Computing Employees’ Salaries, Wages, Benefits and the 13th Month Pay

Every December, every company must deal with the problem of how to compute the 13th month pay for their employees. But this is just one small part of the problem of computing wages and benefits. What was previously a simple task has grown more complicated over the years as new laws and regulations are passed.

Despite the difficulties, it is no excuse not to get it right. If you pay too much due to a wrong computation, it may no longer be possible to correct it if it is already considered a normal part of compensation. On the other hand, paying too low will cause demoralization besides the potential legal problems.

Just to give you an idea of what must be computed, here are some of the basic things you ought to know:

• Learn the minimum wage for your particular location and industry. The minimum wage is the lowest wage you can pay your employees. There are exceptions; most prominent among these is the Barangay Micro Business Enterprise. If your company qualifies and has registered for this, then you can pay less than minimum wages.

• Learn how to compute holiday pay. Rates vary greatly depending on the type of holiday. There are regular and special holidays. If it is a regular holiday, you must pay the wage even if the employee does not work on that day; and you must pay double the normal amount if he works on a regular holiday.

• Learn how to compute overtime pay and night differential. You must pay at least 25 percent on top of the regular pay. This increases to 30 percent if it is a special holiday or if it falls on their days off. There is also an additional pay if it falls on a rest day.

• Be able to compute 13th month pay. While bonuses are discretionary on the part of management, the 13th month pay is compulsory.

• Know the effects of maternity and paternity leaves. Be aware that you have to advance the payment of maternity benefits even before you get reimbursed by the SSS. Now there are even paternity benefits, although this is not as high as maternity benefits.

• How to compute SSS, Pagibig, and Philhealth contributions and benefits.

• Know how to deal with allowances like transportation and free meals.

• Know how to compute withholding taxes. Unless all your employees are just minimum wage earners, you are mandated to withhold taxes.

• How to compute separation and retirement pay. In many cases, there were legal disputes because the incentives were included in the computation of the separation and retirement pay. There are also varying amounts to pay depending on the reason for the separation. If it is due to a labor-saving device, for example, you have to pay one month for every year of service. In the case of retirement pay, the way it is computed makes it almost one month payment for every year employed.

• There are many other things to take into account like service incentive leaves, de minimis and tax refund.

It is certain that most of those who are not already familiar with computing salaries and benefits will feel overwhelmed at the number of things that must be learned. But entrepreneurs and those in charge must know them.

BusinessCoach, Inc., a leading business seminar provider, conducts seminars on Computing Salaries, Wages and Benefits. You may contact them at 727-5628/727-8860/0915-205-0133, email businesscoachphil@gmail.com, or visit their website www.businesscoachphil.com for details.

Click here to view details of the seminar: How to Compute Salaries, Wages, and Benefits »

*Originally published by the Manila Bulletin. Written by Ruben Anlacan, Jr. (President, BusinessCoach, Inc.) All rights reserved. May not be reproduced or copied without express written permission of the copyright holders.