S A L A R I E S

&W A G E S
BUSINESS MATH
 EMPLOYEE
C O M P E N S A T I ON
Refers to the remuneration or reward that an employee gets
from his/ her employer for the services he/ she gives the
latter. This is the legal and moral obligation of any business.
This includes the following:
• Salaries
• Wages
• Employee Benefits
SALARIES
 S A L A R Y
A fixed regular payment, typically paid on a monthly or
biweekly basis but often expressed as an annual sum,
made by an employer to an employee,
(especially a professional or white-collar worker).
R E M E M B E R!
1 year= 12 months = 24 semi- monthly = 6 bi-monthly

1 year= 52 weeks =26 bi-weekly

1 month= 2 semi- monthly

Semi- monthly= 2/5 every month

Bi-monthly= every 2 months

Bi- weekly= every 2 weeks

C O N V E R S I O N S:
Assuming the annual salary is P 72, 000:
1. Monthly Salary

2. Semi- Monthly Salary

3. Weekly Salary

4. Bi- Weekly Salary

T R Y I T!
1. Assuming that the salary is P 85 000 annually. How
much will the salary be if it is converted to:
a. Monthly Salary?

b. Semi- Monthly Salary?

c. Weekly Salary?

d. Bi- Weekly Salary?

R E M E M B E R!
To convert monthly salary into hourly rate, determine
first the number of regular hours in a workweek. Some
companies have 40-hours workweek and others have 48-
hours workweek.

Weekly rate
Hourly Rate=
Regular Hours in a
Workweek
GROSS & NET
E A R N I N GS
GROSS EARNINGS
The amount gained by the worker without any
deductions, like the taxes, benefits, loans, and more.

NET PAY
It is the payment received less deductions of
any employee.
 DEDUCTIONS
Is the amount held by any authority as a form of
payment for same necessary dues (taxes, loans, etc.)
Consider the problem.
For his salary in the previous month, Mr. Fabella received the payslip below:

EARNINGS
Basic: 14 850. 43 PREV. OL/
EL :
Absences_ BSC: RLE-ALW :
LA/ SFA: 8 909. 57 OTH- ALW/ HON :
Other Earn: Prev. RLE :
ABS_Allows: Prev. Basic :
TTL: 2 887. 50 Prev. LA/ SFA :
Holiday Pay: 4 400. 00 :
OL/ EL: 9 900. 01 :
Total Earnings: 40 947.51
 DEDUCTIONS
Tax Whld: 9 865. 38 Retloan:
SSS Prem: 581. 30 :
PhilHlth: 437. 50 :
Pag- ibig: 100. 00 :
SSS Ln: 692. 17 :

Cash Adv: :
Pag- ibbig Ln: :

Ret_Cont: :
Total Deductions: 11 676.35
 NET PAY

Monthly Net: 29 271. 16

1st Half Net: 14 635. 58

2nd Half Net: 14 635. 58

 TOTAL EARNINGS P 40 947. 51
TOTAL DEDUCTIONS P 11 676. 35
MONTHLY NET P 29 271. 16
1st HALF NET P14 635. 58
2nd HALF NET P 14 635. 58

Summarization of Computed Values

Formula: Gross- Deduction= Net

E= Total Earnings
D= Total Deduction
N= Net Earning

Equations:

E= D + N
N= E – D
D= E – N
 If E= P21,230.21 and D=P4,871.15, what is the value of N?

Solution:
Formula: N = E – D

E= P21,230.21 D=P4,871.15 n=?

N=21,230.21 - 4,871.15 = P16,359.06

 T E S T Y O U R S E L F!
1. If E= P22,271.16 and N=P11,721.30, what is the value of D?

2. If D= P15,622.40 and N= P8,236.68, what would be the value for

E?

3. Jonathan has a total earnings amounting to P20,524.17. If he

receives a total deduction of P3,826.21, how much is his net
earnings?

4. Linda has a monthly net amounting to P10,568.23. If she receives

a total deduction of P4,235.18, how much is her total earning?
WAGES
 WAGES
A fixed regular payment, typically paid on a daily or weekly basis,
made by an employer to an employee,
(especially to a manual or unskilled worker).

It is the part of total production that is the return to labor as

earned income, as distinct from remuneration received by
capital as unearned income.

Directly dependent on the amount of hours worked.

