6 Important Things You Need to Know about the Employees’ Compensation Program

A diverse team of employees, including a Hispanic male, an Asian female, and a Caucasian male, is engaged in a safety meeting in a modern office. They are gathered around a table filled with safety gear like hard hats, goggles, and high visibility vests. The group is actively discussing about Employee's Compensation Program.

The Employees’ Compensation Program (ECP) in the Philippines

The Employees’ Compensation Program (ECP) in the Philippines is a social security program designed to provide financial and medical assistance to public and private sector employees and/or their dependents, in the event of any work-related sickness, injury, or death, where they may promptly secure income benefit and medical or other related benefits.

The program was established through Presidential Decree No. 626, as amended. The law formed the Employees’ Compensation Commission (ECC), composed of the Secretary of Labor and Employment as Chairman, the Government Service Insurance System (GSIS) General Manager, the Social Security System (SSS) Administrator, the Chairman of the Philippine Medical Care Commission, the Executive Director of the ECC Secretariat, and two members to be appointed by the Philippine President representing the employee sector and the employer sector.

This article will outline the following features in the law which employees and employers alike must know. These include: 

  1. Persons who are covered by the program and the criteria mentioned in the law for eligibility.
  1. The types of illness and injuries which are covered and compensable under the ECP, including specific examples and the criteria for determining compensability.
  2. Benefits which a person entitled to a claim under the ECP may avail such as loss of income, medical and rehabilitation services, and death benefits, and others
  3. The contributions to be paid to the ECP by the Employer and how these are to be remitted.
  4. The filing and submission procedures in the ECP, the timelines to expect, and other steps involved in filing an ECP claim, the required documents,
  5. Visualizing the entire claim process through a comprehensive flowchart.

I. Coverage under the Employees’ Compensation Program (ECP)

The Employees’ Compensation Program provides benefits and services to employees who are registered as compulsory members of the SSS or the GSIS. It will be noted that those registered with the SSS are private employees, while those covered by the GSIS are those in government sector. In particular, the Employees’ Compensation Program covers the following groups:

  • Private Sector Employees: All workers in the private sector who are registered as compulsory members of the SSS. Note that self-employed individuals are excluded from this term.
  • Overseas Seafarers: Filipino seamen working on vessels registered under the Philippine flag or under a foreign flag but with Philippine recruitment and employment.
  • Government Sector Employees: All government employees who are registered members of the GSIS, including elective government officials who receive a regular salary.
  • Uniformed Personnel: Members of the Armed Forces of the Philippines (AFP), Philippine National Police (PNP), Bureau of Fire Protection (BFP), and the Bureau of Jail Management and Penology (BJMP).

It must be emphasized that the persons identified above are entitled to coverage under the ECP from the first day of their employment.

Every employee must be registered with either the GSIS or the SSS through their employer within thirty (30) days from the date of employment. However, the absence of GSIS or SSS registration or EC contribution alone cannot be the basis for rejecting a claim under the Employees’ Compensation Program.

II. Illness or Injury covered by the Employees’ Compensation Program

The Employees’ Compensation Program covers a wide range of illnesses and injuries that can be traced back to the nature of an employee’s work and working conditions. The program recognizes two main categories:

A. Occupational Diseases: 

These are diseases contracted as a direct result of exposure to specific hazards inherent in the employee’s working environment. To determine compensability or coverage of a particular illness or injury, certain criteria must be met, namely:

1. Criteria for Compensability of Occupational Diseases:

  1. Exposure to Risk: The employee’s work must involve risks that directly contribute to the development of the disease.
  2. Causation: The illness must have been contracted as a result of exposure to the identified risks associated with the employee’s work.
  3. Exposure Period: The disease must have been contracted within a specific period of exposure and under conditions necessary for its development.
  4. Employee’s Conduct: The illness must not have been caused by the employee’s deliberate disregard of safety measures or established warnings or precautions.

2. Examples of Occupational Diseases Covered under the Employees’ Compensation Program:

  • Diseases caused by exposure to chemicals: This includes conditions like lead poisoning, mercury poisoning, and diseases resulting from exposure to benzene, carbon disulfide, or other toxic substances.
  • Diseases caused by exposure to radiation: This includes illnesses caused by exposure to ionizing radiations like cancer and other radiation-related conditions.
  • Respiratory diseases: This includes conditions like silicosis (caused by silica dust), asbestosis (caused by asbestos dust), and byssinosis (caused by cotton dust).
  • Diseases caused by noise exposure: This includes hearing loss caused by prolonged exposure to loud noise.

