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SH1606

SALARIES AND WAGES


From Rags to Riches
Mariano Que initially worked as an employee of a drugstore during the prewar era
but like most typical successful entrepreneurs, Que found his opportunities after the
war and during the advent of the American occupation. The destruction of the prewar
establishments left everyone starting and rebuilding from scratch, and those who had a
wider perception of the peoples needs seemed to have the greater advantage.
Mariano Que saw the demand for sulfa drugs, since most of the Philippine
pharmacies hardly had enough resources to go by. Using his prewar experience as a
drugstore employee, Mariano invested 100 pesos worth of sulfathiazole tablets and
peddled them in single doses so they could be affordable to the poverty-stricken sector.
He rolled over his profits until he had enough money to build a wooden pushcart. That
way, he could peddle a wider assortment of pharmaceutical products.
Other peddlers imitated his marketing and selling strategy, but Que made a
difference. He had a reputation for selling only quality and unexpired medical products,
and soon enough he had a steady clientele. By 1945, Mariano had saved enough
resources, which enabled him to set up his first store, aptly called Mercury Drug. The
Roman god Mercury carried the caduceus symbol, which was largely associated with
the medical profession.
Despite the stores establishment, Mariano invested in motorized vehicles in order
to provide drug delivery services to his valued customers. He also expanded his store
hours to 17 hours a day, 7 days a week, since he recognized that the need for
medication may come unexpectedly. In 1952, the stores were open 24/7, which made
the drugstore become a valuable part of the community.
In 1960, the Ayala Group of Companies offered Mariano Que a space to lease in
the shopping center that was about to be developed in the heart of Makati. Thus, the
second Mercury Drug opened, this time as a self-service pharmacy. The rest is a history
of more innovations and technological adoption of computer-guided controls and
biological refrigerators. These improvements allowed the drugstores expansion into
other life-saving medications. The newer branches of today are superstores as they
carry more than just medicines but other consumer products from food to household to
health and beauty items.
Mercury Drug created a reputation that every Filipino household could rely on; and
there was a store in nearly every town and city accross the country. Today, there are
about 700 Mercury stores, some of which are under franchise. All these fulfilled
Mariano Ques goal of making safe medication available and accessible to every
Filipino community. Today, Marianos daughter, Vivian Que Azcona, continues to
uphold his companys visions and missions.
In return for their customers unwavering loyalty, Mercury Drug celebrates their
annual anniversaries by holding a free clinic to the indigent, for which the appropriate
medications for their illnesses are likewise given for free.

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I.

Wage Compensation
Employee compensation refers to the benefits (cash, vacation, etc.) that an employee
receives in exchange for the service they provide to their employer. There are many
different types of compensation paid to employees.
Of all the different types of compensation, wages () are the most common and the
reason why most people work. Wages are often called the total cash compensation paid to
an employee. Employees are paid on a piece rate, hourly rate, or monthly and daily rate.

II.

Piece Rate
A worker paid in piece rate is paid in proportion to the quantity of work s/he finishes.
The rate () can be fixed irrespective of the quantity () produced, in which case it is
called fixed piece-rate plan. In a fixed piece-rate plan, the base-rate-percentage
relationship is applied where the base is the quantity produced, and percentage is the
wages or total earnings.
=

(Eq. 2.1)

On the other hand, the rate can be increasing as the quantity produced increases, in which
case it is called differential piece-rate plan.

III.

Hourly Rate
Many employees are paid on an hourly basis. With a specified regular hourly rate, the
wage is the percentage and the base is the number of hours ().
=

(Eq. 3.1)

The Labor Code of the Philippines provides a guide in computation of employee


compensation. The following are the different articles of the Labor Code relevant to
working hours:
Art. 83. Normal hours of work. The normal hours of work of any employee shall
not exceed eight (8) hours a day.
Art. 85. Meal periods. Subject to such regulations as the Secretary of Labor may
prescribe, it shall be the duty of every employer to give his employees not less
than sixty (60) minutes time-off for their regular meals.
Art. 87. Overtime work. Work may be performed beyond eight (8) hours a day
provided that the employee is paid for the overtime work, an additional
compensation equivalent to his regular wage plus at least twenty-five percent
(25%) thereof. Work performed beyond eight hours on a holiday or rest day shall
be paid an additional compensation equivalent to the rate of the first eight hours on
a holiday or rest day plus at least thirty percent (30%) thereof.
Art. 91. Right to weekly rest day.
a. It shall be the duty of every employer, whether operating for profit or not, to
provide each of his employees a rest period of not less than twenty-four (24)
consecutive hours after every six (6) consecutive normal work days.

