Salaries and

Wages
Mary Jane O. Cao
 Employee
Compensation
 Employee compensation
refers to the remuneration
in cash and in kind paid to
employees at regular
intervals for time of work
or work done.
 Employee Compensation

WAGE SALARY
Wages is used where the Employees who earn on a
amount of money the salary-basis are those who
employee receives vary earn at a fixed rate that is
from one pay period to quoted on a weekly,
the next, as the amount monthly, bimonthly, or an
paid is directly annual basis.
dependent on the
amount of hours worked.
 WAGES
 Fixed Piece-rate
Plan
The rate is fixed irrespective of
Piece Rate the quantity produced.

A worker employed on a
“piecework” basis is paid  Differentiated
in proportion to the Piece-Work Plan
quantity of work he or
she finishes. The rate can be graduated:
increasing as the quantity
produced increases, or vice
versa.
 Example:
Tammy is paid on a per-piece basis at the rate of ₱1.20
per piece. If she finishes 360 pieces a week, how much is
her total earnings?
Given: Solution:
Rate = ₱1.20 per piece Total Earnings = Quantity x Rate
Quantity produced = 360 pieces = 360 × ₱1.20
Find: Total Earnings = ₱𝟒𝟑𝟐. 𝟎𝟎
 Example:
Linda is employed to repack and seal pepper. She is paid
on the following differential pay plan schedule:

Quantity
Daily Rate Per For the week, Linda repacked
100 Packs the following quantities:
Less than 100 ₱100.00 Monday, 95 pcs; Tuesday, 102
pcs; Wednesday, 130 pcs;
100-149 ₱105.00 Thursday, 152 pcs; and Friday,
150-199 ₱107.50 201 pcs. Compute for her total
wage for the week.
200 or more ₱110.00
 Example:
Solution:
1. Convert the rate on a per-piece basis:
₱100.00 / 100 pcs = ₱1.00 / pc
₱105.00 / 100 pcs = ₱1.05 / pc
₱107.50 / 100 pcs = ₱1.075 / pc
₱110.00 / 100 pcs = ₱1.10 / pc
2. Multiply the quantity produced by the piece-rate:
Monday = 95 × ₱1.00 = ₱ 𝟗𝟓. 𝟎𝟎
Tuesday = 102 × ₱1.05 = ₱𝟏𝟎𝟕. 𝟏𝟎
Wednesday = 130 × ₱1.05 = ₱𝟏𝟑𝟔. 𝟓𝟎 = ₱𝟕𝟐𝟑. 𝟏𝟎
Thursday= 152 × ₱1.075 = ₱𝟏𝟔𝟑. 𝟒𝟎
Friday= 201 × ₱1.10 = ₱𝟐𝟐𝟏. 𝟏𝟎
 WAGES
Hourly Rate
The rate of employee is
on an hourly basis.
 Overtime Premium
It refers to the excess payment
over the regular rate.
1. Article 83 of the Labor Code
enunciates that the normal hours of
work of any employee shall not
exceed eight (8) hours a day. This is
exclusive of the one (1) hour lunch
break.
2. Article 85 provides that the subject to
such regulations as the Secretary of
Labor may prescribe, it shall be the
duty of every employer to give his or
her employees not less than sixty (60)
minutes time-off for their regular
meals.
 WAGES
3. Article 87 provides that the work may
Hourly Rate be performed beyond eight (8) hours
a day provided that the employee is
The rate of employee is paid for the overtime work an
on an hourly basis. additional compensation equivalent to
his regular wage plus at least twenty-
five percent (25%) thereof. Work
 Overtime Premium performed beyond eight hours on a
It refers to the excess payment holiday or rest day shall be paid an
over the regular rate. additional compensation equivalent to
the rate of the first eight hours on a
holiday or rest day plus at least thirty
percent (30%) thereof.
 WAGES
4. Article 93 provides that:
Hourly Rate a. Where an employee is made or
permitted to work on his or her
The rate of employee is scheduled rest day, he or she
on an hourly basis. shall be paid an additional
compensation of at least thirty
percent (30%) of his or her
 Overtime Premium regular wage. An employee shall
It refers to the excess payment be entitled to such additional
over the regular rate. compensation for work
performed on Sunday only when
it is his or her established rest
day.
 WAGES
Hourly Rate
The rate of employee is
on an hourly basis.
 Overtime Premium
It refers to the excess payment
over the regular rate.
4. Article 93 provides that:
b. When the nature of the work of
the employee is such that he or
she has no regular work days and
no regular rest days can be
scheduled, he or she shall be paid
an additional compensation of at
least thirty percent (30%) of his
or her regular wage for work
performed on Sundays and
holidays.
 WAGES
4. Article 93 provides that:
Hourly Rate c. Work performed on any special
The rate of employee is holiday shall be paid an additional
on an hourly basis. compensation of at least thirty
percent (30%) of the regular
wage of the employee. Where
 Overtime Premium such holiday work falls on the
It refers to the excess payment employee’s scheduled rest day,
over the regular rate. he or she shall be entitled to an
additional compensation of at
least fifty percent (50%) of his or
her regular wage.
 WAGES