B. Work-Related Injuries: 

These injuries are typically caused by accidents that occur while the employee is performing his or her work duties, and regardless of the location of the incident. For work-related injuries to be compensated, the following criteria must be met:

1. Criteria for Compensability of Work-Related Injuries:

  1. Accident: The injury must be the result of an accident arising out of and in the course of employment.
  2. Scope of Employment: The injury must have occurred while the employee was performing their work duties or engaging in an activity reasonably necessary or incidental to their employment.

2. Instances When Injuries are Compensable:

Since work-related injuries occur at various locations, both in and out of the work-place, the Employees’ Compensation Program considers various instances when such injuries may be compensable, to wit:

  1. Injuries occurring at the workplace: Injuries sustained due to slips, trips, falls, strains, or other accidents occurring at the employee’s designated work location are compensable.
  1. Injuries occurring while performing official functions: Injuries sustained while performing official functions, even outside the workplace, are covered.
  2. Injuries occurring while carrying out an employer’s order: Injuries sustained while performing duties as directed by the employer, even outside the regular work location, are compensable.
  3. Injuries occurring while traveling to or from work: Injuries occurring while going to or coming from the workplace are compensable if the employee’s travel is a continuous act and they have not been diverted from their usual route.
  4. Injuries occurring while attending to personal comfort: Injuries sustained during short breaks for personal comfort needs, such as using the restroom, getting a drink, or eating, are considered compensable.
  5. Injuries occurring while inside the company shuttle: Injuries sustained while the employee is inside the company shuttle bus are compensable.
  6. Injuries occurring during company-sponsored events: Injuries sustained while participating in a company-sponsored activity are covered under the ECP.
  7. Death of an employee due to assault: Death caused by a murderous assault is compensable if the assault occurred while the employee was performing official functions.

3. Circumstances when Injury is not compensable: 

Where sickness, injury, disability, or death was caused by or under any of the following circumstances, no compensation is allowed under the Employees’ Compensation Program:

  1. Intoxication: If the illness, injury, or death was caused by the employee’s intoxication due to liquor or prohibited drugs, resulting in impaired ability to perform their work duties.
  1. Notorious Negligence: If the injury or death was caused by the employee’s deliberate disregard of their own safety or established warnings and precautions.
  2. Willful Intent to Injure Oneself or Another: If the injury or death was a result of a deliberate act by the employee to inflict harm on themselves or another person.

4. The Employer must keep a Logbook

In connection with any contingency arising in the workplace, and the assistance to be given by the employer, every employer is required to maintain a logbook of such claims. The logbook should contain a chronological record of all instances of sickness, injury, or death occurring to their employees. The logbook must likewise contain the following information:

  1. The name of the employee involved in the contingency.
  1. The date the contingency occurred.
  2. The location or place where the contingency occurred.
  3. A description of the sickness, injury, or death.
  4. Information about the employee’s absence/s related to the contingency.

The entries in the logbook should be made within five (5) days from the employer’s knowledge of the contingency.

III. Benefits Under the Employees’ Compensation Program

If the sickness, injury, disability, or death is found to be compensable and have occurred under the permissible instances where the law allows compensation, benefits are provided under the law which the employee or covered person may claim.

The Employees’ Compensation Program provides various benefits to covered employees or their dependents. These benefits include financial, medical, and rehabilitation services to help them cope with the impact of work-related contingencies, such as:

A. Loss of Income Benefits: 

The Employees’ Compensation Program provides financial assistance to employees who are unable to work due to work-related illness or injury. There are three types of loss of income benefits:

1. Temporary Total Disability (TTD), which is granted for a disability that prevents an employee from performing their work for a continuous period not exceeding 120 days. The daily income benefit is calculated at ninety percent (90%) of the employee’s average daily salary credit as determined by the GSIS or SSS.

2. Permanent Total Disability (PTD), which is granted for disabilities that render an employee permanently unable to work, including but not limited to:

  • Complete loss of sight of both eyes
  • Loss and functional loss of both limbs
  • Brain injury resulting in imbecility or insanity

Note that the amount of the monthly income benefit for PTD is determined by the GSIS or SSS based on the average monthly salary credit or average monthly compensation (AMSC/AMC) of the employee.  

3. Permanent Partial Disability (PPD), which is granted for disabilities resulting in the physical loss (amputation) or functional loss of a body part. The number of monthly pensions is based on the corresponding body part loss or functional loss, as provided under Article 193 of PD No. 626, as amended, and the EC schedule of Compensation.