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b. The employer shall determine and schedule the weekly rest day of his
employees subject to collective bargaining agreement and to such rules and
regulations as the Secretary of Labor and Employment may provide. However,
the employer shall respect the preference of employees as to their weekly rest
day when such preference is based on religious grounds.
Art. 93. Compensation for rest day, Sunday or holiday work.
a. Where an employee is made or permitted to work on his scheduled rest day,
he shall be paid an additional compensation of at least thirty percent (30%) of
his regular wage. An employee shall be entitled to such additional
compensation for work performed on Sunday only when it is his established
rest day.
b. When the nature of the work of the employee is such that he has no regular
workdays and no regular rest days can be scheduled, he shall be paid an
additional compensation of at least thirty percent (30%) of his regular wage
for work performed on Sundays and holidays.
c. Work performed on any special holiday shall be paid an additional
compensation of at least thirty percent (30%) of the regular wage of the
employee. Where such holiday work falls on the employees scheduled rest
day, he shall be entitled to an additional compensation of at least fifty per cent
(50%) of his regular wage.
d. Where the collective bargaining agreement or other applicable employment
contract stipulates the payment of a higher premium pay than that prescribed
under this Article, the employer shall pay such higher rate.
Art. 94. Right to holiday pay.
a. Every worker shall be paid his regular daily wage during regular holidays,
except in retail and service establishments regularly employing less than ten
(10) workers.
b. The employer may require an employee to work on any holiday but such
employee shall be paid a compensation equivalent to twice his regular rate;
and
c. As used in this Article, "holiday" includes: New Years Day, Maundy
Thursday, Good Friday, the ninth of April, the first of May, the twelfth of
June, the fourth of July, the thirtieth of November, the twenty-fifth and
thirtieth of December and the day designated by law for holding a general
election.
Computation of Regular Hourly Rate
According to Article 83, regular working hours shall not exceed eight (8) hours and
article 84 states that this does not include a time-off, which should be greater than or
equal to an hour (60 minutes), spent usually for meals. Hence, if 8, it is subject to
the regular hourly rate () of the employee and Eq. 3.1 is applied.
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The Labor Code sets the rules on the computation of on different working days

On Ordinary Day
On ordinary days, the rate () is constant and is set by the employer. But when an
employee is asked to work during rest days, or special holidays, or regular holidays,
then the rate varies.

On a Rest Day or Special (Non-Working) Holiday


According to Article 93 sections A and C, the regular hourly rate of an employee who
is asked by the employer to work during his/her rest day or on a special holiday is
equivalent to plus an additional compensation equivalent to 30% of .
Based on Labor Advisory No. 11, Series of 2015, the list of the declared special
holidays is as follows:

http://www.dole.gov.ph/files/Labor%20Advisory%20No_%2011-15.pdf

Since both cases assume the same value of regular hourly rate, the rates for both cases
shall be denoted by r . Hence,
= 1.3

(Eq. 3.2)

On a Rest Day Falling on a Special (Non-Working) Holiday


When an employee works on a rest day that falls on a special holiday, the hourly rate
shall be denoted by r . Article 93 section c states that in such instances, r is equivalent
to r plus additional compensation of 50% of r. Therefore,
= 1.5

(Eq. 3.3)

On a Regular Holiday
If an employee works on a regular holiday, the hourly rate, which will be denoted by
r shall be equivalent to twice r, as stated in Article 94 section b). That is,
r = 2

(Eq. 3.4)

Computation of Overtime Rate


If hrs > 8, then the excess time (hrs 8), which will be denoted as , is subject to
a higher hourly rate called overtime rate. Just as it is in the computation of regular
hourly rate, computation of overtime rate depends if the day overtime was spent is an

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ordinary day, rest day or special holiday, rest day falling on a special holiday, or regular
day.

