Senior High School

Business
Mathematics
Quarter 2 – Module 13.1:
Benefits of a Wage Earner

Writer:
JHOANNA S. MANALOTO
Teacher II - San Juan High School (Mexico)
Editors:
JANE P. VALENCIA, Ed.D. – EPS – Mathematics (CHAIRMAN)
CHARIZEL T. ARCILLA – SPST-I Malino National High School
JHOANNA S. MANALOTO – T-II San Juan High School (Mexico)
 What I Need to Know

This will give you an idea of the skills or competencies you are expected to learn in the
module.

After going through this module, you are expected to:

• identify the benefits of a wage earner;

• define each of the benefits given to wage earners;
• distinguish taxable from non-taxable benefits; and
• compute for the taxable income.

What I Know

This part includes an activity that aims to check what you already know about the lesson
to take. If you get all the answers correct (100%), you may decide to skip this module.

Direction: Choose the letter of the correct answer. Write the letter of your answer on a separate
sheet of paper. Show your solution.

1. It is an additional 10% premium given to an employee who works between 10:00 PM and
6:00 AM.
A. overtime pay C. night shift differential
B. premium pay D. maternity leave

2. It is a two-month leave given to an employee who underwent surgery due to gynecological

disorders.
A. maternity leave C. vacation leave
B. sick leave D. magna carta for women

3. It is a compensation given to employees who are validly dismissed or terminated from a

company.
A. separation pay C. holiday pay
B. retirement pay D. overtime pay

4. It is a paid leave of 105 days granted to pregnant employees which can be extended for an
additional 30 days.
A. maternity leave C. vacation leave
B. sick leave D. magna carta for women

5. It is given to an employee upon reaching the age of 60-65, equivalent to at least half-month
salary for every year of service.
A. separation pay C. holiday pay
B. retirement pay D. overtime pay

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6. It is a monetary bonus that is given either in two instalments (May and December) or in full
(before December 24) equivalent to 1/12 of the annual basic salary.
A. service charge C. holiday pay
B. 13 month pay
th D. meal allowance

7. It is an additional compensation given to an employee who renders service beyond the

maximum number of working hours per day.
A. overtime pay C. night shift differential
B. premium pay D. separation pay

8. It is an additional compensation if an employee worked during non-working days such as

rest days and special holidays.
A. overtime pay C. holiday pay
B. premium pay D. separation pay

9. These are the amount collected by some restaurants, hotels, night clubs, and the like,
shared by employees and management.
A. service charge C. minimum wage
B. transportation allowance D. meal allowance

10. It grants seven (7) days of fully paid leave to married fathers that is effective up to the first
four deliveries of the legitimate spouse.
A. maternity leave C. paternity leave
B. vacation leave D. sick leave

11. Which of the following is not a benefit of a wage earner?

A. separation pay C. 13th month pay
B. service incentive leaves D. GSIS premium

12. Which of the following is a taxable benefit?

A. 13th month pay C. rice subsidy
B. overtime pay D. meal allowance

13. Which of the following is not a de minimis benefit?

A. monetized leave credits C. 13th month pay
B. rice subsidy D. clothing allowance

14. Which of the following is a non-taxable benefit?

A. transportation allowance C. night shift differential
B. premium pay D. holiday pay

15. How much is the allowable limit for the total 13th month, bonuses, and excess of de minimis
benefits?
A. ₱80,000 C. ₱90,000
B. ₱82,000 D. ₱92,000

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 Lesson

1 Benefits of a Wage Earner

People are the greatest assets. Therefore, it is a must to take care of the employees by
giving them the proper employee benefits which may include leave benefits, allowances, and
the like.

In this module, you will be enlightened to the important things you need to know about
employee benefits in the Philippines, as mandated by the government.

What’s In

As a recall on your previous lesson on salaries and wages, read and analyze each of the
following problems then solve. Write your final answer on a separate sheet of paper. Round off
your answer to the nearest centavo. Show your solutions.

