EO Modifying Gov't Salary and Benefits 2016

Legal basis and governing framework

Item 1 of Joint Resolution No. 4 (s. 2009) establishes governing principles of the Compensation and Position Classification System (CPCS), including just and equitable compensation, equal pay for work of equal value, and comparability with private sector rates to attract, retain and motivate competent civil servants.
Joint Resolution No. 4 (s. 2009) requires periodic review of the CPCS considering skills and competency changes, demand for expertise, and inflation erosion of purchasing power.
Section 13 of Presidential Decree No. 985 and Item 17 (iv) of Joint Resolution No. 4 (s. 2009) authorize the President, upon recommendation of the Department of Budget and Management (DBM), to periodically revise or update the CPCS and the policies on and levels of allowances, benefits and incentives applicable to government personnel.
Republic Act No. 10717 appropriated PHP 57.91 Billion to cover the FY 2016 requirement for the compensation adjustment of civilian personnel and military and uniformed personnel in the National Government.

Policy and compensation adjustment strategy

Section 1 directs revisions/updates to the existing CPCS to achieve comparability with prevailing private sector rates, thereby attracting and retaining committed civil servants.
Section 1 requires the compensation adjustment strategy to follow these measures:
- Raise the minimum salary for Salary Grade 1 from PHP 9,000 to PHP 11,068.
- Bring government compensation closer to private counterparts to at least 70% of the median of the market for all salary grades.
- Eliminate overlaps in salary grade allocations to reflect differences in duties and responsibilities.
- Maximize net take-home pay through inclusion of additional benefits.
- Strengthen a performance-based incentive system tied to heavier responsibility and performance targets.
Section 1 further aligns the compensation adjustment strategy for military and uniformed personnel (MUP) with mitigating the fiscal crisis building up in their pension system and pursuing pension reform.

Coverage, who is included and excluded

Section 2 applies the modified Salary Schedule authorized herein to all civilian personnel in:
- the Executive, Legislative and Judicial Branches,
- Constitutional Commissions and other Constitutional Offices,
- GOCCs not covered by Republic Act No. 10149, and
- local government units (LGUs).
Section 2 applies regardless of appointment status (regular, contractual or casual), and regardless of whether personnel are appointive or elective, and full-time or part-time.
Section 2 limits the new Provisional Allowance Schedule and Officersa Allowance to MUP of the Department of National Defense (DND) and the Department of the Interior and Local Government (DILG), including the Philippine Coast Guard (PCG) and the National Mapping and Resource Information Authority (NAMRIA).
Section 2 extends the Mid-Year Bonus, Enhanced Performance-Based Bonus (PBB), and Productivity Enhancement Incentive to both civilian personnel and MUP, except that the Hazard Pay increase applies only to MUP.
Section 2 excludes from the salary increase and benefits authorized herein individuals whose services are engaged through job orders, contracts of service, consultancy contracts, and service contracts with no employer-employee relationship.

Modified civilian salaries and tranches

Section 3 sets the modified Salary Schedule for Civilian Personnel to be implemented in four (4) tranches.
Section 3 provides Step Increments for Salary Grades 1 to 33 with Step 1 to Step 8 for each tranche, using the exact numeric amounts specified for:
- First Tranche,
- Second Tranche,
- Third Tranche, and
- Fourth Tranche.
Section 3 establishes that the Fourth Tranche produces the final effect of the civilian modified Salary Schedule (with the amounts shown for each Salary Grade and Step).