Hourly Rate
4. Article 93 provides that:
The rate of employee is d. Where the collective bargaining
on an hourly basis. agreement or other applicable
employment contract stipulates
 Overtime Premium the payment of a higher premium
pay than that prescribed under
It refers to the excess payment this Article, the employer shall
over the regular rate. pay such higher rate.
 WAGES
5. Article 94 provides that:
a. The employer may require an
Hourly Rate employee to work on any holiday
The rate of employee is but such employee shall be paid a
on an hourly basis. compensation equivalent to twice
his regular rate.
b. Work on a rest day which falls on
 Overtime Premium a special day shall be paid 150%
of regular hourly rate.
It refers to the excess payment
c. Work on a regular holiday shall be
over the regular rate.
paid 200% of regular hourly rate.
d. Work on a rest day which falls on
a regular holiday shall be paid
260% of regular hourly rate.
 COMPUTATION OF OVERTIME PAY
On Ordinary Day
1. Compute the hourly rate Regular Hourly Rate = Daily Wage Rate ÷ 8 hours
of the employee.

2. Determine the overtime Overtime Rate

rate per hour. = Regular Hourly Rate + 25% of Regular Hourly Rate

3. Compute for the total Total Pay for the Day

pay per day. = Regular Pay + Overtime Pay
 Example:

Juan earns the regular daily rate of ₱340.00 giving

him an hourly rate of ₱42.50. If he works 10 hours
on a regular day, how much will be his total pay for
the day?
 COMPUTATION OF OVERTIME PAY
On Rest Day and Special Day
1. Compute the hourly rate Hourly Rate = 130% of Regular Hourly Rate
of the employee.

2. Determine the overtime Overtime Rate

rate per hour. = Hourly Rate on Rest Day + 30% Hourly Rate on Rest Day

3. Compute for the total Total Pay for the Day on Rest Day
pay per day. = Daily Rate + (Overtime Rate x Overtime Hours)
 Example:

Juan earns the regular daily rate of ₱340.00 giving

him` an hourly rate of ₱42.50. He was requested by
his boss to work 10 hours on a Saturday, his rest
day. How much will be his total pay for the day?
 COMPUTATION OF OVERTIME PAY
On Rest Day which Falls on a Special Day
1. Compute the hourly rate Hourly Rate = 150% of Regular Hourly Rate
of the employee.

2. Determine the overtime Overtime Rate

rate per hour. = Hourly Rate on Rest Day + 30% Hourly Rate on Rest Day

3. Compute for the total Total Pay for the Day which Falls on a Special Day
pay per day. = Daily Rate + (Overtime Rate x Overtime Hours)
 Example:

Juan earns the regular daily rate of ₱340.00 giving

him an hourly rate of ₱42.50. He was requested by
his boss to work 10 hours on his rest day, which falls
on special day. How much will be his total pay for
the day?
 COMPUTATION OF OVERTIME PAY
On a Regular Holiday
1. Compute the hourly rate Hourly Rate = 200% of Regular Hourly Rate
of the employee.