B. Medical Services: 

The Employees’ Compensation Program covers the costs of medical care, treatment, and rehabilitation for work-related illnesses and injuries. These services include:

  1. Reimbursement for the cost of medicines: This covers the cost of medicines prescribed for the illness or injury.
  1. Payment for medical care: The Employees’ Compensation Program covers the costs of physician consultations, hospital care, surgical procedures, and other necessary medical services.
  2. Hospitalization expenses: The program provides coverage for ward services in hospitals accredited by the Department of Health (DOH), but excludes extra charges for more comfortable accommodations like private and semi-private rooms.
  3. Rehabilitation appliances and supplies: The Employees’ Compensation Program covers the cost of rehabilitation appliances and supplies necessary for the employee’s recovery.

However, the law provides certain exclusions, or those which are not included in the medical services covered by the Employees’ Compensation Program. Among these identified exclusions are extra charges for private or semi-private rooms. These are not covered unless medically necessary or when there are no ward beds available. In addition, charges for personal comfort or convenience, such as telephone, radio, or television are not covered. Finally, the cost of private duty nurses are likewise not covered under the Employees’ Compensation Program.

C. Carer’s Allowance: 

A supplemental pension of P575 per month is provided to pensioners under the Employees’ Compensation Program who suffer from work-connected PPD and PTD.

D. Rehabilitation Services/KaGabay Program: 

This program provides comprehensive rehabilitation services and support to persons with work-related disabilities (PWRD) with an approved EC TTD, PPD, or PTD. The KaGabay Program offers Physical Restoration benefits, or the provision of physical or occupational therapy services to PWRDs, including assistive devices, subject to funding limitations; Skills Training for Re-employment, where PWRDs can receive training to acquire new skills and enhance their employability based on their potential and residual functional capacity, and Entrepreneurship Training, where PWRDs interested in starting their own businesses can participate in entrepreneurship training programs to develop entrepreneurial skills and knowledge. These benefits and services are provided to qualified PWRDs for free under the law.

E. Death Benefits: 

On the other hand, if an employee dies as a result of a work-related injury or sickness, the beneficiaries of the employee are entitled to: a) Income Benefit, where the beneficiaries receive a monthly income benefit, paid at the beginning of the month of the employee’s death, which continues for as long as they are entitled to it, and b) Funeral Benefit, where the employer is obligated to pay a funeral benefit of P20,000 upon the death of an employee as a result of a work-related accident or disease.

F. Simultaneous Granting of Disability Benefits and Other Leave Benefits under the Employees’ Compensation Program and other laws:

It possible for an employee to receive benefits under the Employees’ Compensation Program simultaneously with other leave benefits, such as sick leave, and other benefits granted to them under a different law. Hence:

  1. For those employed in the private sector, the payment of benefits under the SSS does not bar the employee/ beneficiaries from receiving benefits under the EC Program. However, it is required that the disability or death is work-related. Hence, employees who suffer work-connected accidents or diseases while on sick leave with pay are entitled to EC disability benefits in addition to their sick leave and other SSS benefits.
  1. Women employees who experience work-connected gynecological disorders are eligible for both EC disability benefits and Special Leave Benefits under Republic Act No. 9710, otherwise known as the Magna Carta for Women.
  2. For those employed in the government sector, EC benefits are always subject to the GSIS Law. Under Section 55 of R.A No. 8291 or the GSIS Law, where other laws, such as the law governing the Employees’ Compensation Program, provide similar benefits for the same contingency covered by GSIS Law, the qualified member may choose between the GSIS and EC will be paid to him or her. However, if the beneficiary chooses a benefit which provides less than that under the GSIS, the GSIS will pay for the difference between the benefit chosen under the other law (i.e., the Employees’ Compensation Program), and the GSIS benefit.

IV. Contribution and Payment under the Employees’ Compensation Program

Employers are responsible for paying the EC contributions for their employees. For employers in the private sector, they are required to remit a monthly contribution to the SSS based on the following schedule:

  • Monthly Salary Credit: P900-P14,749 / Employer’s Contribution: P10.00
  • Monthly Salary Credit: P14,750 and above / Employer’s Contribution: P30.00

On the other hand, employers in the public sector are required to remit a monthly contribution of P100 per employee to the GSIS.

The employer’s obligation to pay the monthly contribution ceases on the last day of the month in which the contingency (death or separation from employment) occurs. Likewise, when a covered employee becomes disabled during employment, the employer’s contribution obligation is suspended during the months the employee is not receiving salary or wages.

If a covered employee dies or is separated from employment, or becomes disabled, before the GSIS or SSS receives a report of their name, the employer is liable to the GSIS or SSS for the lump sum equivalent of the benefits to which the employee or their dependents may be entitled.

