SENIOR

Business Math HIGH

SCHOOL

Module
Benefits: Wage Earners 6
Quarter 2
Business Math
Quarter 2 – Module 6: Benefits: Wage Earners
First Edition, 2020

Republic Act 8293, section 176 states that: No copyright shall subsist in any work
of 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 payment of
royalties.

Borrowed materials (i.e., songs, stories, poems, pictures, photos, brand names,
trademarks, etc.) included in this module are owned by their respective copyright holders.
Every effort has been exerted to locate and seek permission to use these materials from
their respective copyright owners. The publisher and authors do not represent nor claim
ownership over them.

Published by the Department of Education Division of Pasig City

Development Team of the Module

Writer: Carmelita B. Peralta
Editors: Mrs. Nenet M.Peṅaranda
Reviewers: Marygrace A. salon
Layout Artist: Clifchard D. Valente
Management Team: Ma. Evalou Concepcion A. Agustin
OIC-Schools Division Superintendent
Carolina T. Rivera, Ed. D.
OIC-Assistant Schools Division Superintendent
Victor M. Javeña, Ed. D.
Chief - School Governance and Operations Division
OIC – Chief Curriculum Implementation Division
Education Program Supervisors
1. Librada L. Agon, Ed. D., EPP/TLE
2. Liza A. Alvarez, Science
3. Bernard R. Balitao, Araling Panlipunan
4. Joselito E. Calios, English
5. Norlyn D. Conde, Ed. D., MAPEH
6. Wilma Q. Del Rosario, LRMS
7. Ma. Teresita E. Herrera, Ed. D., Filipino
8. Perlita M. Ignacio, Ph. D., ESP/SPED
9. Dulce O. Santos, Ed. D., Kinder/MTB
10. Teresita P. Tagulao, Ed. D., Mathematics

Printed in the Philippines by the Department of Education, Division of Pasig City

Business SENIOR
HIGH

Math
SCHOOL

Module

6
Quarter 2

Benefits: Wage
Earners
Introductory Message

For the facilitator:

Welcome to the Business Math for Senior High School Module on Benefits: Wage
Earners !

This module was collaboratively designed, developed and reviewed by educators

from Schools Division Office of Pasig City headed by its Officer-In-Charge Schools
Division Superintendent, Ma. Evalou Concepcion A. Agustin in partnership with
the Local Government of Pasig through its mayor, Honorable Victor Ma. Regis N.
Sotto.
The writers utilized the standards set by the K to 12 Curriculum using the Most
Essential Learning Competencies (MELC) while overcoming their personal, social,
and economic constraints in schooling.

This learning material hopes to engage the learners into guided and independent
learning activities at their own pace and time. Further, this also aims to help
learners acquire the needed 21st century skills especially the 5 Cs namely:
Communication, Collaboration, Creativity, Critical Thinking and Character while
taking into consideration their needs and circumstances.

In addition to the material in the main text, you will also see this box in the body of
the module:

Notes to the Teacher

This contains helpful tips or strategies
that will help you in guiding the learners.

As a facilitator you are expected to orient the learners on how to use this module.
You also need to keep track of the learners' progress while allowing them to
manage their own learning. Moreover, you are expected to encourage and assist the
learners as they do the tasks included in the module.
For the learner:

Welcome to the Business Math Module on Benefits: Wage Earners !

The hand is one of the most symbolized part of the human body. It is often used to
depict skill, action and purpose. Through our hands we may learn, create and
accomplish. Hence, the hand in this learning resource signifies that you as a
learner is capable and empowered to successfully achieve the relevant
competencies and skills at your own pace and time. Your academic success lies in
your own hands!

This module was designed to provide you with fun and meaningful opportunities
for guided and independent learning at your own pace and time. You will be
enabled to process the contents of the learning material while being an active
learner.