2. Determine the overtime Overtime Rate on Regular Holiday

rate per hour. = Hourly Rate + 30% Hourly Rate

3. Compute for the total Total Pay for the Day on Regular Holiday
pay per day. = Daily Rate + (Overtime Rate x Overtime Hours)
 Example:

Juan earns the regular daily rate of ₱340.00 giving

him an hourly rate of ₱42.50. He was requested by
his boss to work 10 hours May 1, Labor Day. How
much will be his total pay for the day?
 COMPUTATION OF OVERTIME PAY
On a Rest Day which Falls on a Regular Holiday
1. Compute the hourly rate Hourly Rate = 260% of Regular Hourly Rate
of the employee.

2. Determine the overtime Overtime Rate which falls on a Regular Holiday

rate per hour. = Hourly Rate + 30% Hourly Rate

3. Compute for the total Total Pay on Rest Day which falls on Regular Holiday
pay per day. = Daily Rate + (Overtime Rate x Overtime Hours)
 Example:

Juan earns the regular daily rate of ₱340.00 giving

him an hourly rate of ₱42.50. He was requested by
his boss to work 10 hours on December 30, Rizal
Day, which is a regular holiday. However, Rizal day
fell on a Monday, which was Juan’s rest day. How
much will be his total pay for the day?
 SEATWORK:
Beth is paid based on a graduated piece-rate as
follows:
Assuming Beth worked 12 hours a
Quantity Per Piece Rate day for 5 days, compute her total
pay for the week given the following
Less than 100 ₱1.00 outputs:
Monday = 142 pcs
100-199 ₱1.25
Tuesday = 310 pcs
200-299 ₱1.50 Wednesday = 203 pcs
Thurday = 121 pcs
300 or more ₱1.75 Friday (Rest Day OT) = 85 pcs
 SEATWORK:
Beth is paid based on a graduated piece-rate as
follows:
Assuming Beth worked for 5 days,
Quantity Per Piece Rate compute her total pay for the week
given the following outputs:
Less than 100 ₱1.00 Monday = 142 pcs
Tuesday = 310 pcs
100-199 ₱1.25
Wednesday = 203 pcs
200-299 ₱1.50 Thursday = 121 pcs
Friday (Rest Day OT) = 85 pcs
300 or more ₱1.75
 SALARY
 It refers to earnings of employees paid on a monthly
or annual basis.

1 year = 12 months = 24 semi-monthly = 6 bi-monthly

1 year = 52 weeks = 26 bi-weekly
1 month = 2 semi-monthly
Bi-monthly = every two months
Bi-weekly = every two weeks
 SALARY
1. Monthly Salary 3. Weekly Salary
𝐴𝑛𝑛𝑢𝑎𝑙 𝑆𝑎𝑙𝑎𝑟𝑦 𝐴𝑛𝑛𝑢𝑎𝑙 𝑆𝑎𝑙𝑎𝑟𝑦
= =
12 52

2. Semi-monthly Salary 4. Bi-weekly Salary

𝐴𝑛𝑛𝑢𝑎𝑙 𝑆𝑎𝑙𝑎𝑟𝑦 𝐴𝑛𝑛𝑢𝑎𝑙 𝑆𝑎𝑙𝑎𝑟𝑦
= =
24 26
𝑀𝑜𝑛𝑡ℎ𝑙𝑦 𝑆𝑎𝑙𝑎𝑟𝑦 = 𝑊𝑒𝑒𝑘𝑙𝑦 𝑆𝑎𝑙𝑎𝑟𝑦 × 2
=
2
 SALARY
 To convert monthly salary into hourly rate, we first
determine the number of regular hours in a workweek.

