarding processes as long as those are approved by MicroSourcing HR.
• Non-compliance to the 30-day notice period shall result to non-issuance of certificate of clearance to the employee, which is a requirement when joining a new company.

XII. Termination

All SOW Staff are employees of MicroSourcing and as such only MicroSourcing can terminate the actual employment of its staff. In the Philippines, employees can only be terminated for Just Causes and Authorized Causes as described by the Labor Code of the Philippines and upon compliance to due process.

Just Causes for termination of employment are enumerated in Article 282 of the Labor Code:

• Serious misconduct or wilful disobedience
• Gross and habitual neglect
• Fraud and wilful breach of trust
• Commission of a crime or offense
• Other causes analogous to the foregoing.

Authorized Causes for termination of employment are enumerated in Article 282 of the Labor Code. Termination under Authorized Causes are executed through the exercise of management’s prerogative, and not by virtue of an act or omission by the employee. It is for this reason that the law requires payment of separation pay of 1 month salary for every year of service for the termination from employment. In the computation of tenure, 6 months or more are rounded up to one year. These are the Authorized Causes for termination:

• Redundancy or Installation of labor-saving devices
• Retrenchment
• Disease or Illness
• Closure of business
• Other causes analogous to the foregoing.

Looking at the above Just and Authorized causes for termination, MicroSourcing distinguishes in the following scenarios when it comes to termination of SOW Staff:

Just Causes for termination of employment are enumerated in Article 282 of the Labor Code:

• SOW staff termination for violation of policy - MicroSourcing may at its own discretion terminate SOW staff from the SOW operation in cases of gross negligence, fraud, violation of Code of Conduct, disciplinary issues or other events or circumstances in which continued SOW staff employment or SOW staff deployment to the SOW operation is considered by MicroSourcing management to not be in the best interest of MicroSourcing. Investigation into such policy violations typically require between 5 to 15 workings days during which the employee can be placed under preventive suspension in cases where MicroSourcing HR deems that continued employment poses a threat to the interests of MicroSourcing. Preventive suspension cannot have a duration beyond 30 days. MicroSourcing will notify the client within 24 hours of terminating an SOW staff from the SOW operation. In case an SOW staff member grossly violates a client specific policy or in cases where the client is the one to identify the policy violation, the client needs to report this to the SOW account manager and let standard MicroSourcing procedures run its course. MicroSourcing will bill the client until the last day of the SOW staff member’s employment.
• OW staff termination for non-performance - See section on Performance Management. The client must work with MicroSourcing on clearly defined key performance indicators (KPIs), metrics and performance goals for the processes that are part of each SOW or PO. These performance indicators need to be clearly shared with SOW staff and all SOW staff members must receive regular performance reviews. MicroSourcing will conduct these regular performance reviews in cooperation with the client. MicroSourcing HR can work with the client’s operations management team on defining and executing performance improvement plans (“PIP”) in cases where performance is found to be lacking. A typical PIP will include exact performance indicators and performance expectations and define a fixed evaluation period. MicroSourcing HR makes the final decision on whether or not an employee’s case of non-performance is strong enough to warrant termination. If termination is warranted then MicroSourcing HR will serve the employee a termination notice. Termination due to non-performance is effective immediately. The client will be billed until the day that the SOW staff member’s termination becomes effective.
• SOW staff termination for redundancy - The client can decide that an SOW staff member’s role is no longer needed as part of the SOW operation. This can be the result of a need to down-scale the SOW operation or a change in process which renders a certain job role redundant. For emphasis: redundancy can only be used as a reason for termination in cases where the job role itself has become redundant. It cannot be used to terminate and replace specific SOW staff members. The SOW or PO will typically define the notice period the client must provide to MicroSourcing in cases where it wants to make SOW staff redundant. MicroSourcing will bill the client in full for the full duration of the notice period.

In accordance with the Labor Code of the Philippines, employees who are made redundant are entitled to separation payments.

The table below shows you how seperation liabilities are computed:

• Day 1 to 1.4 years tenure of the SOW staff member: severance liability is 1x monthly base salary
• 1.5 years to 2.4 years tenure of the SOW staff member: severance liability is 2 x monthly base salary
• 2.5 to 3.4 years tenure of the SOW staff member: severance liability is 3 x monthly base salary
• Each additional year of tenure of a SOW staff member equates to an extra month base salary severance liability.

All separation payments will be billed to the client.

XIII. Confidentiality, non-solicitation & non-compete

MicroSourcing’s employment contracts contain standard clauses on confidentiality, non-solicitation and non compete. Upon request, the client can review those clauses and amend them to their own standards. Such requests can be coordinated with MicroSourcing’s HR department who will make sure that any such clauses are in compliance with the Philippine Labor Code.