This module has the following parts and corresponding icons:

Expectation - These are what you will be able to know after

completing the lessons in the module

Pre-test - This will measure your prior knowledge and the

concepts to be mastered throughout the lesson.

Recap - This section will measure what learnings and skills

that you understand from the previous lesson.

Lesson- This section will discuss the topic for this module.

Activities - This is a set of activities you will perform.

Wrap Up- This section summarizes the concepts and

applications of the lessons.
Valuing-this part will check the integration of values in the
learning competency.

Post-test - This will measure how much you have learned from
the entire module. Ito po ang parts ng module
 EXPECTATION

At the end of the lesson module, you are expected to:

1) define each of the benefits given to wage earners;
2) distinguish taxable from nontaxable benefits;and
3) identify the mandatory employee benefits and contributions in the
Philippines.

PRETEST

A. Answer the following questions:

1. How much is the minimum wage in Metro Manila?

2. What is the normal hours of work in a day?
3. When should the 13th month pay be given?
4. Who are entitled to 13th month pay?
5. Where can you get the solo parent ID?
6. How long is the meal period in a day?
7. How about the 14th month pay? When should the 14TH month pay be given?

B. True or False: Write True if the statement is correct and False if the
statement is wrong.

1. All allowances regularly received by the employees are subject to income

tax except those considered as “de minimis”.
2. Compensation income earners, self-employed and professional tax payers
whose annual taxable income are Php 250 000.00 or less are taxable.
3. Employees’ 13th month pay is taxable.
4. An employer who gives a monthly rice subsidy to its employee amounting
to not more than Php 2 000.00 monthly is nontaxable.
5. Bereavement leave is applicable to employee’s brother- in- law.
 RECAP

Gross Income for an individual consists of income from wages, and salary
plus other forms of income, including pensions, alimony, interest, dividends, and
rental income.
Gross income for a business, also known as gross profit or gross margin,
includes the gross revenue of the firm less the cost of goods sold, but it does not
include all the other costs involved in running the business.
Individual gross income is part of an income tax return and after certain
deductions and exemptions becomes adjusted.

Example of an individual Gross Income:

Assume that an individual has ₱ 75 000.00 annual salary, generates
₱ 1 000.00 a year in interest from a savings account, collects ₱ 500.00 per year in
stock dividends, receives ₱ 10 000.00 a year from rental property income. His /
her gross annual income is ₱ 86 500.00.

LESSON

As an employer, you might give benefits to your employees apart from their
regular salaries and wages. They are called “fringe benefits”. There are fringe
benefits that are relatively small in value and are not taxable. These are called “de
minimis benefits”.
According to BIR Revenue Regulations No. 3-1998 ©, the term “de minimis
benefits” refers to facilities or privileges furnished or offered by an employer to his
employees that are relatively small value and are offered or furnished by the
employer merely as a means of promoting the health, goodwill, contentment, or
efficiency of his employees.
“De minimis benefits,” like fringe benefits, are granted by the employer on
top of the employee’s basic compensation, but are not considered as taxable
compensation for income tax purposes nor subject to the fringe benefit tax.
Employers are not obliged to give this kind of benefits but they are
encouraged to do since these benefits, no matter how small, are a big help to the
workers.

What benefits are considered as “de minimis benefits?”

