Employee compensation refers to

the remuneration or reward that an

employee gets from his or her
employer for the services he or she
gives the latter. Basic pay in an
employee’s compensation package
refers to the wages or salaries they
get.
WAGES
•Basic pay in an employee's
compensation package refers to the
wages or salaries they get. Wages
refer to the earnings received by a
worker on a piece rate, hourly rate, or
daily rate.

Earnings of employees paid on a

monthly or annual basis is generally
referred to as “salary”. Example of
salary earners are teachers,
professionals employed in an
organization, full-time or regular
workers who are paid in a fixed
amount.
What is Income?
Income is a broader term than the
wages or salary. Wages and salaries
are income to
the persons receiving it. However,
what is the term used to the money
being received by
people who are not employees. There
are people prefer not to be employed
by earning their
income from commission on sales they
make, rental income if they have
properties they rent
out, dividend income if they are
stockholders, royalties if they are
authors, and other income
for whatever endeavor they are
engaged in including profit-making
businesses.
Let us try to get the income of Ronalee
who is a stockholder of SUNSHINE
Corporation,
owning a 1,500 shares of the
company’s ₱10.00 par value shares.
For that year the company
declares a 10% cash dividend to
stockholders. To compute for
Ronalee’s dividend income,
let us use the formula below:
Dividend income = no. of shares x
par value x dividend rate
= 1,500 shares x ₱10.00 x 10%
= ₱1,500
Let us also try to solve the royalty
income. Tina Echaluce is an author
and her book sold
15,000 copies for the year 2019. Her
book sells at ₱250 per copy. She
receives a 28% royalty
from her publisher. Her royalty income
would be:
Royalty Income = No. of Copies sold
x Rate per book x Percentage of
royalty
= 15,000 x 250 x 25%
= ₱937,500
What is Piece Rate?
A worker employed on a
“piecework” basis is paid in proportion
to the quantity of work
he or she finishes. The rate used can
be fixed irrespective of the quantity
produced in which
case it is called a “fixed piece-rate
plan”. For example, if the tabak maker
produced 10
pieces of tabak everyday, and the rate
per tabak is 75, therefore the wage of
tabak maker is
750 per day.
Given: Produced tabak per day - 10
pieces
Rate per tabak - ₱75
 Solution: Produced tabak x Rate
per tabak = Wage of tabak maker
10 x 75 = ₱750
(wage of tabak maker)
What is differential piece-work
plan?
On the other hand, the rate per
piece can be progressive as the
quantity produced
increases, in which case it is called
“differential piece-work plan”.

HOURLY RATE
•Employees who work more than the
required number of hours are entitled
to overtime pay. Overtime premium
refers to the excess payment over the
regular rate. EMPLOYEE BENEFITS
Aside from basic pay received by the
employees, they are also entitled of
employee
benefits. These include vacation and
sick leaves, medical and
hospitalization benefits, meal
allowance, transportation allowance,
clothing allowance, etc., and incentive
pay for
productivity such as commission,
overrides, bonuses, and profit sharing.
The following are the
benefits given to the employees in the
Philippines, as mandated by the
Department of Labor
and Employment:
1. 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.
2. 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.
3. Holiday Pay - payment of daily wage
for any unworked regular holiday.
if unworked -100% of the daily wage
if worked - 200% of the daily wage
- 200% + [30% of 200%] or
a total of 260%
(regular holiday falling on a
rest day)
Not all the employees are entitled for
Holiday Pay. Let us know the different
conditions
for entitlement of Holiday Pay.
Condition for entitlement of Holiday
Pay:
✓present or on leave with pay on the
workday prior to the holiday
✓On leave without pay on the
workday prior to holiday
 - not entitled to holiday pay unless
they worked on regular holiday.
✓Employers shall grant the same
percentage of the holiday pay as the
benefit granted
by competent authority in the form of
employee’s compensation or social
security
payment whichever is higher, if they
are not reporting for work while on
such benefits.