1. What will be the net earnings of an employee if his gross earning is ₱28,000 and his total
deduction is ₱3,250?

2. An employee has a total monthly deduction of ₱4,285. If her take-home pay is ₱21,305,
how much is his gross earning?

3. Maine got a net pay of ₱30,750 for working as a sales agent. If her gross income for the
month is ₱40,000, how much was deducted from her total earnings?

4. Alden’s monthly deduction is 12% of his monthly gross income. If he receives a monthly
gross income of ₱50,000, how much will be his take-home pay?

5. Ryza has a monthly salary of ₱30,000. She pays her monthly contributions: ₱1,190.83 for
income tax, ₱2,700 for GSIS, ₱412.50 for PhilHealth and ₱100 for Pag-Ibig. How much will
be her net pay?

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 What’s New

Word-Teasers
Start the day with this exciting and challenging game! Guess the mystery words using
the given jumbled letters. Some clues are already given to you. Write your final answers on a
separate sheet of paper or notebook.

1. AVE LE __ __ A __ __

2. NUSOB B __ __ __ S

3. ERIVOTEM O __ __ __ __ __ __ E

4. ANLALOWEC __ L __ __ W __ __ C __

5. NETEBIF B __ __ E __ __ T

6. TIRAMENTY M __ __ __ R __ __ __ Y

7. CADEMIL __ E __ __ __ A __

8. SIBUDSY S __ __ S __ __ Y

9. IMREPUM __ __ E __ I __ __

10. T A N Y I P E R T __ A __ __ R __ __ T __

Notes to the Teacher

The teacher may use pictures to explore student’s prior knowledge
or idea of the different benefits received by their working parents,
siblings, or friends.

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 What is It

Have you identified the mystery words?

These words are some of the different benefits received by wage earners based on the
Philippine laws and regulations. The different benefits of a wage earner are the following:

BENEFITS OF A WAGE EARNER

1. MINIMUM WAGE
A minimum wage rate was set per region, province and industry sector. This may
vary depending on the number of employees and gross sales of an enterprise and its
industry sector.

Note: Minimum wage earners are exempted from tax.

2. OVERTIME PAY
An overtime pay is an additional compensation given to an employee who renders
service beyond the maximum number of working hours per day (8 hours per day). The
additional compensation is equivalent to at least 125% of the employee’s hourly rate.

3. PREMIUM PAY
A premium pay is an additional compensation if an employee worked within 8 hours
during non-working days such as rest days and special holidays. If an employee did not
rendered work or not required to work on this day, then he is not entitled to any
compensation.

4. HOLIDAY PAY
Based on the Labor Code, all employees shall be paid with their daily basic wage for
regular holidays, whether they work on that day or not.

5. NIGHT SHIFT DIFFERENTIAL

An employee who work between 10:00 PM and 6:00 AM receives an additional 10%
premium called night shift differential (NSD), also known as night shift pay.

6. 13th MONTH PAY

It is a monetary bonus which is mandated by the law that is given either in two
installments (May and December) or in full (before December 24). Generally, 13 th month
pay is 1/12 of the employee’s annual income or equivalent to one month basic pay.

7. SERVICE CHARGES
Service charges are the amount collected by some restaurants, hotels, night clubs,
and the like. For the employees of employers collecting service charges are entitled to an
equal share in the 85% of the total charges, while the remaining15% of the charges may be
retained to the management.
8. SERVICE INCENTIVE LEAVES
An employee who has rendered at least one (1) year of service is entitled to Service
Incentive Leave (SIL) of five days with pay which can be used for sick and vacation leave
purposes. At the end of the year, unused SIL can be converted into cash based on the salary
rate.

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9. PARENTAL LEAVES

A. MATERNITY LEAVE
According to the Expanded Maternity Leave (EML) Bill, the law grants each
pregnant employee 105 days of maternity leave credits. It also allows new mothers
to extend this leave for an additional 30 days, but this will be an unpaid leave.

B. PATERNITY LEAVE
The R.A No. 8187, or Paternity Leave Act of 1996, grants seven (7) days of fully
paid leave to married fathers that is effective up to the first four deliveries of the
legitimate spouse. Under the EML, seven days of a woman’s paid maternity leave
credits can be transferred to fathers, extending the allowed seven-day paternity to
be extended to 14 days.

