With our years of experience in payroll computation, one of the most common errors that we see in businesses is in how they compute their employee’s daily rate. This is only applicable if your employee’s salary is fix per month and you just deduct absences and add overtime pays. You might be wondering why this is very important so Ill discuss some reasons below.
1. You need the correct daily rate of the employee when you are deducting their absences. If you are deducting absences for your employees, you want to make sure that you are not under-deducting or over-deducting them. The same applied when you are deducting their tardy and undertime.
2. Their daily rates have an impact to their tax computation, minimum wage earners have additional tax benefits here in the Philippines. You need to make sure that their daily rate is correct so you can properly check if they are minimum wage earners or not.
3. It’s important when computing overtime pays, if you incorrectly computing your employee’s daily rates, it is more likely that you are incorrectly computing their hourly rates as well which you normally use in computing their overtime pays.
Here is how you should compute your employee’s daily rates, you can surely come up with the same result with different formulas but at least this is the most common formula that we see in many companies.
Daily Rate = (Monthly Rate x (Number of months in a year which is 12)) / Total working days in a year
With that, how can you know the total number of working days in a year? That is where the problem usually comes in. But to explain it simply..
We have 52 weeks in a year. If your employees are required to work from Mondays to Fridays (5 days a week), just multiply 5 by 52 which is 260 but during leap years we sometimes get additional 1 working day so some companies actually use 261. You can also see the same figure in BIRs guidelines about the this subject. You can find their document here.
Here is an example.
If you have an employee with a monthly rate of 11,000 and working 5 days a week.
His\Her daily rate will be
(11,000 x 12) / 261 = 505.75
That 505.75 will be your basis when you are checking if the employee is a minimum wage earner or not. Which if you look in the DOLE website in NCR, that is above minimum wage earner so you should deduct taxes to the employee’s salary assuming that there is no other applicable tax exemption.
If the employee is also required to work during Saturdays with the same monthly rate. The computation of daily rate will be
(11,000 x 12) / 312 = 423.08
423.08 is below minimum wage and you don’t need to deduct withholding tax to the employees salary, in fact at the time of this writing (June 2016) 423.08 is below minimum wage and should be increased to the correct minimum wage.
That rate will also be your basis when computing their absences and their hourly rates which will be your basis in the computation of their overtime pays.
Trust is very important between employer and employees and correct salary computation is one way to strengthen it.
can you gave me a salary distribution based on DOLE for a roving guard with vehicle
mam my i know how is the proper computation of salary .
sample the one month salary is 8000 how much her daily rate and if shes late for 10 min. how much i deduct it.
tnx
How will I know how much is my tax in every cut off? if example i’m earning 17,000 a month? thank you.
if an employee only works 10 months a year, shall i use 10 as “number of months in a year” or still 12? thank you very much.
how to compute the withholding tax of under minimum wage and not under minimum wage? thanks
Hi,
What if the employee is working in a compressed week, he is working monday to friday for a total 48 hours. His daily rate is computed monthly rate x 12 / 31. He started sept 15 and our semi monthly payroll for 2nd half cut-off is sept 11-25, how many days we have to deduct from his gross pay? Is it two day for sept 11-12 or including Sept 13 for a total of 3 days. Thanks.
I am a new sole proprietor and I want to hire an assistant for P350 per day (net of sss, Philhealth and Pag-ibig benefits) which I can only afford to pay as of now… how should his monthly payslip computed? and how much should i remit to SSS, PH & Pag-ibig?
Thank you.
a health personnel rendered his service 48 hours a week. how much will he get in a week?
Is monthly wage rate calculated in Philippines ? If yes, can you send me that document as attachment to mail
In 10,500 how much my daily income. Except sundays because its my dayoff.
Hello good day. I’m Jerick, web developer and working with a small company. Our salary are given every 15th and last day of the month. Saturdays and Sundays are our day off. We have a monthly fixed salary like even if we only work for 10 days or 11 days in a certain cutoff period we received the same amount every time. Our cutoff periods are 26-10 given on 15th and 11-25 given on the last day of the month.
Our Boss wants to change the payroll dates from every 15th and last day of the month to every 7th and 22nd day of the month and also the cutoff period from 26-10 to 1-15 and 11-25 to 16-last day of month. He said the reason for the change is to make it easier for them to do the book keeping, something like that.
So to make the adjustments happen, our company will do like this, knowing that today is December 11, 2014 when I sent this letter.
-On Monday December 15, 2014 the company will give us our salary from November 26 to 30 2014 and they said it is computed for 3 days only, because Nov 29 and 30 are saturday and sunday.
-Then on December 22, 2014, we will get our salary for the period of December 1-15, 2014.
My question is, Is it right that we will only receive 3 days amount for Nov 26 – 30?
Hi, tanong ko lng regarding sa monthly fixed rate. pag nakuha ko n yung daily rate assuming na 10,000 a month tpos we are working for mondays to saturdays , including special non-working holidays. yung daily rate n nakuha ko yun n gagamitin or kinuha lng daily rate for the deductions of absences and overtime?
10000 x 12 / 303= daily rate?
Tama po ba? kasi kasama yung special non-working nmin.
Thank you.
good day po. tanong ko lang po dito po company namin ang computation ng salary dati at (monthly salary÷ 25.25) ngayon po (monthly salary÷26) naguguluhan po ako sa binigay niyong fomula. monday to saturday po pasok ko. salamat and god bless
what computation if it falls in the month of february…
panu naman po yung daily rate! kapag meron pong holiday and special hoidays po.
Ako ay security guard,tanong ko lang po kung tama sang binibigay na salary mula sa agency ko.ang contracts po ng company’s sa agency nmim ay 16,000,ang binibigay lang po ng agency ko na salary ko ay 10,000 don pa po binabawas an sss .magkano po ba dapat any tamang salary ko mula as agency ko. SG.red po.type po and godbless you all,ASA po ako satullong nyo.
Hi, ask ko lang kung tama ba na kahit ang basis ng wage computation namin eh sa factor 261 days (daily wage earner) kapag hindi pumasok ang employee on special non working holiday eh hindi paid. Pero based on the salary above minimum earner ang employee. Diba applicable lang ang “no work, no pay” sa minimum wage earner? ngkataon lang na ang basis ng computation ng salary eh sa 261 days factor?. I confused and i need a valid reason and link na maiiexplain ko sa supervisor. It’s unfair kasi sa employee na hindi bayad ng regular day sa SP Non working kahit above minimum/ fixed rate salary ang employee.
what if an employee is a monthly paid employee and her salary is 14000, working 5 days a week. does it mean that if i compute for her daily rate and it falls below the minimum daily rate then i have to adjust her monthly salary ?
Hi..ung father ko ndi fixed ang salary kasi per byahe sya..1600 per byahe kasi trucking driver sya..married pero unemployed ang mother ko..exempted ba sya o taxable?highest na byahe nya 8 lowest is 2 pero ang deduction ng company more than 1k..tama ba un?thanks
sir’/mam’ ask ko lng po diba dun sa sample nyu kung panu malalaman ung daily rate ng employees” is 10000x(days of work)/? ?? san nyu po n a kuha ung divider?? answer plzz.. asap”