 WAGES
Basic Pay
In an employee’s compensation package refers to the wages
or salaries they get. Wages refers to the earnings received by a
worker n a piece rate, hourly rate, or daily rate.
 WAGES
Piece Rate
A worker employed on a “piecework” basis paid in
proportion to the quantity of work he / she finishes.
Fixed piece- rate plan- the rate used can be fixed irrespective
of the quantity produced.
Differential piece-work plan- the rate can be graduated,
increasing as the quantity produced increases.
 WAGES
Hourly Rate
Wage= Number of Hours x Hourly rate

Ex. 40hrs x P10/hour= P 400

 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.
 ARTICLES OF
THE LABOR CODE
(Relevant to Normal Hours & Overtime Work)
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. Article 85
provides that 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.
 ARTICLES OF
THE LABOR CODE
(Relevant to Normal Hours & Overtime Work)

2.) Article 87 provides that work may be performed beyond

eight (8) hours a day provided that the employee is paid for the
overtime work an additional compensation equivalent to his
regular wage plus at least twenty-five percent (25%) thereof.
Work performed beyond eight hours on a holiday or rest day
shall be paid an additional compensation equivalent to the rate
of the first eight hours on a holiday or rest day plus at least thirty
percent (30%) thereof.
 ARTICLES OF
THE LABOR CODE
(Relevant to Normal Hours & Overtime Work)
3.) Article 93 provides that:

a.) Where an employee is made or permitted to work on his

or her scheduled rest day, he or she shall be paid an additional
compensation of at least thirty percent (30%) of his or her
regular wage. An employee shall be entitled to such additional
compensation for work performed on Sunday only when it is his
or her established rest day.
 ARTICLES OF
THE LABOR CODE
(Relevant to Normal Hours & Overtime Work)
3.) 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.
 ARTICLES OF
THE LABOR CODE
(Relevant to Normal Hours & Overtime Work)
3.) Article 93 provides that:

c.) Work performed on any special holiday shall be paid an

additional compensation of at least thirty percent (30%) of the
regular wage of the employee. Where such holiday work falls on
the employee's scheduled rest day, he or she shall be entitled to
an additional compensation of at least fifty percent (50%) of his
or her regular wage.
 ARTICLES OF
THE LABOR CODE
(Relevant to Normal Hours & Overtime Work)
3.) Article 93 provides that:

d.) Where the collective bargaining agreement or other

applicable employment contract stipulates the payment of a
higher premium pay than that prescribed under this Article, the
employer shall pay such higher rate.
 ARTICLES OF
THE LABOR CODE
(Relevant to Normal Hours & Overtime Work)

4.) Article 94 provides that:

a.) The employer may require an employee to work on any
holiday but such employee shall be paid a compensation
equivalent to twice his regular rate.
b.) Work on a rest day which falls on a special day shall be
paid 150% of regular hourly rate.
c.) Work on a regular holiday shall be 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
 Compute the hourly rate of the employee:
Regular hourly rate = Daily wage rate / 8 hours
 Determine overtime rate per hour:
Overtime rate = Regular hourly rate + 25% of Regular hourly rate
 Overtime Premium
 ON REST DAY&
SPECIAL DAY
If an employee is made to work on rest day or an a special
holiday the computation of his/ her pay would be as follows:
 Compute the hourly rate of the employee on a rest day or
special day. The hourly rate on rest day and special day is
130% of the regular rates:
Hourly rate = 130% of Regular hourly rate
 Determine overtime rate per hour:
Overtime rate= Hourly R (rest day) + 30% Hourly R (rest day)
Overtime rate = Hourly rate on rest day x 130%
 ON REST DAY WHICH
FALLS ON A
SPECIAL DAY
 Compute the hourly rate of the employee on a rest day which
falls on a special day:
Hourly rate = 150% of Regular hourly rate
 Determine overtime rate per hour:
Overtime rate = Hourly R (rest day) + 30% of Hourly R (rest day)
Or
Overtime rate = Hourly rate on rest day x 130%
 ON REGULAR
HOLIDAY
 Compute the hourly rate on regular holiday:
Hourly rate= 200% of Regular hourly rate
 Determine overtime rate per hour:
Overtime rate= Hourly R (regular holiday) + 30% Hourly R (regular h)
or
Overtime rate = Hourly rate on regular holiday x 130%
 ON REST DAY WHICH
FALLS ON REGULAR
HOLIDAYS
 Compute the hourly rate :
Hourly rate= 260% of Regular hourly rate
 Determine overtime rate per hour:
Overtime rate= Hourly R (rest day) + 30% Hourly R which falls on regular holiday
or
Overtime rate = Hourly rate on a rest day which falls on regular holiday x 130%
INCOME
 INCOME
Money received, especially on a regular basis, for work or
through investments. For people who are not employees, their
income may not be in the form of wages/ salaries. They can have
commission income if:
 they are paid for the 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.
BENEFITS
 BENEFITS
A payment or gift made by an employer, the state, or an
insurance company.

Employee benefits cover remuneration other than basic pay. It

includes 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. For the
Philippines, the following benefits are given to employees:
 E M P L OY E E B E N E F I T S
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

Holidays on 2018
Holidays on 2018
Holidays on 2018
Holidays on 2018
 In lieu of vacation pay, Article 95 of the Labor Code provides
for service incentive leave for every employee who has rendered
at least one year of service of 5 days with pay.