C. SOLO-PARENT LEAVE
Seven (7) days leave with pay are given to solo or single mothers and fathers
for every year of service, aside from their other leave privileges (maternity or
paternity). Solo mothers can extend their leave for 15 days, and these are paid leaves.

10. SPECIAL LEAVE BENEFITS FOR WOMEN

A. MAGNA CARTA FOR WOMEN

An employee who underwent surgery due to gynecological disorders and have
rendered at least six months of service in the company is entitled to two months
leave with full pay, as per R.A 9710 or the Magna Carta for Women.

B. LEAVE FOR WOMEN AND THEIR CHILDREN WHO ARE VICTIMS OF VIOLENCE
As per R.A 9262 or the Anti-Violence against Women and their Children Act 0f
2004, victims of violence against women are entitled to 10 days leave with full pay.

11. SEPARATION PAY

A regular employee who is validly dismissed or terminated from a company is entitled
to a separation pay, except those who are terminated due to misconduct or crime
involvement.

11. RETIREMENT PAY

Upon reaching the retirement age, an employee is entitled to a retirement pay
equivalent to at least half-month salary for every year of service. A fraction of 6 months is
considered as one whole year. An employee may retire upon reaching the age of 60 or more
(voluntary retirement age), but not more than 65 (compulsory retirement age), provided
the he served for at least 5 years in the same company.
Employers may give benefits to their employees other than their regular salaries and
wages called de minimis benefits that are relatively small in value and are not taxable.

Below is the updated list of de minimis benefits based on the BIR Revenue Regulations
No. 11-2018 (RR 11-2018).

DE MINIMIS BENEFITS

• monetized unused vacation leave credits of private employees not exceeding ten (10) days
during the year;

• monetized value of vacation and sick leave credits of government officials and employees;

• medical cash allowance to dependents of employees, not exceeding ₱1,500 per employee
per semester or ₱250 per month;

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• rice subsidy of ₱2,000 or one (1) sack of 50kg rice per month amounting to not more than
₱2,000;

• uniform and clothing allowance not exceeding ₱6,000 per annum;

• 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 per annum;

• laundry allowance not exceeding ₱300 per month;

• employee achievement awards, e.g. for length of service or safety achievement, which must
be in the form of 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

• gifts given during Christmas and major anniversary celebrations not exceeding ₱5,000 per
annum;

• daily meal allowance for overtime work and graveyard shift not exceeding twenty-five
percent (25%) of the basic minimum wage on a per region basis; and

• benefits received by an employee by virtue of a collective bargaining agreement (CBA) and

productivity incentive schemes provided that the total monetary value received from both
CBA and productivity incentive schemes combined do not exceed ₱10,000 per employee per
taxable year.

If the employer granted more than this account, the excess might be included as a
taxable compensation income. If the excess benefits, bonuses, and the 13th month pay exceeds
₱90,000 limit, that’s the time it is taxable.

To summarize the tax rules applied to all income received by an employee, you may use
the following table:

Salaries and Wages

Taxable
(Basic Compensation)
De Minimis Benefits Non-Taxable
Excess of De Minimis plus 13th Month Pay
Non-Taxable
and Bonuses (maximum of ₱90,000)
Benefits and Bonuses in excess of ₱90,000 Taxable
All other Benefits Taxable

Example:
Mr. Manaloto received the following compensation and benefits during the entire year.
Annual Basic Salary ₱360,000
13th Month Pay and Bonuses ₱90,000
Rice Subsidy ₱30,000
Uniform Allowance ₱10,000

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 The following is the computation of the taxable and non-taxable income and benefits of
Mr. Manaloto.