On Ordinary Day
On Ordinary Day, overtime rate shall be denoted as . Article 87 suggests that
is equivalent to and an additional compensation equal to 25% of . Therefore,
= 1.25

(Eq. 3.5)

On a Rest Day or Special (Non-Working) Holiday


According to Article 87, when an employee is requested by the employer to work
during his/her rest day, or on a special holiday, then the rate of overtime shall be
equivalent to r plus 30% of r . Rate of overtime in such instances shall be denoted as
r OT . Therefore,
= 1.3
= 1.69

(Eq. 3.6)

On a Rest Day Falling on a Special (Non-Working) Holiday


When the rest day falls on a special holiday, then overtime rate shall be r plus
additional compensation equivalent to 30% of r . Overtime rate in such cases shall be
denoted as . Hence,
= 1.3
= 1.95

(Eq. 3.7)

On a Regular Holiday
When an employee works overtime at a regular holiday, rate of overtime, which will
be denoted as rOT , shall be equivalent to r plus 30% of r. That is,
= 1.3
= 2.6

(Eq. 3.8)

Table 3.1 gives a summary of the hourly rates for different cases.
Cases
On a Regular Day
On a Rest Day or Special Holiday
On a Rest Day Falling on a Special Holiday
On a Regular Holiday
Table 3.1

Hourly Rates
Regular
Overtime
( )
( > )

= 1.25
= 1.3
= 1.69
= 1.5
= 1.95
= 2
= 2.6

Note that the standard percent values stated by the law are preceded by the phrase at
least, which implies " conditions. But for class discussion purposes, we will assume
that the rates given by the employers are equal to the standard percent values. In real life

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practice, company may give higher rates, but never lower than the lower bounds set by
the law.
Computation of the Total Pay () for the day.
Given a regular hourly rate and number of hours an employee worked for the day
(), is computed depending on the and the day. If 8, then is subject
to regular hourly rate. Otherwise, the first eight (8) hours is subject to regular hourly rate
and is subject to overtime rate.
Table 3.2 shows the computation for total pay ().
Regular
( )
On a Regular Day
=
On a Rest Day or Special Holiday
=
On a Rest Day Falling on a Special Holiday
=
On a Regular Holiday
=
Table 3.2
Cases

IV.

Overtime
( > )
= 8 + ( )
= 8 + ( )
= 8 + ( )
= 8 + ( )

Monthly-Paid Employees and Daily-Paid Employees


Earnings of employees paid on a monthly or annual basis is generally referred to as
salary. It is a fixed regular payment, typically paid on a monthly or biweekly basis but
often expressed as an annual sum, made by an employer to an employee.
For the sake of expression, it is sometimes necessary to convert salaries on annual
basis into monthly basis, monthly into weekly, monthly into semi-monthly, etc. Below
are the equality relationships between annual salary and the other bases:
=

1
12

(Eq. 4.1)

=
=

1
52

1
24

(Eq. 4.2)
(Eq. 4.3)

1
26

(Eq. 4.4)

To convert monthly salary into hourly rate, it is first converted into weekly salary.
Afterwards, the regular hours in a week is computed. Suppose
= , then
=

V.

(Eq. 4.5)

Income
Income is a broader term than wages or salary. Wages and salaries are cash inflows
received any individual in exchange for the provision of service to a firm. It is the

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payment to the employee paid by the employer. An income is any form of inflow of
funds that an individual receives, which allows an individual the opportunity to consume
the required goods and services and to save for future needs.
For people who are not employees, their income may not be in the form of wages or
salaries. They can have commission income if they are paid for the commission on sales
they make, rental income if they have properties they rent out, dividend income if they
are authors, and other income for whatever endeavor they engage in including profitmaking businesses. A business firms income is in the form of profits that the business
earns as discussed in previous handouts.

VI.

Other Employee Benefits


For the Philippines the following benefits are given to employees:

Vacation pay: 13 vacation days, with additional one (1) vacation day every year
starting on 2nd year of service and convertible to cash at the end of each year.
Maximum total vacation leave is 18 days.

Sick Leave: 12 days per year for the first two (2) years of service. With additional
one (1) sick leave every year starting on 2nd year of service. Maximum total sick
leave is 15 days. All unused leave days are convertible to cash in December of each
year.

Holiday Pay: In lieu of vacation pay, Article 95 of the Labor Code provides for
service incentive leave for every employee who has rendered at least one year of
service of five (5) days with pay.

