SALARIES AND WAGES PREPARED BY: MS.

JAENETH D. SIMONDO
SALARIES AND WAGES
(DEFINITION OF
SALARY, WAGE,
INCOME AND
BENEFITS)
SPECIFIC LEARNING
OUTOMES
The learners should be able to:
1. define employee compensation
2. define salary and wage
3. solve problems related to piece – rate earners and hourly-paid earners
including overtime pay
4. differentiate between salary and wage
5. distinguish between salary earners and wage earners
6. convert annual salaries to monthly, semi-monthly , and weekly salaries
7. define income and benefits
 Note: People who work
expect a monetary return for
their service. There are
different ways a person gets
paid for his/her services.
EMPLOYEE COMPENSATION
Refers to the remuneration or
reward that an employee gets
from his / her employer for the
services he / she gives the latter.
WAYS OF SERVICE
PAYMENT
1. Salary and Wage
2. Income and
Benefits
1. SALARY AND WAGE
SALARY is the compensation usually quoted annually or monthly for an
employee.
WAGE , on the other hand, is compensation quoted in an hourly or daily
rate for an employee.
Salary earners usually get paid every 15 days (bi-monthly) while Wage
earners usually get paid either weekly or sometimes even monthly, at their
employer’s convenience.
Salary earners are not paid less if they work for only a fraction of the
required number of hours and they are also not paid for working overtime
while wage earners are under the “no work, no pay policy”, which means
they are only paid the actual number of hours or days that they worked.
1. SALARY AND WAGE
PIECE RATE – a worker employed on a “piece work” basis is paid in
proportion to the quantity of work he / she finishes. The rate used can be
fixed irrespective of the quantity produced, in which case it is called a fixed
piece – rate plan. On the other hand, it can be graduated, increasing as the
quantity produced increases, in which case it is called differential piece –
work plan.
1. SALARY AND WAGE
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.
LABOR CODE RELEVANT TO
NORMAL HOURS AND 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 the subject to such regulations as the
Secretary of Labor may prescribe, it shall be the duty of every
employer to give his / her employees not less than sixty (60)
minutes time – off for their regular meals.
LABOR CODE RELEVANT TO
NORMAL HOURS AND OVERTIME
WORK
2. Article 87 provides that work may be performed beyond
eight (8) hours a day provided that the employees 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.
LABOR CODE RELEVANT TO NORMAL
HOURS AND OVERTIME WORK
3. Article 93 provides that:
A. where an employee is made or permitted to work on his /
her scheduled rest day, he / she shall be paid an additional
compensation of at least thirty percent (30%) of his / her
regular wage. An employee shall be entitled to such additional
compensation for work performed on Sunday only when it is
his / her established rest day.
LABOR CODE RELEVANT TO NORMAL
HOURS AND OVERTIME WORK
3. Article 93 provides that:
B. when the nature of the work of the employee is such that
he / she has no regular work days and no regular rest days can
be scheduled, he / she shall be paid an additional compensation
of at least thirty percent (30%) of his / her regular wage for
work performed on Sundays and holidays.
LABOR CODE RELEVANT TO NORMAL
HOURS AND 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 / she shall be entitled
to an additional compensation of at least fifty percent (50%) of
his / her regular wage.
LABOR CODE RELEVANT TO NORMAL
HOURS AND 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.
EXAMPLES
1. A tutor who is paid P200 per hour is earning a wage. How much does
he earn for a 10-hour week work?

2. A University Assistant professor is usually given a monthly salary. If

his salary is P40,000 per month, how much does he get every two
weeks?

3. A fast food service crew is paid per hour. If he is paid an average

wage of P77.43 per hour, how much will he get if he works for 6 hours
and 6 days a week for 4 weeks?
EXAMPLES
4. A minimum wage earner in Metro Manila is paid P481 for an 8-
hour workday. What is his hourly wage?

