There are many day-to-day and month-to-month operations in a business we can overlook. But at GreatDay HR by SunFish DataOn Philippines, Inc., we know every aspect of a business is important if you want to be successful. Sometimes one of the best ways to be successful is to set your employees up for success.
One of those things that happens every month and for most employees twice a month that is often overlooked is their payslip. So with that, we want to help educate and bring awareness to what a payslip is and the different parts of that payslip.
A payslip is a document that validates the employee’s salary for credit card applications, loans, or even securing a new position in your dream job. Apart from that, the payslip’s main use is to show the employee their earned wages, the deductions made, and taxes withheld for a set period. This document enables employees to have a copy of their records, particularly if they find any discrepancies or contentions to their pay.
A typical payroll in the Philippines includes the following: your ‘net take-home pay’ to ‘mandatory government contributions’, and everything in between.
Here’s a breakdown of everything you will find on a payslip in the Philippines that can quickly be processed and generated within GreatDay HR.
Basic Pay
The basic pay is the standard pay per hour of an employee. In the Philippines, the standard basic wage in the National Capital Region is Php 537. The basic salary can also change depending on the company’s pay structure.
Withholding Tax
The withholding tax is the taxpayer’s corporate tax obligation. Citizens involved in trade or business activities pay this tax. What companies usually do is withhold a portion of the employee’s monthly salary to advance the employee’s yearly tax contribution.
Mandatory Government Contributions
In the Philippines, there are three mandatory government contributions aside from tax: SSS, Philhealth, and PAG-IBIG HDMF. These deductions are computed based on the employee’s monthly salary. If their salary is in the higher range, their contributions become higher as well depending on the bracket set by these agencies.
- The Philippines’ Social Security System, commonly known as SSS, is one of the country’s national social insurance programs that provides its members with maternity, sickness, disability, retirement, funeral, and death benefits, among many others. For a member to take out a one-month loan, they should have 36 posted monthly contributions, where six of those should have been within 12 months before the loan application.
To date, 3.63% of the employee’s monthly salary is dedicated to their SSS contribution.
- The PAG-IBIG HDMF fund is a nationwide savings system that can be used to secure housing loans. Employees earning more than Php 1,500 monthly contribute 2% of their salary to PAG-IBIG, while those that earn less contribute Php 1,000.
There are various requirements to qualify for a PAG-IBIG housing loan. It is best to check those out to ensure faster processing of the loan request.
- The PhilHealth premium contribution aims to provide employees financial assistance to avail of health services in the country. This contribution covers the individual’s hospital costs including but not necessarily limited to hospital room and boarding, professional services, and medicines.
From the employee’s monthly salary, 2.75% is allotted for the PhilHealth contribution. For those who are earning Php 40,000 and above, Php 550 is salary-deductible.
Loan Payments
The loan section in the employee’s payslip pertains to the employee’s loans from the company. With the employee’s knowledge and consent, companies automatically deduct the employee’s loans from their monthly pay.
Tardiness
Normally, employees are paid by the hour they spent working. An employee’s fixed working schedule is typically eight hours. When they are late, the salary corresponding to the frequency of their tardiness is deducted from their monthly salary.
Absences
Employees are granted leaves once they are regularized. Also, specific conditions such as being a solo parent, childbirth, and other instances, are warranted leaves set by either the company or the government. All these are paid leaves that the employees can file themselves. When does a leave become a deductible from the employee’s salary?
A leave is deducted from the employee’s salary in two main instances. One, the leave was scheduled after the employee has fully consumed all their leaves. Another instance is when an employee decides to go AWOL (absent without leave) without informing their superior. Depending on the frequency of the latter, the employee can also face disciplinary action apart from the accompanying salary deduction.
Other deductions from company-specific policies
Companies may have deduction policies of their own. These deductions are reflected on the payslip to inform the employees of the company’s additional deductions.
Net take-home pay
The net take-home pay is the employee’s salary with all the deductibles subtracted from the gross salary. This is the actual pay that the employees receive in their corporate bank accounts or through other payout schemes set by the company according to designated policies.
Why it’s important to understand your payslip
Employees are taking their salaries into better consideration as more information like the above becomes available to them through digital means. HR practitioners can benefit from using digitization to ensure that employees’ salaries, for one, are well-accounted for.
More importantly, HRIS and payroll software in the Philippines like GreatDay HR is gaining momentum to help micro, small, and medium enterprises (MSMEs) transition to a digital workspace. GreatDay HR’s HRIS and payroll software helps the HR team automate their processes, particularly concerning attendance, compiling company and employee data, and of course, payroll.
By using a payroll software, processing the employee’s monthly salaries and documents will take less time and effort from the HR team, and will help them help the company’s employees understand their payslips better. So what is the best payroll software in the Philippines? It will definitely be one that is easy to use and learn and includes a comprehensive number of HR services and digital workspace building. It should be affordable for smaller businesses and is also tailor-fit to the Filipino workforce. HRIS software like GreatDay HR provides free demonstration sessions for their services so you can check company fit. And it’s all online so no need for you to leave the workplace!
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GreatDay HR is one of the platforms offered by SunFish DataOn Philippines Inc. (SDP), the leading provider of cutting-edge Human Resources technology solutions used by thousands of companies in the Asia Pacific region, including the Philippines. Together, with its sister companies, Humanica Thailand and DataOn Indonesia, SDP creates HRIS and Payroll Solutions for employee empowerment across the board. With its 50+ staff and growing in the Philippines, SDP offers a comprehensive and smooth support service to all its valued clients.