Long-term benefits: retirement, death, disability, dependents allowance

Minimum wage earner tax exemption

Bonuses and allowances (travel, rice, meal, clothing, laundry)

13th month pay of no less than 12 of annual salary

Leave incentives: sick, maternity, paternity, solo parent, and others

Health related benefits and some insurances

Some benefits are taxable, just like wages, salaries, commission, royalties, etc.
However, some benefits are non-taxable. Revenue Regulations (RR) No. 5-2011 dated
March 16, 2011 cites the non-taxable benefits as follows:
REVENUE REGULATIONS NO. 5-2011 issued on March 16, 2011 further amends
Revenue Regulations (RR) Nos. 2-98 and 3-98, as last amended by RR No. 5-2008, with
respect to De Minimis Benefits, which are exempt from Income Tax on compensation
as well as from Fringe Benefit Tax.
The following shall be considered as de minimis benefits, which are not subject to
Fringe Benefit Tax and Income Tax as well as Withholding Tax on compensation income
of both managerial and rank and file employees:

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a. Monetized unused vacation leave credits of private employees not exceeding 10


days during the year;
b. Monetized value of vacation and sick leave credits paid to government officials
and employees;
c. Medical cash allowance to dependents of employees, not exceeding 750 per
employee per semester or 125 per month;
d. Rice subsidy of 1,500 or one (1) sack of 50 kg rice per month amounting to not
more than 1,500;
e. Uniform and clothing allowance not exceeding 4,000 per annum;
f. Actual medical assistance, e.g. medical allowance to cover medical and healthcare
needs, annual medical/executive check-up, maternity assistance, and routine
consultations, not exceeding 10,000.00 per annum;
g. Laundry allowance not exceeding 300 per month;
h. Employees achievement awards, e.g., for length of service or safety achievement,
which must be in the form of a tangible personal property other than cash or gift
certificate, with an annual monetary value not exceeding 10,000 received by the
employee under an established written plan which does not discriminate in favor
of highly paid employees;
i. Gifts given during Christmas and major anniversary celebrations not exceeding
5,000 per employee per annum; and
j. Daily meal allowance for overtime work and night/graveyard shift not exceeding
25% of the basic minimum wage on a per region basis.
All other benefits given by employers, which are not included in the above
enumeration shall not be considered as de minimis benefits, and hence, shall be subject
to Income Tax as well as to withholding tax on compensation income.

VII.

Payroll Deductions

Rate of Contribution to SSS


All employees of private enterprises are covered by the Social Security Service
(SSS). Self-employed individuals can also become members. The monthly
contribution The current SSS contribution rate is 11% of the monthly salary credit not
exceeding 16,000 and this is being shared by the employer ( 7.37% ) and the
employee (3.63%).
Self-employed and voluntary members pay the 11% of the monthly salary credit
(MSC) based on the monthly earnings declared at the time of registration.
For OFWs, the minimum monthly salary credit is pegged at 5,000.
For the non-working spouse, the contribution will be based on 50% of the
working spouses last posted monthly salary credit but in no case shall it be lower than
1,000.