 For tax purposes, only the benefits considered as “de minimis” are
considered as tax-exempt. All other benefits given by the employers which are not
included in the listing of “de minimis benefits” are not “de minimis,” hence, they
are subject to income tax, as well as withholding tax on compensation income.
Here is the list of the latest “de minimis benefits” of both managerial and
rank-and-file employees for income tax purposes.
All allowances regularly received by the employees are subject to income tax,
except those that are enumerated below:
1. Monetized unused vacation leave credits of private employees not exceeding
ten (10) days during the year (RR No.5 – 2011).
2. Monetized value of vacation and sick leave credits paid to government
officials and employees (RR No.5 – 2011).
3. Medical cash allowance to dependents of employees not exceeding ₱ 500.00
per employee per semester or ₱ 250.00 per month; ( as amended – TRAIN
RA 10963).
4. Rice subsidy of ₱ 2 000.00 or one (1) sack of 50 kg rice per month
amounting to not more than ₱ 2 000.00; (as amended – TRAIN RA 10963).
5. Uniform and Clothing allowance not exceeding ₱ 6 000.00 per annum;
(as amended by RR 11-2018 on TRAIN RA 10963)
6. 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;
(RR No.5 – 2011 ).
7. Laundry allowance not exceeding ₱ 300 per month; (RR No.5 – 2011 ).
8. Employees achievement awards, e.g., for length of service or safety
management, which must be in the form of a tangible personal property
other than cash or gift certificate, with an annual monetary value not
exceeding ₱ 10 000.00 received by the employee under an established
written plan which does not discriminate in favor of highly paid employees.
9. Gifts given during Christmas and major anniversary celebrations not
exceeding ₱ 5 000.00 per employee per annum; (RR No.5 – 2011)
10. Daily meal allowance for overtime work and night/graveyard shift not
exceeding 25% of the basic minimum wage on a per region basis;
(RR No.5 -2011).
11. 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 ₱ 10 000.00 per employee per taxable year;
(RR No.1 – 2015).
Any excess of the limit will be taxable and, therefore be subjected to withholding
tax. In the case when an employee is a rank-and –file employee, the benefits be
subjected to the withholding tax and the normal income tax rate.
However, if the employee is a managerial or supervisory employee, it will be
subjected to the 32% fringe benefit tax; (RR No.3 – 2015 dated March 9, 2015).
For managerial, the excess benefits, bonuses, and the 13th month pay exceeds
₱ 82,000.00 limit, it is taxable.
Illustration:
Mr. Rupert Jalandoni received the following compensation and benefits
during the year while working as a bookkeeper.
Annual basic salary Php 250 000.00
13th month pay and bonuses 72 000.00
Rice subsidy 3 000.00

Uniform Allowance 8 000.00

The following is the computation of the taxable and nontaxable
compensation income of Mr. Rupert Jalandoni.
Description Taxable Nontaxable

Annual Basic Salary ₱ 250 000.00

De Minimis benefit
Rice Subsidy (1,500 x 12) ₱ 18 000.00

Uniform/Clothing (Php 5 000/annum) 5 000.00

Other Benefits:
13th Month pay and Bonuses 72 000.00

Excess rice subsidy ₱2 000.00 10 000.00

Excess uniform/clothing 3 000.00

Total ₱ 255 000.00 ₱105 000.00

Mandatory Employee Benefits and Contributions in the Philippines

The Philippine Social Security System, strengthened by the provisions of the
RA Act No. 8282 or the Social Security Law, is the country’s social insurance
program and consist of the following:
● Social Security System (SSS) the SSS was created to provide private
employees and their families protection against disability, sickness, old age, and
death.
● Government Service Insurance System (GSIS) is the equivalent system for
Philippine government employees.
● Home Development Mutual Fund (HDMF) – also known as the Pag-IBIG
Fund, is a provident savings system supplying housing loans to private and
Philippine government employees, and to self-employed persons who elect to join
the Fund.
 ● Philippine Health Insurance Corporation (PhilHealth) is administered by
the Philippine Health Insurance Corporation, and provides employees with a
practical means of paying for adequate medical care in the Philippines.
2020 Philippines Benefits

Employees are eligible for most benefits program on the first day of employment.
Holidays: Eleven (11) paid national regular holidays and nine (9) national special
holidays per year as provided under Proclamation No. 845 (2020 Declared Holidays)
Vacation: Thirteen vacation leave, with additional one (1) day every year starting
on the 3rd year of service and convertible to cash at the end of each year. Maximum
vacation leave is 18 days.
Retirement: the plan is 100% funded by the company calculated at one month’s
base salary per year of service based on the employee’s latest basic rate upon
normal retirement at age 60, death or total and permanent disability. Early
retirement benefit can be available to 10 years of service equal to 50% of normal
retirement benefit.

