Employer action code: Monitor

Congress has approved legislation that would significantly increase the duration of maternity leave and require employers to top up benefits from Social Security. Currently, employees with at least three months of Social Security contributions in the 12-month period preceding childbirth or miscarriage are entitled to 60 days of paid maternity leave (78 days in the case of cesarean delivery). Pay replacement benefits are provided by the Social Security System (SSS) at 100% of the employee’s average covered salary and employers are required to advance payment of benefits, which are subsequently reimbursed by the SSS.

KEY DETAILS

Significant provisions of the law include the following:

  • 105 days of Social Security-paid maternity leave will be granted for normal childbirth or cesarean delivery (60 days in the case of miscarriage or emergency termination), of which up to seven days can be transferred to the child’s father (irrespective of marital status and the father’s entitlement to employer-paid paternity leave). The amount of the SSS maternity benefit will be unchanged.
  • Stipulations indicate that employers will be responsible for paying employees the difference between SSS maternity benefits and the employee’s average weekly or regular wages for the duration of leave. Businesses with 10 or fewer employees and enterprises in financial difficulties will be exempt from this requirement.
  • The paid maternity leave period will include a compulsory period of at least 60 days after childbirth.
  • Pay replacement benefits will be provided regardless of the number of childbirths (currently, this applies only for the first four births or miscarriages) and irrespective of marital status.
  • The employee will have the option to request an extra 30 days of maternity leave without pay.
  • Single mothers will have an additional 15 days of Social Security-paid maternity leave.
  • Employment protection is included (e.g., taking maternity leave cannot be used as basis for an employee’s demotion in employment or termination).

EMPLOYER IMPLICATIONS

The bill is awaiting the president’s signature. Assuming it is signed, it would become law 15 days after publication in the official Gazette. In addition to the uncertainties over the effective date of the law (and the president’s views on the law) further guidance may be needed regarding the apparent employer mandate to top up SSS benefits. Over a third of employers surveyed by Willis Towers Watson top up SSS maternity benefits to 100% of base pay for the duration of leave as a matter of practice due to the relatively low level of pay replacement. Requiring employers to top up pay would represent a significant increase in employer costs for maternity leave.