Senior High School

Business
Mathematics
Business Mathematics – Grade 11
Alternative Delivery Mode
Quarter 2 – Week 3 – Module 3: SALARY, WAGE, GROSS, AND NET EARNINGS
First Edition, 2021

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the Government of the Philippines. However, prior approval of the government agency
or office wherein the work is created shall be necessary for exploitation of such work for
profit. Such agency or office may, among other things, impose as a condition the
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Borrowed materials (i.e., songs, stories, poems, pictures, photos, brand names,
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Published by the Department of Education

Secretary: Leonor Magtolis Briones
Undersecretary: Diosdado M. San Antonio

Development Team of the Module

Writers:
Maureen P. Abulencia, LPT, CPA
Leonides L. Gavina, LPT, CPA, EdD, DBA

Layout Artist:
Pedro C. Limos, Jr.

Content Evaluators:
Rosemarie DC. Gonzales, LPT, DBA
Christian Paul C. Gutierrez, LPT, DBA
Sharon F. Sanchez, LPT, DBA
Maricel E. Sanchez, LPT, MBA
Junie J. Gale, LPT, PhD
Jemar P. De Vera, LPT, MBA, EdD

Language Evaluator:
Rosanna A. Paiso, LPT, MEd
Kenna Marie P. Samson, LPT, MaEd

Layout Evaluator:
Emmanuel S. Malasan, LPT

Validators and Reviewers:

Lalaine C. Rosario, EdD
EPS-ABM
Barmie S. Caluza, PhD
PSDS
 11
Business
Mathematics
Quarter 2 Week 3 Module 3
SALARY, WAGE, GROSS, AND NET
EARNINGS
 What I Need to Know

This module was written for you to accomplish at home. It was carefully
designed so that you can work at your own pace and allow self-discovery of the
concept through the activities that you will perform. Activities were also selected to
allow independent learning which also aims to develop your reading comprehension
skills through understanding written texts.

After going through this module, you are expected to:

Most Essential Learning Competencies:

1. Define salary, wage, income, benefits. (ABM_BM11SW-IIc-1)
2. Compute gross and net earnings. (ABM_BM11SW-IId-2)

Learning Objectives:
1. Define salary, wage, gross and net earnings.
2. Identify standard deductions from salaries and wages like withholding tax,
SSS, Phil health and HDMF contributions.
3. Compute for gross and net earnings.

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 What I Know

ACTIVITY 1: Magpakilala Ka
Directions: Identify what is being described below.
____________1. It administers the National Health Insurance Program, which was
established to provide health insurance coverage and ensure affordable and
accessible health care services for all Filipinos.
____________2. Is a social insurance program for employees in the Philippines that
provides retirement and health benefits to all paid up employees?
____________3. Is the amount earned by any person before subtracting the taxes,
benefits, loans, and other possible deductions?
____________4. 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.
____________5. Was established to provide a national savings program and
affordable shelter financing for Filipino workers. Among other things, the Fund
offers its members short-term loans and access to housing programs.

SALARY WAGE GROSS EARNINGS

NET EARNINGS SOCIAL SECURITY SYSTEM PHILHEALTH

PAG-IBIG/HDMF

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 What’s In

ACTIVITY 2: Sino Ako

DIRECTIONS: Fill out the table by identifying the occupation being depicted in the
picture and if the worker receives either a salary or a wage

Picture Occupation Salary/Wage

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 What’s New

Salary is associated with employee compensation quoted on an annual basis,

such as ₱240,000 per year. Salaries are usually paid on a monthly or semi-monthly
basis. People working for the government such as public-school teachers, accountants,
auditors, human resource manager, and others are usually paid a salary. People
working in private companies with white collar or also known as the suit-and-tie
workers also get a salary.

Wages are usually associated with employee compensation that is based on the
number of hours worked multiplied by an hourly rate of pay. Wages are paid to people
with blue collar jobs. These workers engage in hard manual labor like construction,
mining, or maintenance. Some college professors are also paid per hour but get their
pay semi-monthly.

Other basic terms that will be used in this lesson are gross earnings, net
earnings and deductions.

Gross Earnings is the amount earned by any person before subtracting the
taxes, benefits, loans, and other possible deductions. While Net Earnings is the
amount earned by any person from the gross earnings less the total deductions.
Deductions is the amount held by any authority as a form of payment for some
necessary dues like taxes, loans, etc.

Mandatory payroll deductions and contributions for workers usually includes

withholding taxes on salaries, GSIS/SSS, Philhealth, and HDMF (Pag-ibig Fund).

Withholding tax is a mandatory tax on the gross value of an employee’s salary.

Withholding taxes are then paid by the employer to the Bureau of Internal Revenue
(BIR) the following month.