5. A carpenter is paid daily, usually P500 – P600 per day and is a

wage earner. A taxi driver and a tricycle driver are salary or wage
earners? Why?

Remark: the daily or hourly wage of an employee an be computed

from his monthly salary.
EXAMPLES
6. Tammy is paid on a per piece basis at the rate of P1.20 per piece. If she
finishes 360 pieces for a week, how much is her total earnings?

7. Linda is employed to repack and seal pepper. She is paid on the

following differential pay plan on schedule
QUANTITY DAILY RATE QUANTITY DAILY RATE
PER 100 PACKS PER 100 PACKS

Less than 100 P100.00 150 - 199 P107.50

100 – 149 P105.00 200 or more P110.00

For the week, Linda repacked the following quantities: Monday , 95 ; Tuesday, 102; Wednesday, 130;
Thursday, 152; and Friday, 201. Compute for her total wage for the week.
EXERCISES
1. A clerk earns a salary of P20,000 per month. Assuming that
he works 8 hours a day for 20-day work month, how much does
he get per day? Per hour?

2. An employee is paid a monthly salary of P16,000 for working

20 days in a month. A taxi driver earns P750 per day. Assuming
both works 8 hours a day, who has a higher hourly wage?

3. Rolando earns P30.00 per hour. For the week, he worked a

total of 35 hours. How much did he earn?
2. INCOME AND
BENEFITS
INCOME is money that an individual receives in
exchange for providing a good/service or through
investing capital.
Some sources of income:
A. Farmers, Fishermen and vendors earn income by
providing goods such as crops, fish and vegetables,
respectively.
B. Individuals may earn income by investing capital in
stocks, mutual funds, or bank deposits.
2. INCOME AND BENEFITS
BENEFIT is employee compensation given by an
employer on top of the basic salary/wage. Note that
benefits may come in the form of cash or in kind.