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Schedule of Contributions
EMPLOYER-EMPLOYEE
MONTHLY
SALARY
SOCIAL SECURITY
EC
TOTAL CONTRIBUTION
CREDIT*
ER
EE
TOTAL
ER
ER
EE
TOTAL
1,000 - 1,249.99
1,000
73.70
36.30
110.00
10.00
83.70
36.30
120.00
1,250 - 1,749.99
1,500
110.50
54.50
165.00
10.00
120.50
54.50
175.00
1,750 - 2,249.99
2,000
147.30
72.70
220.00
10.00
157.30
72.70
230.00
2,250 - 2,749.99
2,500
184.20
90.80
275.00
10.00
194.20
90.80
285.00
2,750 - 3,249.99
3,000
221.00
109.00
330.00
10.00
231.00
109.00
340.00
3,250 - 3,749.99
3,500
257.80
127.20
385.00
10.00
267.80
127.20
395.00
3,750 - 4,249.99
4,000
294.70
145.30
440.00
10.00
304.70
145.30
450.00
4,250 - 4,749.99
4,500
331.50
163.50
495.00
10.00
341.50
163.50
505.00
4,750 - 5,249.99
5,000
368.30
181.70
550.00
10.00
378.30
181.70
560.00
5,250 - 5,749.99
5,500
405.20
199.80
605.00
10.00
415.20
199.80
615.00
5,750 - 6,249.99
6,000
442.00
218.00
660.00
10.00
452.00
218.00
670.00
6,250 - 6,749.99
6,500
478.80
236.20
715.00
10.00
488.80
236.20
725.00
6,750 - 7,249.99
7,000
515.70
254.30
770.00
10.00
525.70
254.30
780.00
7,250 - 7,749.99
7,500
552.50
272.50
825.00
10.00
562.50
272.50
835.00
7,750 - 8,249.99
8,000
589.30
290.70
880.00
10.00
599.30
290.70
890.00
8,250 - 8,749.99
8,500
626.20
308.80
935.00
10.00
636.20
308.80
945.00
8,750 - 9,249.99
9,000
663.00
327.00
990.00
10.00
673.00
327.00
1,000.00
9,250 - 9,749.99
9,500
699.80
345.20
1,045.00
10.00
709.80
345.20
1,055.00
9,750 - 10,249.99
10,000
736.70
363.30
1,100.00
10.00
746.70
363.30
1,110.00
10,250 - 10,749.99
10,500
773.50
381.50
1,155.00
10.00
783.50
381.50
1,165.00
10,750 - 11,249.99
11,000
810.30
399.70
1,210.00
10.00
820.30
399.70
1,220.00
11,250 - 11,749.99
11,500
847.20
417.80
1,265.00
10.00
857.20
417.80
1,275.00
11,750 - 12,249.99
12,000
884.00
436.00
1,320.00
10.00
894.00
436.00
1,330.00
12,250 - 12,749.99
12,500
920.80
454.20
1,375.00
10.00
930.80
454.20
1,385.00
12,750 - 13,249.99
13,000
957.70
472.30
1,430.00
10.00
967.70
472.30
1,440.00
13,250 - 13,749.99
13,500
994.50
490.50
1,485.00
10.00
1,004.50
490.50
1,495.00
13,750 - 14,249.99
14,000
1,031.30
508.70
1,540.00
10.00
1,041.30
508.70
1,550.00
14,250 - 14,749.99
14,500
1,068.20
526.80
1,595.00
10.00
1,078.20
526.80
1,605.00
14,750 - 15,249.99
15,000
1,105.00
545.00
1,650.00
30.00
1,135.00
545.00
1,680.00
15,250 - 15,749.99
15,500
1,141.80
563.20
1,705.00
30.00
1,171.80
563.20
1,735.00
15,750 - over,
16,000
1,178.70
581.30
1,760.00
30.00
1,208.70
581.30
1,790.00
Source: https://www.sss.gov.ph/sss/appmanager/pages.jsp?page=scheduleofcontribution retrieved April 25, 2016
RANGE OF
COMPENSATION

SE/VM/OFW
TOTAL
CONTRIBUTION
110.00
165.00
220.00
275.00
330.00
385.00
440.00
495.00
550.00
605.00
660.00
715.00
770.00
825.00
880.00
935.00
990.00
1,045.00
1,100.00
1,155.00
1,210.00
1,265.00
1,320.00
1,375.00
1,430.00
1,485.00
1,540.00
1,595.00
1,650.00
1,705.00
1,760.00

Rate of Contribution to PhilHealth


All employees whether of private entities or government entities are to be
members of PhilHealth. This is basically intended to cover them and their employees
in times of sickness. The table below shows the contribution schedule:

04 Handout 1

Salary
Bracket

Salary Range

Salary Base

Total Monthly
Premium

Employee
Share*

Employer
Share

8,999.99** and below

8,000.00

200

100

100

9,000.00 - 9,999.99

9,000.00

225

112.5

112.5

10,000.00 - 10,999.99

10,000.00

250

125

125

11,000.00 - 11,999.99

11,000.00

275

137.5

137.5

12,000.00 - 12,999.99

12,000.00

300

150

150

13,000.00 - 13,999.99

13,000.00

325

162.5

162.5

14,000.00 - 14,999.99

14,000.00

350

175

175

15,000.00 - 15,999.99

15,000.00

375

187.5

187.5

16,000.00 - 16,999.99

16,000.00

400

200

200

10

17,000.00 - 17,999.99

17,000.00

425

212.5

212.5

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11

18,000.00 - 18,999.99

18,000.00

450

225

225

12

19,000.00 - 19,999.99

19,000.00

475

237.5

237.5

13

20,000.00 - 20,999.99

20,000.00

500

250

250

14

21,000.00 - 21,999.99

21,000.00

525

262.5

262.5

15

22,000.00 - 22,999.99

22,000.00

550

275

275

16

23,000.00 - 23,999.99

23,000.00

575

287.5

287.5

17

24,000.00 - 24,999.99

24,000.00

600

300

300

18

25,000.00 - 25,999.99

25,000.00

625

312.5

312.5

19

26,000.00 - 26,999.99

26,000.00

650

325

325

20

27,000.00 - 27,999.99

27,000.00

675

337.5

337.5

21

28,000.00 - 28,999.99

28,000.00

700

350

350

22

29,000.00 - 29,999.99

29,000.00

725

362.5

362.5

23

30,000.00 - 30,999.99

30,000.00

750

375

375

24

31,000.00 - 31,999.99

31,000.00

775

387.5

387.5

25

32,000.00 - 32,999.99

32,000.00

800

400

400

26

33,000.00 - 33,999.99

33,000.00

825

412.5

412.5

27

34,000.00 - 34,999.99

34,000.00

850

425

425

28

35,000.00 and up

35,000.00

875

437.5

437.5

*Employee share represents half of the total monthly premium


while the other half is shouldered by the employer.
**For house-helper (kasambahay) receiving a wage of less than Five P5,000 per month,
the employer will shoulder both the employee and employer share based on the premium schedule.

Rate of Contribution to GSIS


All government employees holding permanent and non-permanent positions are
members of the Government Service Insurance System (GSIS). Premium
contributions are based on monthly compensation. There are two types of insurance
coverage, namely:
1. Regular - refers to compulsory premium payments on life insurance and
retirement benefits.
2. Employee compensation Fund refers to premium payments paid by your
government agency so you get full coverage in case of a work related accident.
Rate of premium contributions are as follows:
Type of insurance
coverage

04 Handout 1

Personal Share

Government Share

Life

Retirement

Life

Retirement

Regular

2%

7%

2%

10%

Employees
Compensation Fund

none

0%

none

1% not to
exceed P100

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Withholding Taxes
Withholding Tax on Compensation is the tax withheld from income payments to
individuals arising from an employer-employee relationship.
REVISED WITHHOLDING TAX TABLES
Effective January 1, 2009
DAILY

Exemption

1.65

8.25

28.05

74.26

165.02

412.54

+0%
over

+5%
over

+10%
over

+15%
over

+20%
over

+25%
over

+30%
over

+32% over

Status

(000P
)