How is the retirement benefits computed?

Minimum retirement pay = 22.5 days x daily rate x number of years in service
Healthcare: the plan provides a comprehensive health care coverage for employees
and eligible dependents through Medicard’s accredited hospitals and doctors
nationwide. The annual premium for Principal employees is 100% shouldered by
the company.
Other Leaves:
● Sick leave: twelve (12) days for the first two years of service and
additional one (1) day for every year starting on the 3rd year. Maximum total sick
leave is 15 days. All unused leave are convertible to cash at the end of the year.
Paternity leave: All married male employees are eligible for seven (7) working days
up to four (4) child birth including miscarriage of legitimate spouse to be availed
within (60) days from delivery/miscarriage.
Bereavement leave: Three (3) days applicable to immediate family member which
includes the employee’s children, parents, grandparents, brother, sister, spouse,
and parents-in-law.
Solo Parent Leave: Seven (7) working days.
Calamity leave: Two (2) days leave for employees who were affected by flood, fire,
and typhoon (must be supported by a gov’t. proclamation or may be declared by the
company).
Magna Carta for Women (Special Leave): Sixty (60) calendar days leave. This is
given to all female employees who underwent surgery caused by gynecological
disorders and who have rendered at least six (6) months continuous aggregate
employment service for the last twelve (12) months prior to surgery.
13th month: the company grants a 13th month pay equivalent to one (1) month’s
pay to all eligible employees provided that they worked for at least one (1) month
during a calendar year. The 13th month pay is due at the end of June.
14th month: due at the end of November
Loyalty Token: Employees are recognized for their loyal and dedicated service to
the company for every 5 years of continuous service by the way of gift check or
token, plus a plaque of appreciation during the service award ceremony.

ACTIVITIES

A. Direction: Write the letter of the best answer on your answer sheet or
notebook.
1. The 13th month pay is usually given
a.at the end of May c. at the end of November
b. at the end June d. at the end of December

2. Employers must pay this for every employee in case they cannot find a job in
the future.

a. Family and Medical leave Act c. Jury Duty

b. Workers compensation d. Unemployment compensation

3. Which of the following is NOT one of the 3 categories of employee benefits?

a. benefits added as a perk

b. benefits that are required by law
c. benefits the employee must get on their own
d. benefits that are considered as standard

4. These funds are set aside to provide people with an income when their career
ends.

a. retirement b. Medicare c. Disability d. Unemployment

5. This is given to all female employees who underwent surgery caused by

gynecological disorder and who have rendered at least six (6) months continuous
aggregate employment service for the last 12 months prior to surgery.

a. Maternity leave c. Magna Carta for Women

b. Vacation Leave d. Sick leave

B. Identify the following as taxable or nontaxable benefits

1. wedding gift (cutlery)

2. tickets to a concert (innovation and excellence awards)
 3. 10-year anniversary award (golf club)
4. Sales performance reward in the form of remuneration
5. Gift certificate
6. Basketball / volleyball / bowling shirt
7. Holiday season gift (artwork)
8. Benefits and bonuses in excess of ₱ 82 000.00

C. Solve the following problems. Show your complete solution.

1. Because of the pandemic situation, the engineers of an oil company
shocked the business world by taking 10% pay cut. The former monthly
salary was Php 42 000.00. How much was the reduced salary?

2. Mrs. Gamboa was about to retire at the age of 60. What is her expected
minimum retirement pay if she is paid a daily rate of Php 850.00 and has
served the company for almost 30 years?