Examples:
A. Cash Benefits: 13th month pay, bonuses, rice subsidy,
transportation allowance.
B. Non-Cash benefits: SSS/GSIS, PAG-IBIG, PhilHealth
ARTICLE 103. TIME OF
PAYMENT
Wages shall be paid at least once every two (2) weeks or twice a month at intervals not
exceeding sixteen (16) days. If on account of force majeure or circumstances beyond the
employer’s control, payment of wages on or within the time herein provided cannot be
made, the employer shall pay the wages immediately after such force majeure or
circumstances have ceased. No employer shall make payment with less frequency than
once a month.
The payment of wages of employees engaged to perform a task which cannot be
completed in two (2) weeks shall be subject to the following conditions, in the absence
of a collective bargaining agreement or arbitration award:
That payments are made at intervals not exceeding sixteen (16) days, in proportion to the
amount of work completed.
The final settlement is made upon completion of work.
(Article 143, P.D. 442, also known as the Labor Code of the Philippines)
ACTIVITY
Ask your family member about their job description or
type of work and their salary / wage per month and
other sources of income within your family. Then
compute for your family income for the whole month.
Also, ask your family member about the types of
benefits they get from their employers.
Write this in a clean whole bond paper with your
FAMILY SURNAME on top.
AND WAGES
(BENEFITS
OF A SALARY
/ WAGE
SPECIFIC
LEARNING
OUTCOMES
The learners should be able to:
1. enumerate the benefits of a
wage earner
2. define each of the benefits
given to wage earners
A. BENEFITS OF A
SALARY / WAGE
EARNER
The following are examples of benefits of a salary / wage earner:
1. Social Insurance ( Employer Counterpart)
2. 13th month pay
3. Sick leave
4. Vacation leave
5. Maternity leave
6. De Minimis Benefits
7. Fringe Benefits
A. BENEFITS OF A
SALARY / WAGE
EARNER
Specifically, in the Philippines we have the following:
8. Paternity Leave
9. Service Incentive leave
10. Solo Parent’s leave
11. VAWC leave
12. Leaves under RA 9710 (Women who undergo surgery)
13. Tax Exemptions (For minimum wage earners)
14. Tax Exemptions for Non-Minimum Wage Earners
1. SOCIAL INSURANCE
The private company and government employees are required
by law to contribute to the social insurance funds. Employers
are dictated by law to pay a portion of this social insurance
premium. Social insurance agencies are: SOCIAL SECURITY
SYSTEM (SSS) for employees in private sector, Government
Service Insurance System (GSIS) for government employees,
Philippine Health Insurance Corporation (PHIC) more
commonly known as PhilHealth and Home Development
Mutual Fund (HDMF) more commonly known as PAG- IBIG
Funds.
2. 13 TH MONTH PAY
This is ½ of the basic salary that an
employee received for a year. This is
mandatory and should be given to the
employees on or before the 24th of
December of the year.
3. SICK LEAVE
An employee is given leave
with pay due to sickness. This
is usually 15 days for each
year of service.
4. VACATION LEAVE
An employee is also given leave
with pay to go on vacation. This is
also around 10 days for each year
of service.
5. MATERNITY LEAVE
A benefit given to pregnant female
employees when they give birth. This is
usually 60 calendar days which starts on the
day of giving birth. For employees who
have served for at least 2 years, the
maternity leave is a paid leave, but for those
who have served for less than 2 years then it
is pro-rated.
6. DE MINIMIS
BENEFITS
Benefits of relatively small values
provided by the employers to the
employee on top of the basic
compensation intended for the general
welfare of the employees. Examples are
clothing and rice allowances.
7. FRINGE BENEFITS
A compensation in addition to direct
wages or salaries such as company car,
house allowance, medical insurance,
paid holidays, pension schemes,
subsidized meals. Some fringe benefits
are regarded part of a taxable income.
8. PATERNITY LEAVE
A benefit given to male employees
when their legal spouse gives birth.
It is a 7-day paid leave starting on
the day the spouse gave birth.
9. SERVICE
INCENTIVE LEAVE
Every employee who has rendered
at least one year of service shall be
entitled to a yearly service incentive
leave of five days with pay.
10. SOLO PARENT’S
LEAVE
The parental leave is an additional
benefit which shall be for seven (7)
working days every year, with full pay,
consisting of basic salary and
mandatory allowance.
11. 10 – DAY LEAVE FOR
VICTIM OF VIOLENCE
AGAINST WOMEN AND THEIR
CHILDREN (VAWC)
This is granted to women employees who are victim
of physical, sexual, psychological harm or suffering
or economic abuse. The leave benefit shall cover the
days that the women employee has to attend to
medical and legal concerns. (R.A. 9262)
12. SPECIAL LEAVE
FOR WOMEN
Leave benefit for 2 months following
surgery caused by gynecological
disorders, with full pay for female
employees who have rendered continuous
aggregate employee service of 6 months
for the last 12 months (R.A. 9710)
13. TAX EXEMPTIONS (FOR
MINIMUM WAGE EARNER)
Under R.A. 9504, statutory
minimum wage earners are
exempted from income tax and
consequently from withholding
tax on compensation.
14. TAX EXEMPTIONS FOR NON-
MINIMUM WAGE EARNERS
(ANNUAL):
A. Basic Personal Exemption: P50,000
Note: this is a mandatory exemption allowed to individual citizens of
the Philippines, regardless of status. This applies to all citizen
taxpayers engaged in trade or business, practice of professions, and
employees earning compensation income.
B. Additional Personal Exemption: P25,000 per dependent, up to a
maximum of four dependents.
C. Employee’s contributions to GSIS/ SSS, PhilHealth, and PAG-
IBIG.
SALARIES AND
WAGES
(TAXABLE AND
NON-TAXABLE
BENEFITS)
SPECIFIC LEARNING
OUTCOME
The learners should be able to distinguish taxable from non-taxable benefits.