Payroll Computation in the Philippines – Basic Guide

Payroll Computation Philippines

Luzon, Visayas, Mindanao – There are a lot of investors more attracted to investing and expanding their medium and small businesses here in the Philippines. The problem is how to measure and compare the wages of their employees.

In this article, we will discuss how to do payroll computation works. Also, the necessary related to this article.

When we start a business, many things come up in our minds. First, what kind of software fits our firm. Second, How can we use it? Third, is the software already accredited with the Bureau of Internal Revenue (BIR). Then the last important thing is how to manage them all.

What are the things we need when computing a payroll

There are a lot of things we might consider knowing before tackling how to compute a payroll. First, we must know the employee’s required hours. Second, Time off and paid leave. Third, Withholding tax, and last but not the least, Mandatory salary deduction.

Payroll Computation for fixed rate

  1. A Regular Day (basic daily rate = monthly rate x number of months in a year (12) / total working days in a year)
  2. A Special Day (130% x basic daily rate)
  3. A Special Day, which is also a scheduled Rest Day (150% x basic daily rate)
  4. A Regular Holiday (200% x basic daily rate)
  5. A Regular Holiday, which is also a scheduled Rest Day (260% x basic daily rate)

Computation for Night Shift

  1. Ordinary Day (110% x basic hourly rate)
  2. Rest Day and Special Day (143% x hourly rate)
  3. Regular Holiday (220% x hourly rate)

Overtime Computation

  1. On Ordinary DaysNumber of hours over 8 hours (125% x hourly rate)
  2. On a Rest Day or Special DayOn a Rest day and Special Day (130% x hourly rate)
  3. Number of hours over 8 hours (169% x hourly rate)

13 Month Pay Computation

Total basic salary earned for the year exclusive of overtime, holiday, and night shift differential pay divided by 12 = 13thmonth pay


Basic monthly salary₱20,000
Daily rate₱1,000
Date startedMay 2, 2017
Length of employment for the calendar year (by December 31)8 months
Unpaid leave3 days
Total annual income (minus unpaid absences)₱157,000
13th-month pay13,083

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