Bonuses and productivity incentives

Section 4 grants a Mid-Year Bonus equivalent to one (1) month basic salary as of May 15 beginning FY 2016.
Section 4 requires at least four (4) months of satisfactory service and that recipients are still in the service as of May 15.
Section 4 directs the Mid-Year Bonus to be given not earlier than May 15 each year, and it is granted in addition to the Standard Allowances and Benefits under the Total Compensation Framework embodied in Joint Resolution No. 4 (s. 2009).
Section 4 requires the existing Year-End Bonus equivalent to one (1) month basic salary and Cash Gift at prescribed rates to be given in November every year.
Section 5 enhances the existing PBB for qualified government personnel, including those in LGUs, to strengthen results orientation.
Section 5 sets the enhanced PBB amount at one (1) month basic salary up to two (2) months basic salary, implemented in two (2) phases starting in FY 2017.
Section 5 makes the enhanced PBB subject to achievement of performance targets/commitments and compliance with good governance and other conditions; it also uses a progressive rate system based on position and responsibility.
Section 5 empowers the Inter-Agency Task Force on the Harmonization of National Government Performance Monitoring, Information and Reporting Systems (created under Administrative Order No. 25 (s. 2011)) to prescribe eligibility conditions, procedures, and a ranking system for the enhanced PBB.
Section 6 provides that starting FY 2016, the Productivity Enhancement Incentive is given not earlier than December 15 to all qualified government employees at PHP 5,000 each.

MUP provisional allowances, hazard pay, and officers’ allowances

Section 7 authorizes monthly Provisional Allowance for MUP in four tranches, in lieu of increases in base pay, with monthly amounts shown per unit/agency grouping and per rank level.
Section 7 identifies the monthly allowance groupings for tranches as DILG, DND, BJMP and BFP, PNP and PPSC, PCG, and NAMRIA, and provides tranche amounts for each named rank/category (e.g., Candidate, Private, Private First Class Seaman, Corporal Fire/Jail Officer II, Sergeant Petty Officer III, Technical Sergeant Petty Officer I, up to senior flag/general levels and Cadet categories).
Section 7 states the Provisional Allowance is an interim measure to supplement total compensation of MUP until the Base Pay Schedule is rationalized considering pension implications of base pay adjustment of personnel in active service under existing laws.
Section 8 increases Hazard Pay for all MUP from PHP 240 per month to:
- PHP 390 per month starting January 1, 2016,
- PHP 540 per month by January 1, 2017,
- PHP 690 per month by January 1, 2018,
- PHP 840 per month by January 1, 2019.
Section 9 authorizes an Officersa Allowance for specified MUP ranks as an interim measure until the Base Pay Schedule is modified and rationalized.
Section 9 sets Officers’ Allowance amounts per tranche at:
- First Tranche / Second Tranche / Third Tranche / Fourth Tranche rates shown for each rank (e.g., Captain: 1,000 / 3,000 / 4,500 / 7,000; Major: 1,500 / 4,500 / 6,500 / 11,000; Lieutenant Colonel: 2,000 / 6,000 / 8,500 / 13,000; continuing through General: 9,000 / 18,000 / 25,000 / 35,000).

LGU implementation limits and barangay special rules

Section 10 permits the modified Salary Schedule and additional benefits for civilian personnel to be granted to LGU personnel subject to:
- authorization from their respective sanggunian under Sections 447(a), 458(a) and 468(a) of Republic Act No. 7160, and
- compliance with the Personnel Services (PS) limitation under Sections 325 and 331 of Republic Act No. 7160.
Section 10 requires LGUs to implement the modified Salary Schedule (including the Representation and Transportation Allowances) in a manner that corresponds to income classification and does not exceed the percentage limits stated in Section 10(ii).
Section 10 establishes the following maximum percentages of the Salary Schedule:
- Provinces/Cities:
  - Special Cities: 100%
  - 1st Class: 100%
  - 2nd Class: 95%
  - 3rd Class: 90%
  - 4th Class: 85%
  - 5th Class: 80%
  - 6th Class: 75%
- Municipalities:
  - Special Cities: 90%
  - 1st Class: 90%
  - 2nd Class: 85%
  - 3rd Class: 80%
  - 4th Class: 75%
  - 5th Class: 70%
  - 6th Class: 65%
Section 10 provides that the basic pay of barangay personnel shall be in the form of honoraria not exceeding the percentage of the Salary Schedule corresponding to the LGU income classification.
Section 10 allows barangay personnel to receive:
- Mid-Year Bonus and Year-End Bonus based on monthly honoraria as of May 15 and October 31 respectively, and
- Cash Gift of PHP 5.000.
Section 10 provides that the minimum Year-End Bonus for barangay officials is:
- PHP 1,000 for the punong barangay, and
- PHP 600 for other mandatory barangay officials,
  and these minimums are not subject to the PS limitation.

