(UPDATED) A 5 Minute Business Guide to Surviving the COVID-19 Pandemic

NICOLAS AND DE VEGA LAW OFFICES BUSINESS GUIDE TO SURVIVING THE COVID-19 PANDEMIC

AVAIL OF GOVERNMENT PROGRAMS

a. DOLE CAMP

  • Eligible companies are Private establishments that have implemented flexible work arrangements or temporary closure due to the COVID-19
  • However, DOLE stopped accepting applications effective 15 April 2020

  • This wage subsidy shall be given for up to two months so that affected small businesses are able to retain their employees during the quarantine period
  • Deadline is 08 May 2020
  • Eligibility depends on 2 things 1) size of business and 2) impact of ECQ
  • Size of business: The small business — whether a corporation, partnership, or sole proprietorship — must not be in the BIR’s Large Taxpayer Service (LTS) list. Employees of large and medium business enterprises are ineligible to join
  • Impact of the ECQ: Small businesses under both Category A (non-essentials i.e. construction, airlines, hotels, entertainment) that are forced to stop operations (i.e., temporary closure or suspension of work) and Category B (quasi-essentials i.e. retail trade, BPO, banks, funeral, laundry, BPO) that are allowed to operate a skeleton force can apply for the wage subsidy for employees who are not able to work and did not get paid during the ECQ
  • Employee did not get paid by their employer for at least two weeks during the temporary closure or suspension of work
  • Employees that have already received assistance amounting to 5,000 pesos from CAMP may still receive support under the SBWS They will first receive one full tranche of 5,000 to 8,000 pesos, depending on region of work, from May 1 to 15. For the second tranche, they will get the difference (subsidy minus the 5,000 they already received) and will therefore receive the same total amount in subsidy as non-CAMP beneficiaries
  • Small businesses must maintain the employment status of all eligible employee beneficiaries before the ECQ and throughout the SBWS period. Employees cannot resign during the ECQ period.

c. Department of Trade and Industry (DTI) Loans for Micro, Small and Medium-Sized Enterprises (MSMEs)

  • Micro may borrow up to 200k while small may borrow up to P500k
  • DTI will provide a grace period until such time that the economic crisis has been abated with a 0.5% interest per month
  • For DBP loan, 15 years with 3  year grace period
  • Landbank loan up to 85% of actual need for working capital with interest rate of 5% per annum payable maximum 5 years with grace period on principal payment

d. Grace period of 30 days for loans falling due during the ECQ by covered institutions

Borrowers whose loans with principal and/or interest falling due within the ECQ period shall be entitled to avail of the 30-day grace period without incurring interest on interest, penalties, fees and other charges. Also, no additional documentary stamp tax will be imposed on the relief granted, on credit extensions, credit restructuring, or micro-lending.

e. Grace period for commercial rent

  • If MSME who was temporarily closed during the ECQ, a minimum of 30 day grace period on commercial rent counted from the last due date shall be given by the lessor.
  • Where cumulative rents fell due during the ECQ, the post rent shall be equally amortized in 6 months following the end of the ECQ and shall be added to the rents due on succeeding months without penalties or interest
  • Total or partial waiver or discount on commercial rent is upon discretion of the lessor.
  • No eviction for failure to pay the rent within 30 days after the lifting of the ECQ

f. Extension of deadlines of local taxes, fees and charges falling due March 25 onwards will be until June 25 (DOF DC No. 002-2020)

g. Extension of deadlines for national taxes by the BIR (RR 11-2020). June 14 for ITR

ADOPT AUSTERE MEASURES

You may want to revisit your previous books of account and identify certain expenses that you can dispense with in order to save on costs.  Examples of such unnecessary costs are budget for company outing, company parties, pantry supplies, rental costs for a huge space and excessive allowances.

You may also ask your top management if they are willing to take pay cuts in order to save the company.  However, if you do this, you must ask them to signify their consent in writing.  DO NOT ever force them to take pay cuts as this would be tantamount to diminution of benefits or constructive dismissal.