A. Table for employees without qualified dependent


1. Z

33

99

231

462

825

1,650

2. S/ME

50

165

198

264

396

627

990

1,815

B. Table for single/married employee with qualified dependent child(ren)


1. ME1 / S1

75

248

281

347

479

710

1,073

1,898

2. ME2 / S2

100

330

363

429

561

792

1,155

1,980

3. ME3 / S3

125

413

446

512

644

875

1,238

2,063

4. ME4 / S4

150

495

528

594

726

957

1,320

2,145

WEEKLY

Exemption

9.62

48.08

163.46

432.69

961.54

2,403.85

+0%
over

+5%
over

+10%
over

+15%
over

+20%
over

+25%
over

+30%
over

+32% over

Status

A. Table for employees without qualified dependent


1. Z

192

577

1,346

2,692

4,808

9,615

2. S/ME

50

962

1,154

1,538

2,308

3,654

5,769

10,577

B. Table for single/married employee with qualified dependent child(ren)


1. ME1 / S1

75

1,442

1,635

2,019

2,788

4,135

6,250

11,058

2. ME2 / S2

100

1,923

2,115

2,500

3,269

4,615

6,731

11,538

3. ME3 / S3

125

2,404

2,596

2,981

3,750

5,096

7,212

12,019

4. ME4 / S4

150

2,885

3,077

3,462

4,231

5,577

7,692

12,500

SEMIMONTHLY

Exemption

20.83

104.17

354.17

937.5

2,083.33

5,208.33

+0%
over

+5%
over

+10%
over

+15%
over

+20%
over

+25%
over

+30%
over

+32% over

Status

A. Table for employees without qualified dependent


1. Z

417

1,250

2,917

5,833

10,417

20,833

2. S/ME

50

2,083

2,500

3,333

5,000

7,917

12,500

22,917

B. Table for single/married employee with qualified dependent child(ren)

04 Handout 1

1. ME1 / S1

75

3,125

3,542

4,375

6,042

8,958

13,542

23,958

2. ME2 / S2

100

4,167

4,583

5,417

7,083

10,000

14,583

25,000

3. ME3 / S3

125

5,208

5,625

6,458

8,125

11,042

15,625

26,042

*Property of STI
Page 11 of 14

SH1606
4. ME4 / S4

150

6,250

6,667

7,500

9,167

12,083

16,667

27,083

MONTHLY

Exemption

41.67

208.33

708.33

1,875.00

4,166.67

10,416.67

+0%
over

+5%
over

+10%
over

+15%
over

+20%
over

+25%
over

+30%
over

+32% over

Status

A. Table for employees without qualified dependent


1. Z

833

2,500

5,833

11,667

20,833

41,667

2. S/ME

50

4,167

5,000

6,667

10,000

15,833

25,000

45,833

B. Table for single/married employee with qualified dependent child(ren)


1. ME1 / S1

75

6,250

7,083

8,750

12,083

17,917

27,083

47,917

2. ME2 / S2

100

8,333

9,167

10,833

14,167

20,000

29,167

50,000

3. ME3 / S3

125

10,417

11,250

12,917

16,250

22,083

31,250

52,083

4. ME4 / S4

150

12,500

13,333

15,000

18,333

24,167

33,333

54,167

Legend: Z-Zero exemption; S-Single; ME-Married Employee; 1;2;3;4-Number of qualified dependent children
S/ME = 50,000 EACH WORKING EMPLOYEE Qualified Dependent Child = 25,000 each but not exceeding four (4)
children

USE TABLE A FOR SINGLE/MARRIED EMPLOYEES WITH NO QUALIFIED


DEPENDENT
1. Married Employee (Husband or Wife) whose spouse is unemployed.
2. Married Employee (Husband or Wife) whose spouse is a non-resident citizen
receiving income from foreign sources
3. Married Employee (Husband or Wife) whose spouse is engaged in business
4. Single
5. Zero Exemption for employees with multiple employers for their 2nd,
3rd..employers (main employer claims personal & additional exemption
6. Zero Exemption for those who failed to file Application for Registration
USE TABLE B FOR THE FOLLOWING SINGLE/MARRIED EMPLOYEES
WITH QUALIFIED DEPENDENT
1. Employed husband and husband claims exemptions of children
2. Employed wife whose husband is also employed or engaged in business; husband
waived claim for dependent children in favor of the employed wife
3. Single with qualified dependent children

Pag-ibig Fund Contribution


The Home Development Mutual Fund (HDMF) or more popularly known as the
PAG-IBIG Fund, was established to provide national savings program and affordable
shelter financing for the Filipino workers. The fund offers its members short-term
loans and access to housing programs. It is mandatory for all SSS and GSIS covered
employees; uniformed members of the AFP, BFP, BJMP, and PNP; as well as

04 Handout 1

*Property of STI
Page 12 of 14

SH1606

Filipinos employed by foreign-based employers. With the signing of Republic Act


No. 9679, membership to the Fund shall be mandatory for the following:
o All employees who are or ought to be covered by the Social Security System
(SSS), provided that actual membership in the SSS shall not be a condition
precedent to the mandatory coverage in the Fund. It shall include, but are not
limited to:
o A private employee, whether permanent, temporary, or provisional who is not
over sixty (60) years old;
o A household helper earning at least P1,000.00 a month. A household helper is
any person who renders domestic services exclusively to a household such as
a driver, gardener, cook, governess, and other similar occupations;
o A Filipino seafarer upon the signing of the standard contract of employment
between the seafarer and the manning agency, which together with the foreign
ship owner, acts as the employer;
o A self-employed person regardless of trade, business or occupation, with an
income of at least P1,000.00 a month and not over sixty (60) years old;
o An expatriate who is not more than sixty (60) years old and is compulsorily
covered by the Social Security System (SSS), regardless of citizenship, nature
and duration of employment, and the manner by which the compensation is
paid. In the absence of an explicit exemption from SSS coverage, the said
expatriate, upon assumption of office, shall be covered by the Fund.
o An expatriate shall refer to a citizen of another country who is living and
working in the Philippines.
o All employees who are subject to mandatory coverage by the Government Service
Insurance System (GSIS), regardless of their status of appointment, including
members of the judiciary and constitutional commissions;
o Uniformed members of the Armed Forces of the Philippines, the Bureau of Fire
Protection, the Bureau of Jail Management and Penology, and the Philippine
National Police;
o Filipinos employed by foreign-based employers, whether they are deployed here
or abroad or a combination thereof.
The monthly contribution is given by the table below:
Percentage of Monthly Compensation