Non-taxable
Other
Description Taxable De Minimis
Benefits &
Benefits
Excess
Annual Basic Salary ₱360,000
13th Month Pay and Bonuses ₱90,000
Rice Subsidy (₱2,000 x 12) ₱24,000 ₱6,000
Uniform Allowance (₱6,000 per annum) ₱6,000 ₱4,000
Total ₱100,000

Since the total sum of the 13th month pay, bonuses and excess of the given de minimis
benefits exceeded the maximum amount of ₱90,000 by ₱10,000, therefore:

Total Taxable Amount = ₱360,000 + ₱10,000 = ₱370,000

What’s More

ACTIVITY 1.1
Direction: Determine whether the following is a benefit of a wage earner or not. Write B for
benefit and N for no. Use a separate sheet of paper for your answers.

1. 13th month pay 6. car insurance

2. income tax 7. rice subsidy

3. overtime pay 8. maternity leave

4. GSIS premium 9. leave without pay

5. night shift differential 10. PhilHealth premium

ACTIVITY 1.2
Direction: Classify the following as to taxable or non-taxable benefit. Put a check mark on the
column of your answer. Use a separate sheet of paper for your answers.

Benefit Taxable Non-taxable

1. meal allowance
2. holiday pay
3. 13th month pay
4. rice subsidy
5. overtime pay
6. monetized leave credits
7. uniform allowance
8. premium pay
9. laundry allowance
10. medical cash allowance

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 What I Have Learned

Direction: Match the each definition below on the terms given inside the box. Write the letter
of your answer on a separate sheet of paper.

A. Retirement Pay F. Service Charges

B. Service Incentive Leave G. Maternity Leave
C. Overtime Pay H. 13th Month Pay
D. Night Shift Differential I. Magna Carta for Women
E. Premium Pay J. Separation Pay

1. It is given to employees who are validly dismissed or terminated from a company.

2. These are the amount collected by some restaurants, hotels, night clubs, and the like,
shared by employees and management.

3. It is an additional compensation given to an employee who renders service beyond the

maximum number of working hours per day.

4. It is a paid leave of 105 days granted to pregnant employees which can be extended for an
additional 30 days.

5. It is an additional compensation if an employee worked during non-working days such as

rest days and special holidays.

6. It is a five-day leave with pay which can be used for sick and vacation leave purposes.

7. It is a monetary bonus that is given either in two installments (May and December) or in full
(before December 24).

8. It is an additional 10% premium given to an employee who works between 10:00 PM and
6:00 AM.

9. It is given to an employee upon reaching the age of 60-65, equivalent to at least half-month
salary for every year of service.

10. It is a two-month leave given to an employee who underwent surgery due to gynecological
disorders.

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 What I Can Do

Mrs. Esteban is a professor in a university. Suppose she received the following salaries
and benefits within the year.

Annual Basic Salary ₱420,000

13th Month Pay and Bonus ₱90,000
Rice Subsidy ₱30,000
Laundry Allowance ₱5,000
Clothing Allowance ₱10,000

Summarize the computation of the taxable and non-taxable income and benefits of Mrs.
Esteban using the given table below. Use a separate sheet of paper for your answers.

Non-taxable
Other
Description Taxable De Minimis
Benefits &
Benefits
Excess
Annual Basic Salary
13th Month Pay and Bonus
Rice Subsidy
Laundry Allowance
Clothing Allowance
Total

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 Assessment

Directions: Choose the letter of the best answer. Write the letter of your choice on a separate
sheet of paper or notebook. Don’t forget to show your solutions.

1. Mrs. Mendoza, a high school teacher underwent surgery due to ovarian cysts. What benefit
can she avail?
A. maternity leave C. vacation leave
B. sick leave D. magna carta for women

2. Dianne works as a service crew in a 24-hour fast food chain. She was assigned to work in a
graveyard shift from 10:00 P.M. to 6:00 A.M. Aside from her basic wage, what benefit
can she get?
A. overtime pay C. night shift differential
B. premium pay D. holiday pay

3. Katrina works as a cashier in a supermarket. On a peak season, her employer asked her to
work for additional hours beyond her schedule. What additional compensation can she
get?
A. overtime pay C. night shift differential
B. premium pay D. holiday pay

4. Mang Agustin was asked by his employer to render his service on Saturday, which is his
rest day. What additional compensation can he get if he will work on that day?
A. overtime pay C. holiday pay
B. premium pay D. separation pay