Some benefits are taxable, just like wages, salaries,

commissions, royalties, etc. However, some benefits are non-
taxable. Revenue Regulations (RR) No. 5-2011 dated March 16,
2011 published in Manila Bulletin March 18, 2011 cites the non-
taxable benefits follows
 The BIR issued Revenue Regulatons No. 5-2011 limiting he items of ‘de
minimis’ benefits that are exempt from withholding tax on compensation
(WTC) or to Fringe Benefit Tax (FBT) to the following:

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 P750.00

per employee per semester of P125.00 per month;

4. Rice Subsidy of P1 500.00 or one (1) sack of 50 kg of rice per month amounting
to not more than P1 500.00;

5. Uniform and clothing allowance not exceeding P4 000.00 per annum;

6. Actual medical expenses not exceeding P10 000.00 per annum;

7. Laundry allowance not exceeding P300.00 per month;

8. Annual achievement awards with an annual monetary value not

exceeding 10 000.00;

9. Gifts during Christmas and major anniversaries not exceeding 25

000.00 per annum; and

10. Daily meal allowance for overtime work and night shift not
exceeding 25% of the basic minimum wage. RR 5-2011 emphasized
that other than the above benefits, all other benefits given by
employers to employees shall not be considered "de minimis"
benefits, and hence, shall be subject to income tax as well as
withholding tax on compensation or fringe benefits tax.
 OTHERBENEFITS OF
THE WAGERS
Provided by The Presidential Decree No. 442
(Labor Code of the Philippines)

1.) Long-term benefits: retirement, death, disability

2.) Minimum wage earner tax exemption

3.) Bonuses and allowance (e.g. travel, rice, meal, clothing, and
laundry)
4.) 13th month pay, holiday pay, special pay, overtime pay , night
shift differential, and hazard pay

5.) Leave incentives: sick, maternity, paternity, solo parent, and

others

6.) Health related benefits and insurances

- Retirement
-Minimum Wage Earner Tax Exemption
-Maternity/Paternity Benefit
- Bonuses/Allowances (travel, rice, meal, clothing, etc.)
 COMPUTATIONS OF
SOME BENEFITS

1.) Retirement Benefit

The minimum retirement pay is given by
R is the retirement pay, R= 22.5 x P x T where R is the
retirement pay
P is the daily rate and T is the number of years served.
EXAMPLE:
Mr. Larry served Company A for 22 years with an average daily
rate of P467.35. He plans to retire and avail of his retirement
benefit. How much is the minimum retirement pay that he will
receive?

Solution:
Formula: R= 22.5 x P x T

Where R is the retirement pay, P is the daily rate and T is the

number of years served

R= 22.5 x P467.35 x 22 = P231,338.25

TRY IT!

Mr. Torres plans to retire and utilize his retirement pay that
he will receive for serving the company in 15 years with an
average daily rate of P481.23?
Solution:

R=22.5 x P x T

where P is the retirement pay, R is the daily rate and T is the

number of years served

R= 22.5 x 481.23 x 15 = P162,415.13

 COMPUTATIONS OF
SOME BENEFITS

2.) 13th Month pay

Let x be the annual basic salary of an employee. The 13th
month pay of this employee must be ½ of x.
EXAMPLE:
Mr. Buenaventura receives an annual salary of P240,000. At
the end of the year, what would be his 13th month pay?

Note: The 13th month pay is given by 1/12 x, where x is the

annual basic salary of the employee.

Formula:
13th month= ½ (240,000)= P20,000
 COMPUTATIONS OF
SOME BENEFITS
3.) Maternity benefit
Let x be the average monthly salary of the employee. Then
2.6x and 2x for caesarean and normal delivery, respectively.

4. Holiday pay
Holiday pay refers to payment of the regular daily wage for
any non-working regular holiday. Note that if the employee
worked on a holiday, then he will receive twice his daily wage.
EXAMPLE:
Mr. Abiog’s daily rate is P765.00 and is given a sick leave of
30 working days. Suppose the sick leave benefit is convertible to
cash and he has incurred 7 absences only (all due to sickness).
How much will he get?

Solution:
Since he incurred 7 absences, so there are only
30 – 7 = 23 days that can still be converted to cash.

23 x 765 = P17,595
EXAMPLE:
The total allowances the company X give to their employees
is exactly 15% of their salary. Mr. Zachriel’s salary this month is
P27,345.56 where his allowances are meal and clothing. If his
clothing allowance is fixed at P2,500.00, then what is his meal
allowance for the month.
Solution:
It is given that 15% of his salary is from allowances, so:
27,345.56 x 0.15= 4,101.83
and the total allowance= meal allowance + clothing allowance,
we have:
4,101.83 = meal allowance + 2500
Thus, Mr. Zachriel’s meal allowance is:
4,101.83 – 2500 = 1,601.83
 YES/NO
 Special Day Pay  SSS Premium Pay
 Travel Allowance  Holiday Pay
 Tax  13th Month Pay
 Paternity Leave  Rice Incentive
 Health Insurance  5- Year Service Pay
 Motor Car Insurance  Living Allowance
 Leave without Pay  Maternity Benefit for all
Fathers