The Social Security System, or SSS, is the government-mandated program for

employees working for private institutions in the Philippines. It is a social insurance
scheme that provides for various benefits during the lifetime of an SSS member. Its
counterpart, the Government Security Insurance System, or GSIS, is designed for
government and public sector employees.

It is mandatory for companies in the Philippines to deduct SSS or GSIS

contributions from the salaries of their employees.

To ensure affordable health insurance coverage for working Filipinos, the

government requires that all employees are insured through the Philippine Health
Insurance System, commonly known as PhilHealth.

It is therefore mandatory for employers to deduct part of each employee’s salary

and remit the equivalent payment to PhilHealth.

GSIS contribution

Section 11 of the Revised Implementing Rules and Regulations of RA 8291

approved on June 23, 2010 under Board Resolution No. 88 provides that the rate of
contribution payable by the member and the government agency shall be nine (9) per
cent and 12 per cent, respectively, based on the actual monthly salary of the member.

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Example 1:

A government employee has a monthly salary of ₱27,067 paid monthly.

Compute for the GSIS contribution. The member’s contribution is 9% of his/her monthly
salary, therefore ₱27,067 x 0.09 = ₱2,436.03. The GSIS contribution of a government
employee earning ₱27,067 paid monthy is ₱2,436.03.

SSS Contribution Table

Example 2:
The Operations Manager of a private company is earning ₱150,000 per month.
If the employee is paid semi-monthly, compute for the SSS contribution for half month.
₱150,000 per month is in the range of ₱24,750 and above that is why the employee
contribution is ₱1,125 for one month. Since the employee is paid semi-monthly ₱1,125
÷ 2 = ₱562.50. Therefore, the SSS contribution of the Operations Manager on a semi-
monthly basis is ₱562.50.

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Philhealth Contribution

The Philhealth deduction is to be shared equally by both the employee and the
employer.

Philhealth has suspended the increase in member’s monthly salary premiums

for the year 2021 in response to the directive of managing the impact of the Covid-19
pandemic. To date, Philhealth will continue to collect contributions using the three
percent premium rate.

Example 1:

A government employee has a monthly salary of ₱27,067. Compute for the

Philhealth contribution. Since it is year 2020 we look at row 2020. ₱27,067 is within the
salary range from ₱10,000.01 to ₱59,999.99 that is why the premium rate is 3% to be
divided equally by the employer and the employee. So ₱27,067 x 0.03 = ₱812 ÷ 2 =
₱406. The Philhealth contribution of an employee earning ₱27,067 a month paid
monthly is ₱406.

Example 2:

The Operations Manager of a private company is earning ₱150,000 per month.

If the employee is paid semi-monthly, compute for the Philhealth contribution for half
month. Again we look at row for year 2020. The maximum salary is ₱60,000 and
₱150,000 is above ₱60,000 that is why the Philhealth contribution is at maximum of
₱1,800 to be divided equally by the employer and employee therefore getting ₱900 for
a month. Since the employee is paid on a semi-monthly basis we divide ₱900 by 2
getting ₱450. The Philhealth contribution of an employee earning ₱150,000 per month
paid on a semi-monthly basis is ₱450 for a pay period.

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Pag-ibig/HDMF Contribution

The maximum monthly compensation to be used in computing the employee

and employer contributions shall not be more than ₱5,000.

The increase in monthly contributions to Pag-ibig is also suspended for the year
2021.

Example 1:

A government employee has a monthly salary of ₱27,067. Compute for the Pag-
ibig contribution. ₱27,067 is above the maximum monthly compensation of ₱5,000
therefore the Pag-ibig contribution is ₱5,000 x 0.02% = ₱100. The Pag-ibig contribution
of an employee earning ₱27,067 a month paid monthly is ₱100.

Example 2:

The Operations Manager of a private company is earning ₱150,000 per month.

If the employee is paid semi-monthly, compute for the Pag-ibig contribution for half
month. ₱150,000 is above the maximum monthly compensation of ₱5,000 therefore
the Pag-ibig contribution is ₱5,000 x 0.02% = ₱100. Since the employee is paid on a
semi-monthly basis we divide ₱100 by 2 resulting to ₱50. The Pag-ibig contribution of
an employee earning ₱150,000 a month paid semi-monthly is ₱50.

Withholding Tax

Refer to BIR Withholding tax Table

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Example 1:

A government employee’s gross salary is ₱27,067. If the employee is paid

monthly, compute for the withholding tax.