V. Employees’ Compensation Program Claiming Procedures

1. Documents Required

Claims under the Employees’ Compensation Program must be filed with the nearest SSS or GSIS branch, where the Employer is registered, and depending on the sector of employment.

The specific documents needed for filing an ECP claim depend on whether the employee is registered with the SSS or the GSIS. The following are the basic records to be submitted in filing a claim:

  1. Updated Service Record, or the current designation of the employee in the company, at the time the illness or accident occurred.
  2. EC Logbook, or a certified true copy of the page containing the record of the employee’s illness or accident.
  3. Medical Findings from the attending doctor or hospital where the employee was confined.

2. Additional documents depending on contingency

Since various contingencies are covered under the Employees’ Compensation Program, additional requirements must be submitted, depending on the type of contingency which occurred. Hence:

a. For Illnesses:
  1. Hospital/Clinical Records of confinement
  2. Official receipts of the hospital bills, professional fees and medicine purchased.
b. For Accidents:
  1. Accident report where the accident occurred or a Police Report if the accident occurred outside the company premises.
c. In case of Death:
  1. Death Certificate and Accident Report
  2. If married, Marriage Contract and Birth Certificates of dependents under 21 years of age.

3. Basic Procedure for Filing a Claim

  1. The first step is to obtain, complete and submit the required EC forms. These can be secured from the SSS or GSIS branch or online through the respective websites of the SSS or GSIS.
  2. Prepare supporting documents as mentioned above, including all required supporting documents, medical reports, employment records, logbook and other relevant documents.
  3. Submit the claim to the appropriate SSS or GSIS together with the forms and application documents required.
  4. A different procedure is governed by EC medical reimbursement claims. For EC medical reimbursement claims, these can be filed only after the EC sickness/accident/disability/death claim has been approved.  

In case an EC claim is denied by the SSS or GSIS, the claimant can appeal the decision to the Employees’ Compensation Commission (ECC) through a simple letter of appeal. Note that there is a statute of limitations for making such claims. The law requires that these claims be filed within three (3) years from the time the cause of action accrued. This means that:  

  • For sickness: The prescriptive period starts from the time the employee lost their earning capacity.
  • For injury: The prescriptive period starts from the time the injury was sustained.
  • For death: The prescriptive period starts at the time of the covered employee’s death.

VI. Employer’s Liability under the Employees’ Compensation Program

The employer bears significant responsibilities under the Employees’ Compensation Program, including financial obligations and compliance with safety regulations.

A. Non-Registration of Employee: If a covered employee dies or becomes disabled during employment before the GSIS or SSS receives a report of their name, the employer is liable for the lump sum equivalent of the benefits to which the employee or their dependents may be entitled.

B. Delinquent Contributions: Employers who fail to make their contributions on time are subject to penalties:

  • Financial Liability: The employer is liable for the benefits paid to their employees or dependents, and any benefit and expenses to which the employer is liable constitute a preferred lien on all their property, real or personal, over any credit except taxes.
  • Criminal Liability: The employer or responsible official who commits the violation may be punished with a fine of not less than P1,000 nor more than P10,000 and/or imprisonment for the duration of the violation or non-compliance, or until the violation is rectified.
  • Penalty on Contributions: For unpaid contributions, the employer must pay a penalty of 3 percent per month from the date the contribution falls due until it is paid.

C. Safety Devices: The employer has a duty to comply with safety and health laws and take necessary precautions to prevent work-related disability or death.

  • Penalty for Failure to Comply: If an employee is injured or dies due to the employer’s failure to comply with safety device requirements, the employer must pay the State Insurance Fund a penalty of 25 percent of the lump sum equivalent of the monthly income benefit due to the employee.

D. EC Logbook: The employer is responsible for accurately recording instances of sickness, injury, or death in the EC logbook.

  • Penalty for Failure to Maintain Logbook: If the employer fails to record an actual sickness, injury, or death in the logbook within the prescribed period or gives false or withheld material information, they are subject to penalties:
    • Financial Liability: The employer is liable for 50 percent of the lump sum benefit.
    • Fine: The employer may be fined between P500 and P5000.
    • Imprisonment: The employer may be imprisoned for six months to one year.

About Nicolas and De Vega Law Offices

If you need help in labor matters, we can help you. Nicolas and De Vega Law Offices is a full-service law firm in the Philippines.  You may visit us at the 16th Flr., Suite 1607 AIC Burgundy Empire Tower, ADB Ave., Ortigas Center, 1605 Pasig City, Metro Manila, Philippines.  You may also call us at +632 84706126, +632 84706130, +632 84016392 or e-mail us at info@ndvlaw.com. Visit our website https://ndvlaw.com.

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