If the regular week load is 40 hours:

𝑊𝑒𝑒𝑘𝑙𝑦 𝑅𝑎𝑡𝑒
𝐻𝑜𝑢𝑟𝑙𝑦 𝑅𝑎𝑡𝑒 =
40 ℎ𝑜𝑢𝑟𝑠

If the regular week load is 48 hours:

𝑊𝑒𝑒𝑘𝑙𝑦 𝑅𝑎𝑡𝑒
𝐻𝑜𝑢𝑟𝑙𝑦 𝑅𝑎𝑡𝑒 =
48 ℎ𝑜𝑢𝑟𝑠
 GROSS AND NET EARNINGS

GROSS INCOME NET INCOME

It refers to income that is
computed prior to any
deductions such as social
security contributions,
health insurance
contributions, and
withholding taxes.
It is the amount received by
the employee after all taxes
and contributions have
been deducted from the
gross income.
 Employee Compensation

EMPLOYEE WORKING
BENEFITS CONDITIONS
Forms of The circumstances in the
compensation that are place of work that are
not monetary in expected to be provided
nature. by the employer.
 EMPLOYEE BENEFITS
• Vacation Pay: Thirteen (13) vacation days, with additional
one vacation day every year starting on second year of
service and convertible to cash at the end of each year.
Maximum total vacation leave is 18 days.
• Sick Leave: Twelve (12) days per year for the first two years
of service. With additional one sick leave every year
starting on second 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
 ‘DE MINIMIS’ BENEFITS
1. Monetized unused vacation leave credits of private
employees not exceeding 10 days.
2. Monetized value of vacation and sick leave credits paid to
government employees.
3. Medical cash allowance to dependents of employees, not
exceeding Php 750.00 per employee per semester of
Php125.00 per month.
4. Rice subsidy of Php 1,500.00 or one (1) sack of 50-kg rice
per month amounting to not more than Php 1,500.00.
5. Uniform and clothing allowance not exceeding Php
4,000.00 per annum.
 ‘DE MINIMIS’ BENEFITS
6. Actual medical expenses not exceeding Php 10,000 per
annum.
7. Laundry allowance not exceeding Php 300.00 per month.
8. Annual achievement awards with an annual monetary
value not exceeding Php 10,000.
9. Gifts during Christmas and major universities not
exceeding Php 5,000 per annum.
10. Daily meal allowance for overtime work and night shift not
exceeding 25% of the basic minimum wage.
 WORKING CONDITIONS

1 Work hours not exceeding eight

hours per day Paternity and maternity leave
5

2 Payment of overtime work and

holiday pay Provision of medical and health
6
insurance
3 Rest period of atleast 24
consecutive hours for every six
7 Compensation and contributions to
consecutive days of normal work
insurance funds such as the SSS or
4 For every year of service, an GSIS
incentive leave of at least five days
with pay
 PAYROLL
DEDUCTIONS
 PAYROLL DEDUCTIONS

1 Employee’s SSS contribution for

private employees

5 Salary advances or temporary

2 Employee’s GSIS contribution for
values (IOUs)
public employees

6
3 PhilHealth contribution for all Union dues
employees

4 Withholding taxes for all employees

 RATE OF CONTRIBUTION TO SSS

 All employees of private enterprises are covered by

the SSS.
 The current SSS contribution rate is 11% of the
monthly salary credit not exceeding Php 16,000.00
and is being shared by the employer (7.37%) and the
employee (3.63%).
 RATE OF CONTRIBUTION TO GSIS
 All government employees holding permanent and
non-permanent positions are members of the GSIS.
Premium contributions are based on monthly
compensation.

Two Types of Insurance Coverage:

1. Regular – refers to compulsory premium payments on
life insurance and retirement benefits.
2. Employees 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 CONTRIBUTION TO
PHILHEALTH

 All employees, whether of private or

government entities, are to be members of
PhilHealth.
 This is basically intended to cover them
and their beneficiaries in times of sickness.
 WITHHOLDING TAXES

 No withholding tax shall be required on the

Statutory Minimum Wage (SMW) of the
minimum wage earner in the public/private
sectors including holiday pay, overtime
pay, nightshift differential, and hazard pay.