Frequently Asked Questions

General Payroll

Q: How often do accounting departments have to run payroll?

A: As per the Philippine Labor Code, it’s at least twice a month. Most companies adopt the decision to run their payroll on the 15th and 30th of each month, while the majority of the remaining companies adopt the decision to run their payroll on the 5th and 20th of each month.

Q: When is a company legally allowed to not pay their staff for any reason?

A: In cases where an employee is an outgoing employee – meaning that they are soon to be no longer connected with the company – they are required to undergo the appropriate clearance procedures in order to receive their salary, however, companies are not legally allowed to withhold salaries for any reason.

Q: What information has to be on a payslip?

A: Each payslip must clearly state the name of the employee, the full name of the company, the time period covered in terms of the payment, the gross salary of the employee, and any relevant itemized deductions that may be incurred during that specific period, as well as the name of the member of staff (either from HR or accounting) who prepared the payslip, and the employee signature.

Q: When does annualization need to be processed?

A: It’s usually processed at least twice in any given calendar year (from January to December) or payroll manager deems necessary (to adjust any tax withheld for compensation to the employee). Annualization includes the supplementary salary (compensation received other than the basic salary, such as sales commissions) deductions for unauthorized absences, bonuses in excess of P82,000, and excess amounts in de minimis benefits (absences and non-taxable benefits) received by the employee.

Labor Laws

Q: What are the basic tax laws employees need to know?

A: The Philippine tax system, as with many other nations in the world, is too complex to detail in such a concise manner. For more information on the relevant tax statutes and requirements, you can contact us on and one of our certified payroll specialists are always on hand to answer any questions that you may have.

Q: How long are notice periods for employee termination?

A: For the lawful termination of a contracted employee, due process involves the “two notice” rule – a written notice of intent to dismiss addressed and submitted to the employee in question, and ample time must be provided for the employee to respond to the claims. A hearing must also be held to give them sufficient opportunity to respond directly to the employer about such claims, at which time evidence from both sides may be presented/rebutted. Provided the employer’s claims are found to be true and just, a notice of intent to dismiss indicating on what grounds the dismissal has been granted must be presented to the employee in question at least 30 days prior to the date of termination A copy of this notification must also be furnished to the regional office of the Department of Labor and Employment (DOLE) in whichever region the employer is operating.

Q: What’s probation and how does it affect payroll and benefits?

A: Article 281 on Probationary Employment stipulates that such an employment contract may not exceed 6 months from the date of employment, unless such conditions are covered by an apprenticeship agreement, which may allow for an extended period of probationary employment. Employees working under such a contract are entitled to regular compensation and a proportionate percentage of the 13th month payment after just 1 month of service (it could be described as a “no work, no pay” employment status).

Q: What are the penalties for not paying taxes?

A: The legally enforceable penalties for not paying the required taxes include a fine of P10,000 and imprisonment for a period of not less than 1 year but not more than 10 years, as stipulated under NIRC Sec. 255, entitled “Failure to File Return, Supply Correct and Accurate Information, Pay Tax Withhold and Remit Tax and Refund Excess Taxes Withheld on Compensation” (Annex A of Revenue Memorandum Order (RMO) No. 7-2015).

Government Reports

Q: What is the legally required frequency of tax declaration submissions?

A: For individuals with businesses/corporations and partnerships, VAT declarations must be submitted on the 20th of the following month and on the 25th for the quarterly VAT. The percentage tax must be submitted on the 20th of the following month. Income tax submissions must be done annually on the 15th of April, whereas the quarterly income tax submission must be submitted thrice a year (60days after the end of the relevant quarter). Registration fees must be submitted at the end of January of the following year, and withholding tax and compensation must be submitted every month (which requires a summarized report at the end of each year to be submitted the following year) and on the 10th of the following month.

Q: What are the penalties for not paying mandatory contributions?

A: Such penalties are composed of a compromised fee of a minimum of P1,000, plus 20% interest and a 25% surcharge on the tax due. The SSS penalty is 3% of the amount owed, the PhilHealth penalty is 2% of the amount owed, and the Pag-IBIG penalty is 1% of the amount owed.

Q: Where can I find more information on the requirements for filing tax declarations?

A: Websites that represent organizations such as the SSS (, PhilHealth ( and the Pag-IBIG Fund ( are known to be quite useful. However, you can contact us on and one of our certified payroll specialists will be more than happy to run you through the relevant procedures.

Time and Attendance

Q: Which paid leave days are legally mandated?

A: The Philippine Labor Code mandates that a minimum of 5 service-incentive leave days (including sick leave and vacation leave) must be provided to each employee that works under the agreement of a full-time contract.

Q: How much is overtime pay?

A: Outside of the regular salary that each employee is entitled to as part of their employment contract with their employer, an additional 25% on the calculated hourly rate is required to be paid if overtime becomes a requirement.

Q: How much is holiday pay in cases where the employees didn’t work the day before the specified holiday?

A: The Philippine Labor Code states that companies are required to pay additional fees to their employees, based upon certain circumstances. Aside from the employee’s attendance prior to the holiday, some companies require their staff to be present after the holiday, except in cases where they have already filed for leave.

Q: Are companies allowed to withhold pay for employees arriving late to work?

A: Under the Philippine Labor Code, it is a violation of the rights of any contracted employee to deny them the full amount that they are eligible to be paid should the employees be late for work.

Q: How can employers encourage adequate time-keeping for staff to ensure maximum efficiency?

A: This comes down to promoting the obvious benefits of adequate time-keeping (maintaining and maximizing productivity), but must also include adequate instruction on how to properly use any calendar-based software that is available to the employees, as well as simple desk calendars or whiteboards with tasks/dates listed so as to make sure that everyone knows what is required of them and the company.

Employee Engagement

Q: What are the key methods of ensuring that employees arrive at work on time?

A: The key here is to ensure that a positive and productive environment awaits each employee so that they are excited about coming to work, as opposed to it being something they would rather not do – meaning that the role of the HR manager is vital to the cause of maximizing output by ensuring that as many man hours as possible are available each and every day.

Q: What are the different benefits the employees should get?

A: Outside of the legally and contractually mandated benefits that employees must receive, team building exercises, company outings and lunches, employee of the month schemes, target-based bonus programs, parking privileges, additional paid-leave days or extended lunch hours, public praise for successful performances and even plaques indicating achievements of excellence are but a few of the methods commonly used by employees to provide additional bonuses without having to create additional paper work and expenses by simply giving them cash-based incentives.

Q: How can employees be encouraged to file for leave days as early as possible?

A: No employer likes to lose their most valuable resources – which are of course the employees – for any period of time outside of that which is legally mandated, but in such cases where this becomes unavoidable, further incentives can be provided for those who file for leave well in advance so as to allow for ample time to find temporary replacements for the position or alternative means of meeting deadlines and targets so that the employee can deliver their required services in an effective and timely manner.

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