PAYMENT OF WAGES

  • The “no work, no pay policy” may be adopted
  • Payment of holiday pay may be deferred until such time that the present emergency situation has been abated and the normal operations of the establishment is in place (DOLE Labor Advisory 15-20 and 13-A-2020)
  • Establishments that have totally closed or ceased operation during ECQ are exempted from the payment of holiday pay (DOLE Labor Advisory 15-20 and 13-A-2020)
  • For purposes of determining the 6 month probationary period, the ECQ period is not included. (DOLE Labor Advisory No. 14-2020)

ADOPT FLEXIBLE WORK ARRANGEMENTS UNDER DOLE LABOR ADVISORY 11-20, NO. 09-20

STEP 1

Evaluate your books of account and make a forecast on the estimated cash flow you have and will have in the coming months.  Compare this with your labor cost to determine where you need to make some cuts.

STEP 2

Post DOLE Labor Advisory No. 09 or the “Guidelines on the Implementation of Flexible Work Arrangements as Remedial Measure Due to the Ongoing Outbreak of Coronavirus Disease 2019 (COVID-19)” in a conspicuous place in your office visible to your employees.

STEP 3

Choose which flexible work arrangements you wish to pursue as remedial measures (as amended by Labor Advisory No. 17-2020):

  1. Reduction of Workhours and/or Workdays where the normal workhours or workdays are reduced.
  2. Rotation of Workers whereby the employees are rotated or alternately provided work within the week or month.
  3. Forced Leave wherein employees are required to go on leave for several days or weeks utilizing their leave credits.
  4. Transfer of employees to another branch or outlet of the employer.
  5. Assignment of employees to other functions or position
  6. Partial Closure of some units or departments
  7. Other feasible work arrangements
  8. Adjustment of wages and wage-related benefits provided that the employer and employee agree voluntarily in writing (not to exceed 6 months)

STEP 4

Identify the employees that will be affected by these remedial measures.

STEP 5

Talk to these affected employees about the proposed remedial measures.  Ensure that you inform them that this is merely temporary.

STEP 6

Inform DOLE, through the submission of an Establishment Report, regarding your adoption of remedial measures.

STEP 7

Implement the remedial measures

STEP 8

Form a grievance machinery to address any grievances that the concerned employees may raise.

STEP 9

When your financial condition improves, discontinue the adoption of flexible work arrangements and reinstate your employees to their previous work conditions.

STEP 10

Inform DOLE about the discontinuance of your flexible work arrangements.

RETRENCH EMPLOYEES

STEP 1

Make sure that you have implemented other remedial measures other than retrenchment.

STEP 2

If these remedial measures are not sufficient, evaluate your books of account and collaborate with your accountant.  Only pursue a retrenchment plan if the losses are substantial, serious, actual, and real, or if only expected, are reasonably imminent.  There must be good faith on your other part.  Otherwise, your retrenchment plan will be struck down by the DOLE and you will be guilty of illegal dismissal.

STEP 3

Identify the employees that will be retrenched. You must use fair and reasonable criteria in ascertaining who would be dismissed and retained among the employees.  Usually, the Last-in First-Out approach is used.

STEP 4

Give the employee a written notice that he/she will be retrenched at least one month prior to the intended date of retrenchment.  DO NOT miss this step.

STEP 5

Submit a written notice to DOLE about your retrenchment plan at least one month prior to the intended date of retrenchment.  DO NOT miss this step.

STEP6

You must pay the retrenched employees separation pay equivalent to one month pay or at least ½ month pay for every year of service, whichever is higher.

STEP 7

On the effective date of termination, give your retrenched employees their final pay, pro-rated 13th month pay, unmonetized service incentive leaves, tax refund, cash bond and other benefits granted by your company.

About Nicolas and De Vega Law Offices

If you need assistance in labor-related issues, compliance with DOLE issuances, and company employment policies,  or business-related concerns, we can help you find solutions. 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 [email protected]. Visit our website www.ndvlaw.com.

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