04 Handout 1

Monthly Compensation

Employee Share

Employer Share

1,500 and below

1%

2%

Over 1,500

2%

2%

*Property of STI
Page 13 of 14

SH1606

VIII.

Gross Earnings and Net Earnings


The gross earnings () of an employee is the earnings of an employee before
necessary deductions have been done. The net earnings () is what the employee takes
home after the necessary deductions have been done.
=

(Eq. 7.1)

References:
Lopez-Mariano, Norma D. (2016). Business Mathematics. Manila, Philippines. Rex Bookstore.
Lopez, Lundag, Dagal (2016). Business Mathematics. Quezon City, Philippines. Vibal Group
Inc.
Altares, P.S., Arao, R.R., Arce, M.T.B., Bugtong, D.E., Calayag, M.E., CoPo, A.R.I., Laddaran,
A.T., , Yao, A.M.S.D. (2012). Business Mathematics. Manila, Philippines. Rex
Bookstore.
Rags
to
Riches:
Mariano
QueMercury
Drugstore.
Retrieved
from:
https://ragstoriches101.wordpress.com/2014/02/20/mariano-que-mercury-drugstore/ on
April 19, 2016.
Mckinney, Paul. What Is Employee Compensation? - Definition & Concept Study.com.
Retrieved
from:
http://study.com/academy/lesson/what-is-employee-compensationdefinition-lesson-quiz.html on April 19, 2016
Billikopf, Gregorio. Labor Management in Agriculture: Cultivating Personnel Productivity
Chapter
10:
Piece
Rate
Pay
Design
Retrieved
from:
https://nature.berkeley.edu/ucce50/ag-labor/7labor/10.pdf on April 22, 2015.
Labor Code of the Philippines: PRESIDENTIAL DECREE NO. 442, AS AMENDED.
Retrieved from: http://www1.umn.edu/humanrts/research/Philippines/PD%20442%20%20Labor%20Code%20of%20the%20Philippines.pdf on April 22, 2016.
DOLE.gov.ph. (n.d.). List of Holidays. Retrieved from: http://www.dole.gov.ph/pages/view/9 on
April 22, 2016
DOLE.gov.ph.
(n.d.).
Labor
Advisory
No.
11-15.
Retrieved
from:
http://www.dole.gov.ph/files/Labor%20Advisory%20No_%2011-15.pdf on April 21,
2016.
DOLE.gov.ph. (n.d.). Working Conditions and Rest Periods. Retrieved from:
http://www.dole.gov.ph/labor_codes/view/12 on April 22, 2016.
DOLE.gov.ph. (n.d.). Handbook on Workers Statutory Monetary Benefits 2010 Edition.
Retrieved from: http://ro2.dole.gov.ph/fndr/mis/files/handbook.pdf on April 24, 2016.
BIR.gov.ph.
(n.d.).
Revenue
Regulations
No.
5-2011.
Retrieved
from:
ftp://ftp.bir.gov.ph/webadmin1/pdf/56846rr11_05.pdf on April 24, 2016.
SSS.gov.ph.
(n.d.).
Rate
of
Contributions
to
SSS.
Retrieved
from:
https://www.sss.gov.ph/sss/appmanager/pages.jsp?page=scheduleofcontribution on April
25, 2016.
Philhealth.gov.ph.
(n.d.).
Premium
Contribution
Table.
Retrieved
from:
http://www.philhealth.gov.ph/partners/employers/contri_tbl.html on April 25, 2016.
gsis.gov.ph.
(n.d.).
Premium
Payments.
Retrieved
from:
http://www.gsis.gov.ph/default.php?id=86 on April 25, 2016.
pagibig.gov.ph.
(n.d.)
Mandatory
Membership.
Retrieved
from:
http://www.pagibigfund.gov.ph/benpromembership.aspx on April 25, 2016.

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*Property of STI
Page 14 of 14