For those earning just slightly more than minimum wage, it is a struggle to budget their salaries with their expenses, which include their utility bills, food, and transportation expenses. Add these factors to the increasing costs of commodities in the country, as well as the schooling expenses of their children, and they often have more bills than they can afford to pay. Because of this, many employees in the Philippines oftentimes live on a payday-to-payday cycle, finding the means to stretch their budgets and balance their incomes with their payables and daily needs.
With this pressing need to provide for their families and still manage their necessities, most employees are carefully scrutinizing their payslips to ensure that they are being paid back every centavo that they are entitled to. However, there are instances when employers deduct more than what is required by law, or when employers deduct government-mandated benefits but do not remit them.
The Philippine Labor Code requires employees and their employers to pay Social Security Systems (SSS), National Health Program (NHIP, as administered by PhilHealth), and Home Development and Mutual Fund (HDMF, also known as Pag-IBIG) contributions. On an employee’s payslip, these deductions are accompanied by their monthly withholding tax. For all these items, the deductions depend on the employee’s salary, their beneficiaries, and under which part of the tax bracket they fall. The computation for an employee’s taxable income could be computed as follows:
(Basic Pay + Overtime Pay + Holiday Pay + Night Differential, if applicable) – (SSS/PhilHealth/Pag-IBIG deductions – Absences – Tardiness) = Taxable Income
As for finding out what the deductions for SSS, Pag-IBIG, and PhilHealth should be, employees can turn to the official websites of these government agencies, as these offices provide public contribution tables so that employees can accurately calculate what their deductions should be.
For example, assuming that an employee is married with a child and has a basic salary of PhP25,000, then the employee will be deducted PhP581.30 for his SSS contribution, PhP100 for his Pag-IBIG contribution, and PhP312.50 for his PhilHealth contribution. Once his table income is computed (in this case, PhP24,006.20), it is a simple matter of turning to the Bureau of Internal Revenue (BIR) tax table. Following that the employee is married with a single dependent, his taxable income is then PhP3,397.30.
Of course, this is oftentimes easier said than done; PhilPay.ph automatically calculates the correct deductions via its cloud-based payment platform, as you would expect, but more importantly it gives employees full access to their detailed payslip online or through their mobile device.