WRAP-UP

1. Carla is taking 30 days off of work to organize a breast cancer awareness

program in her community. This is an example of what type of work-life program?
A. Leave of absence / vacation
B. Stress Relief Program
C. Onsite Training
D. Healthy living Program
E. Dependent cure

2. How is the retirement benefits computed?

3. When can a woman employee avail of special leave benefits?

4. How many days is the maternity leave for a normal delivery?

5. How many days is the maternity leave for a Caesarian delivery?

VALUING
Many employees in today’s market quickly feel uninspired by their work, get
bored after 2 years and start job hunting for something new. Quick turnover
drains companies, both financially and creatively. Quantifying exactly how much it
costs businesses to replace every employee who leaves is a challenge, but estimates
are out there.
 If you are the boss / manager of the company, what do you think is the best
way / technique to hold the employees, especially those who are equipped to serve
the company for a longer period of time?

If you are the employee, what are some of the benefits that will attract you so
much so as not to leave the job?

POST–TEST

A. Direction: Identify whether the following is a taxable benefit or a

nontaxable benefit.
1. Salaries and wages (basic compensation) ____________________
2. De minimis benefits ____________________
3. Excess of de minimis benefits ____________________
4. 13th month + bonuses = ₱ 82 000.00 ____________________
5. All other benefits ____________________
B. Multiple Choice. Write the letter of the best answer.
1. Who is required to pay unemployment insurance taxes?
A. You, the employee.
B. You, the employer.
C. You and your employer.
D. Neither you nor your employer.
2. Employers are increasingly turning to workplace wellness programs in order
to
A. reduce healthcare costs by developing a healthier workplace.
B. compete for the best employees.
C. compensate for the lack of physical activity in many professions.
D. all of the above.
3. Which of the following is NOT an example of an incentive?
A. tickets to a sporting event
B. salary
C. a trip
D. an award
4. Which is an example of a monetary award?
A. employee stock options
B. flexible work hours
C. additional training
D. a trophy or plaque
5. Jennifer is an accountant. She is paid a basic salary in addition to the
possibility of more compensation if she exceeds the firm’s minimum billable
hours she is expected to generate. What is this type of compensation system
called?
A. wage
B. salary
C. pay-for-performance
D. commission
Pretest
A. 1. Php 537.00 (effective Nov. 22, 2018)
2. 8 hours
3. not later than December 24
4. all rank and file employees who worked for at least one month during
the calendar year
5. DSWD office of the City you resides
6. not less than 60 minutes or 1 hour
7. at the end of November
B. 1. True 2. False 3. False 4. True 5. False
Activities Posttest
A. B.1.taxable A. 1. Taxable B. 1. B
1. b 2. taxable 2. Nontaxable 2. D
2. d 3. nontaxable 3. Taxable 3. B
3. c 4. taxable 4. Nontaxable 4. A
4. a 5. taxable 5. Taxable 5. D
5. c 6. nontaxable C.
7. taxable a. Php 221 000.00
8. taxable b. Php 941 000.00
C. 1. Php 37 800.00 2. Php 573 750.00
KEY TO CORRECTION
b. Find his total job benefits for the year.
a. Find the total value of Mr. Gavieres’ fringe benefits for the year
Free Parking (estimated) - Php 6 000.00
Rice subsidy - Php 24 000.00
Use of company car - Php 120 000.00
Paid Vacation / Holidays - Php 59 000.00
Health and Life insurance - Php 12 000.00
amounts;
Php 720 000.00. He estimates his yearly fringe benefits to be worth these
C. Mr. Gavieres, a medical sales representative, has an annual gross income of
 REFERENCES
https://kc recruitment.com/hr-consulting/labor-and-employment/salary/

https://dacpa.ph/p=163 by Vincent Perdiguez

Social Security System (www.sss.gov.ph)

Pag-IBIG Fund (www.pagibigfund.gov.ph)

Philippine Health Insurance Corporation (www.philhealth.gov.ph)

Created by Findlaw’s team (legal writers and editors). Updated Dec. 5, 2018.

Business Mathematics, Lopez-Mariano, Norma D., PhD.