The first step is to deduct all the other non-taxable compensation which includes
GSIS/SSS, Philhealth and Pag-ibig, so ₱2,436.03 + ₱406 + ₱100 = ₱2,942.03 of the
basic salary is non-taxable. To get the taxable salary we deduct ₱2,942.03 from the
basic salary. So, ₱27,067 - ₱2,942.03 = ₱24,124.97. Look for monthly in the first
column of the BIR withholding tax table. ₱24,124.97 is within compensation range
₱20,833-₱33,332 under the number 2, so prescribed withholding tax is ₱24,124.97 -
₱20,833 = ₱3,291.97. ₱3,291.97 x 0.2 = ₱658.39. Withholding tax of an employee
with a gross salary of ₱27,067 is ₱658.39.

Now let us compute for the net pay of the government employee with earning
₱27,067. Total deductions including GSIS contribution (₱2,436.03), Philhealth
contribution (₱406), Pag-ibig contribution (₱100), and withholding tax (₱658.39) is
equal to ₱3,600.52. Therefore, net earnings is ₱27,067 less ₱3,600.52 which is equal
to ₱23,466.48.

Example 2:

The Operations Manager of a private company is earning ₱150,000 per month.

If the employee is paid semi-monthly, compute for the withholding tax.

The first step is to divide ₱150,000 by two since the Operations Manager is paid
on a semi-monthly basis, therefore ₱150,000/2 = ₱75,000. The second step is to add
all the non-taxable compensation which includes GSIS/SSS, Philhealth and Pag-ibig,
so ₱562.50 + ₱450 + ₱50 = ₱1,062.50 of the basic salary is non-taxable. The third is
to get the taxable salary therefore ₱75,000 - ₱1,062.50 = ₱73,937.50.

Now let us not forget that the Operations Manager will receive a 13th month pay
greater than the limit of non-taxable bonus which is ₱90,000. Let us factor this in. 13th
month pay is ₱150,000 at the end of the year less ₱90,000 limit for the non-taxable so
₱60,000 is taxable. ₱60,000 ÷ 12 months per year ÷ 2 because employee is paid semi-
monthly, so this is equal to ₱2,500. So, the taxable salary should be ₱73,937.50 +
₱2,500 = ₱76,437.50.

Next step is to look for semi-monthly in the first column of the BIR Withholding
tax table. The taxable salary of ₱76,437.50 is within compensation range ₱33,333-
₱83,332 under number 4, so the prescribed withholding tax is ₱76,437.50 - ₱33,333 =
₱43,104.50. ₱43,104.50 x 0.3 = ₱12,931.50 + ₱5,416.67 = ₱18,348.02. Withholding
tax of an employee with gross salary of ₱150,000 paid semi-monthly is ₱18,348.02
every pay period.

The net pay of the Operations Manager of a private company earning ₱150,000
per month paid semi-monthly will be computed as follows. Total deductions including
SSS contribution (₱562.50), Philhealth contribution (₱450), Pag-ibig contribution (₱50),
and withholding tax (₱18,348.02) is equal to ₱19,410.52. Therefore, net earnings is
₱75,000 less ₱19,410.52 = ₱55,589.58. The net pay of the Operations Manager every
pay period is ₱55,589.48.

Now your employer will have a choice if it considers spreading the 13th month
pay across 12 months or just deduct it one time when an employee will receive the
benefit. So, computation might vary for employees receiving 13th month and other
bonuses greater than ₱90,000. For lesson purposes let us opt to spread the
withholding tax for bonuses which are taxable to soften the blow to the taxpayers.

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 What’s More

ACTIVITY 3: Di Mo Ako Maloloko

DIRECTIONS: Using the SSS, Philhealth, HDMF, and Tax Tables, re-compute the
amounts in the pay slip if they are correct. Show your correct and complete solutions.

Show your computation for the following:

1. SSS
2. Philhealth
3. Pag-ibig/HDMF
4. withholding tax
5. Gross and Net Earnings
Make a conclusion for your computations.

Rubrics for Activity Di Mo Ako Maloloko

Criteria Level of Performance
Excellent Good Fair Needs
3 2 1 Improvement
0
Solution Solution is A part of the Solution does No solution
correct and solution is not make
makes sense correct sense
Form The solution Some of the There were No content
was written handwriting many erasures
legibly and cannot be and
there were no understood handwriting is
erasures and there were not clear
less than two
erasures
Conclusion The The conclusion The conclusion No conclusion
conclusion is is correct, but does not make
correct and is the solution sense
supported by does not
the solution support it

9
 What I Have Learned

Directions: Answer the questions below:

1. What are the mandatory deductions in a payslip?
2. How do you compute for SSS/GSIS, Philhealth, Pag-ibig/HDMF and
withholding tax?
3. What is the importance of the mandatory deductions.
4. Would you change anything on the government rules in computing for the net
earnings? Why?