5. A production company terminated ten of its employees due to installation of new labor-
saving machines in the factory. What benefit can they get from the company?
A. separation pay C. holiday pay
B. retirement pay D. overtime pay

6. After dining in a fancy restaurant, Mr. Lim paid ₱350 for the service charge. What percentage
of the collected service charge will be shared by the employees?
A. 100% C. 90%
B. 95% D. 85%

7. Mrs. Garcia, a pregnant employee of the company, is scheduled to have a caesarean delivery
on November. How many days will be given for her maternity leave?
A. 90 days C. 100 days
B. 95 days D. 105 days

8. It is given to an employee upon reaching the age of 60-65, equivalent to at least half-month
salary for every year of service.
A. separation pay C. holiday pay
B. retirement pay D. overtime pay

9. It is a monetary bonus that is given either in two instalments (May and December) or in full
(before December 24) equivalent to 1/12 of the annual basic salary.
A. service charge C. holiday pay
B. 13 month pay
th D. meal allowance

12
10. Jessica received a total of ₱120,000 for 13th month pay, bonus and excess of de minimis
benefits. What amount will be taxable?
A. ₱120,000 C. ₱30,000
B. ₱90,000 D. ₱20,000

11. Which of the following is not a benefit of a wage earner?

A. income tax C. 13th month pay
B. service incentive leaves D. separation pay

12. Which of the following is not a de minimis benefit?

A. monetized leave credits C. rice subsidy
B. overtime pay D. clothing allowance

13. Which of the following is a non-taxable benefit?

A. transportation allowance C. night shift differential
B. premium pay D. holiday pay

14. Half of the cashiers of a department store were required to work on Christmas Day. What
benefit will they get aside from their basic pay?
A. vacation leave C. night shift differential
B. overtime pay D. holiday pay
15. It grants seven (7) days of fully paid leave to married fathers that is effective up to the first
four deliveries of the legitimate spouse.
A. vacation leave C. maternity leave
B. sick leave D. paternity leave

13
 Additional Activities

Conduct an indirect/online interview to a family member, friend, or neighbor who is a

wage earner. Ask the following questions then write the responses on the space separate sheet
of paper or notebook.

Name of Interviewee (optional):___________________________________________________

What is your nature of work/job?________________________________________________
How much is your average wage per month?_____________________________________
What are the different benefits that you receive from your company/employer?
Do you receive these
Benefits
benefits? (Yes/No)
Overtime Pay

Premium Pay

Holiday Pay

Night Shift Differential

13th Month Pay

Service Charge Share

Vacation Leave

Sick Leave

Maternity/Paternity Leave

Monetized Leave Credits

Medical Cash Allowance

Rice Subsidy

Uniform Allowance

Bonus

Meal Allowance

Transportation Allowance

Laundry Allowance

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Answer Key

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 Development Team of the Module

Writer: JHOANNA S. MANALOTO – T-II San Juan High School (Mexico)

Editor: JANE P. VALENCIA, Ed.D. – EPS – Mathematics
Reviewer: JANE P. VALENCIA, Ed.D. – EPS – Mathematics
CHARIZEL T. ARCILLA – SPST-I Malino National High School
JHOANNA S. MANALOTO – T-II San Juan High School (Mexico)
Illustrator: JHOANNA S. MANALOTO – T-II San Juan High School (Mexico)
Layout Artist: JHOANNA S. MANALOTO – T-II San Juan High School (Mexico)
Language Reviewer:

Management Team

ZENIA G. MOSTOLES, Ed.D., CESO V, Schools Division Superintendent

LEONARDO C. CANLAS, Ed.D., CESE. Asst. Schools Division Superintendent
ROWENA T. QUIAMBAO, CESE, Asst. Schools Division Superintendent
CELIA R. LACNALALE, Ph.D., CID Chief
JANE P. VALENCIA, Ed.D., Education Program Supervisor, Mathematics
JUNE E. CUNANAN, Education Program Supervisor/ Language Editor
RUBY M. JIMENEZ, Ph.D., Education Program Supervisor, LRMDS