Implementation timetable and retroactivity

Section 11 requires National Government Agency implementation of the modified Salary Schedule and additional benefits, subject to appropriations by Congress.
Section 11 sets the tranche implementation dates as follows:
- January 1, 2016: first tranche salary schedule for civilian personnel; first tranche Provisional Allowance, Officersa Allowance, and Hazard Pay for MUP; and the Mid-Year Bonus.
- January 1, 2017: second tranche salary schedule for civilian personnel; second tranche Provisional Allowance, Officersa Allowance and Hazard Pay for MUP; the Mid-Year Bonus and half of the enhanced PBB.
- January 1, 2018: third tranche salary schedule for civilian personnel; third tranche Provisional Allowance, Officersa Allowance and Hazard Pay for MUP; the Mid-Year Bonus and the full amount of the enhanced PBB.
- January 1, 2019: fourth tranche salary schedule for civilian personnel; fourth tranche Provisional Allowance, Officersa Allowance and Hazard Pay for MUP; the Mid-Year Bonus and the full amount of the enhanced PBB.
Section 11 requires covered GOCCs and LGUs to implement compensation adjustments in at least four (4) years depending on financial capability, with each tranche starting not earlier than the tranche dates stated.
Section 11 allows GOCCs and LGUs that do not have adequate/sufficient funds to partially implement the modified Salary Schedule and authorized benefits.
Section 11 requires that in partial implementation, the partial amounts are at a uniform percentage across all positions for every GOCC/LGU.
Section 12 provides retroactive effect for:
- first tranche implementation of the modified Salary Schedule for civilian personnel,
- grant of Provisional Allowance,
- Officersa Allowance,
- increased Hazard Pay for MUP,
  effective January 1, 2016.
Section 12 also subjects retroactive first tranche application for covered GOCCs and LGUs to their financial capabilities and compliance with other requirements under existing laws.

Special coverage limits, effective start dates, funding, guidelines

Section 13 exempts specified entities from the modified Salary Schedule and additional benefits:
- government agencies (including GOCCs) exempted from coverage of Republic Act No. 6758, as amended, under their enabling law/charter; and
- GOCCs governed by the CPCS established by the Governance Commission for GOCCs (GCG) and approved by the President under Republic Act No. 10149.
Section 13 directs that exempt entities are governed by their respective CPCS made effective upon recommendation of the DBM or the GCG, as the case may, and approval by the President.
Section 14 provides that the salaries authorized for the President, Vice President, and Members of Congress take effect only after expiration of the respective terms of incumbents.
Section 14 provides that implementation for regular members of the Cabinet takes effect starting July 1, 2016.
Section 15 establishes funding sources:
- For National Government agencies funded in the GAA, FY 2016 needs are charged against FY 2016 GAA appropriations; FY 2017–2019 funding requirements are included in the annual National Expenditure Program for Congress approval.
- The DBM is authorized to implement/adjust compensation corresponding to appropriations in the GAA consistent with its authority under Section 7 of RA No. 6758, as amended and following the strategy in Section 1.
- For GOCCs, amounts come from their respective corporate funds in approved corporate operating budgets approved by DBM.
- For LGUs, amounts are charged against their respective funds in accordance with the pertinent provisions of the Order and RA No. 7160.
Section 16 requires the DBM to issue the implementing guidelines necessary to implement the Order.

Separability, repeal, and effectivity

Section 17 provides separability: invalid or unconstitutional provisions do not affect the validity of other unaffected provisions.
Section 18 repeals or modifies all other inconsistent rules, regulations, issuances, or parts thereof.
Section 19 sets effectivity at immediate effect upon publication in a newspaper of general circulation, while Section 12 separately sets the retroactive January 1, 2016 effect for first tranche civilian pay and MUP provisional allowances, increased hazard pay, and officers’ allowances.