What I Can Do

ACTIVITY 4: Kaya Mo Ba
DIRECTIONS: Create a pay slip for Maganda Ako, a fast-food crew, who has a
gross salary of ₱5,000 per pay period. Pay period is for October 1 to 15, 2021.
Create your own logo and name of the fast-food business. You can use
Microsoft Excel, or any software to create the pay slip. If you cannot create a
digital pay slip you can manually draw a pay slip.

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Show your computations below

Rubrics for Activity Kaya Mo Ba

Criteria Level of Performance
Excellent Good Needs
2 1 Improvement
0
Content The pay slip clearly The sample pay No sample pay slip
depicts the gross slip does not was given
and net earnings contain all the
and the mandatory information in the
deductions as discussion
discussed
Creativity The pay slip The pay slip There is no logo
contains an original contains a logo and and business name
logo with a unique a business name, in the pay slip
business name but it is not unique
Computation The computation Some of the There were no
was complete and computations were computations done
correct not shown and
some were also
incorrect

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 Assessment

DIRECTIONS: Read the problem and solve for what is being asked for.

1. A private employee with a monthly compensation of ₱75,000 paid on a semi-monthly

basis. The employee also has a loan of ₱5,500 from HDMF. What is the employee’s
SSS, Philhealth, HDMF contribution and withholding tax? What is the employee’s net
pay?

2. A government employee with a monthly compensation of ₱18,000 paid on a semi-

monthly basis. What are the employees GSIS, Philhealth, HDMF contribution and
withholding tax? What is the employees net pay?

3. A bank manager receives a monthly salary of ₱120,000. He gets paid twice a month.
Compute for his mandatory monthly deductions consisting of SSS, Philhealth, Pag-ibig
and withholding tax. Compute for his net pay.

Rubrics for Assessment

Criteria Level of Performance
Excellent Good Fair Needs
3 2 1 Improvement
0
Solution Solution is A part of the Solution does No solution
correct, solution is not make
complete and correct. Some sense
makes sense of the solutions
were not
shown.
Neatness The solution Some of the There were No content
was written handwriting many erasures
legibly and cannot be and
there were no understood handwriting is
erasures and there were not clear
less than two
erasures

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 Answer Keys

What I know
1. Philhealth
2. Social Security System
3. Gross Earnings
4. Salary
5. Pag-ibig/HDMF

What’s In
Picture 1 – Construction Worker – Wage
Picture 2 – Teacher – Salary
Picture 3 – Security Guard – Wage
Note: Other answers can be considered depending on the learner’s
explanation

What’s More
What I can Do
Assessment
Note: Answer will depend on what year is it. We need to consider
updates in government laws regarding employee benefits and
deductions, updates in income taxation.

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References

BOOKS

Lopez, Brian Roy C., et al, 2016 Business Mathematics. 1253 G. Araneta Avenue,
Quezon City. Vibal Group, Inc.

Lopez-Mariano, Norma D., 2016 Business Mathematics First Edition. 856 Nicanor
Reyes Sr.St., Sampaloc, Manila. Rex Book Store, Inc.

ONLINE AND ELECTRONIC RESOURCES

Bureau of Internal Revenue. Tax Information Withholding Tax Table (2019). Retrieved
from https://www.bir.gov.ph/index.php/tax-information/withholding-tax.html.
September 20, 2021

Lachman-Anke, Peggy and Marco. Construction Worker Image (2017). Pixabay.

Retrieved from https://pixabay.com/illustrations/construction-worker-black-workers-
2606310/. September 2, 2021

Max Pixel. Construction Worker Labor Workers Builder Building and other photos.
Creative Commons Zero – CC0. Retrieved from
https://www.maxpixel.net/Construction-Worker-Labor-Workers-Builder-Building-
4896054. September 2021

P&A Grant Thornton, CPAs. “Suspension of Philhealth contribution hike for 2021”. P&A
Grant Thornton (2021). Retrieved from
https://www.grantthornton.com.ph/insights/articles-and-updates1/tax-
notes/suspension-of-philhealth-contribution-hike-for-2021/. September 2, 2021

Rico, JJ. “Philhealth sets new contribution schedule; assures immediate eligibility to
benefits”. Philhealth (2019). Retrieved from philhealth.gov.ph.
https://www.philhealth.gov.ph/news/2019/new_contri.php#gsc.tab=0. September 2,
2021

Social Security System. New Contribution Schedule (2021). Retrieved from

https://www.sss.gov.ph/sss/DownloadContent?fileName=2021-CONTRIBUTION-
SCHEDULE.pdf. September 2, 2021

Zoleta, Venus. “How to Compute your Pag-IBIG Contribution: A Complete Guide to

Contribution Table and Payment”. FilipiKnow (2021). Retrieved from
https://filipiknow.net/pag-ibig-contribution-table/. September 2, 2021

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