Do You Understand Your Salary Computation?

Working as an HR in our company, I am amazed by how many employees don’t understand how their net salary is computed. I receive a lot of questions, sometimes angry complaints why they are not receiving their actual salary that was promised to them when they were hired. I saw a need to educate most employees so they know if they are really receiving what they have worked for. This inspired me to write an article to at least give some ideas on salary computation.

When offered a position in a company, you will be given your daily or monthly salary rate. But this figure is not the same as what you will receive every payday.  Below is a list of allowable deductions that you might see in your payslip:

  1. Mandatory contributions
  2. Withholding Tax
  3. Loan payments
  4. Absences and late
  5. Other deductions based on company policy

Mandatory Contributions

Employers and employees both pay a monthly contribution to government agencies (SSS, Philhealth, and Pag-ibig). Remember, only the employee’s share should be deducted from your salary.

The amount of deduction is based on your basic monthly salary. The higher your salary is, the higher the deduction will be. Don’t complain just yet though. These contributions will be put to good use. When you get sick, Philhealth will be able to shoulder a portion of the expenses. SSS and Pag-ibig will also provide pension once you retire.

1. SSS

The amount deducted every month is 3.63% of your monthly salary while the employer contributes 7.37%. The table below shows your actual deduction base on your salary.

Image Source: SSS Website

2. Philhealth

Philhealth requires employers to remit 2.75% from your monthly salary credit, half of which will be deducted to your salary. For more details, see table below.

Image Source: Philpad

3. Pag-ibig

Each month, you will be deducted a total of 2% from your monthly salary for your Pag-ibig contribution. Your employer will also remit the same amount to Pag-ibig.

Withholding Tax

For employees earning P20,833 per month is not required to pay taxes. However, if you are earning more, you are mandated to pay taxes. Taxes have a different computation than the mandatory contributions. For easier reference, you can use the online calculator provided by the Bureau of Internal Revenue (BIR).

Loan Payments

If you have availed of salary loan from SSS, Pag-ibig or your company, they are allowed to deduct your amortization every month until the loan is fully paid. SSS and Pag-ibig takes about 24 months before it is fully paid.

Absences and Late

Tardiness and absences can be deducted in your monthly salary income. You should be able to know how to properly compute your deduction for this one to know if the deductions are correct.

For absences, you should be deducted to an equivalent of your daily rate multiplied by the number of days you were absent. If your rate is monthly, you can determine your daily rate by dividing your monthly salary by 24 if you are working from Monday-Friday. If you are working until Saturday, it should be divided by 26.

To compute for your tardiness deduction, you should know first your hourly rate. Your hourly rate is your daily rate divided by 8 hours. Your deduction for late is your hourly rate multiplied by the number of hours you are late.

Other Deductions base on Company Policy

Each company has a set of different rules when it comes to deductions. If you are in a position that regularly receives budget for expenses, you will be required to liquidate them as proof that you have disbursed the amount according to the specified items. Failure to do so will result in the budget to be deducted in your salary. Tellers and cashiers are also deducted if their collection does not coincide with the company’s monitoring.

Please bear in mind that as per the Department of Labor and Employment (DOLE), under number seven of Labor Advisory 11 series of 2014, employers are not allowed to deduct the cost of company uniforms from their workers’ pay. These practices are unauthorized and should be reported to DOLE.


  1. Please let me know if you’re looking for a article
    writer for your blog. You have some really great posts and I think I would
    be a good asset. If you ever want to take some of the
    load off, I’d really like to write some material for your blog in exchange for a link back to mine.
    Please blast me an e-mail if interested. Thanks!

  2. Hi would you mind letting me know which webhost you’re
    working with? I’ve loaded your blog in 3 different internet browsers and I must say this
    blog loads a lot quicker then most. Can you recommend a good internet hosting provider at a honest price?
    Thanks, I appreciate it!

  3. Thanks , I have just been looking for info approximately this subject for a while
    and yours is the best I’ve discovered so far. But, what about the conclusion?
    Are you sure concerning the source?

  4. Hey I know this is off topic but I was wondering if you knew of
    any widgets I could add to my blog that automatically tweet
    my newest twitter updates. I’ve been looking for a plug-in like this for quite some time and was hoping maybe you would have some experience with something like this.
    Please let me know if you run into anything. I truly enjoy reading your blog
    and I look forward to your new updates.

  5. Excellent article. Keep writing such kind of info on your page.
    Im really impressed by it.
    Hi there, You’ve performed a great job. I will definitely digg it and individually recommend to
    my friends. I am confident they’ll be benefited from this web site.

  6. I am now not positive the place you are getting your information, but great
    topic. I must spend a while finding out much more or figuring out
    more. Thank you for wonderful information I was on the lookout for
    this information for my mission.

  7. Amazing issues here. I am very glad to look your post. Thanks so much and I am taking a look ahead to touch you.

    Will you kindly drop me a e-mail?

  8. Hi there! I could have sworn I’ve been to this website before but after browsing through
    some of the post I realized it’s new to me. Nonetheless,
    I’m definitely glad I found it and I’ll be bookmarking and checking back

  9. Asking questions are actually fastidious thing if you are not understanding something totally, however this paragraph offers pleasant understanding even.

  10. Hello would you mind letting me know which webhost you’re using?

    I’ve loaded your blog in 3 different browsers and I must say this blog loads a lot faster then most.
    Can you recommend a good internet hosting provider
    at a reasonable price? Many thanks, I appreciate it!

  11. I was curious if you ever considered changing the structure of your website?
    Its very well written; I love what youve got to say.
    But maybe you could a little more in the way of content
    so people could connect with it better. Youve got an awful lot of text for
    only having 1 or 2 pictures. Maybe you could space it out better?

  12. Hey I know this is off topic but I was wondering if you knew of any widgets I could add to my blog that automatically tweet my newest twitter
    updates. I’ve been looking for a plug-in like this for
    quite some time and was hoping maybe you would have
    some experience with something like this. Please let me know if
    you run into anything. I truly enjoy reading your blog and I look
    forward to your new updates.

  13. You’re so awesome! I don’t think I have read through something like that before.
    So nice to find somebody with genuine thoughts on this topic.

    Seriously.. many thanks for starting this up.

    This web site is something that is needed on the internet, someone with
    a bit of originality!

  14. Hey there! I know this is kind of off-topic but I had to ask.
    Does managing a well-established website like yours require a lot of work?
    I am completely new to operating a blog however I do write in my diary everyday.

    I’d like to start a blog so I will be able to share my experience and feelings online.
    Please let me know if you have any ideas or tips for new aspiring
    bloggers. Appreciate it!

  15. I’ve been surfing online more than three hours today, yet I never found any
    interesting article like yours. It’s pretty worth enough for me.

    In my opinion, if all site owners and bloggers made good content as you did, the net will be a lot more useful than ever before.

  16. Hello! Someone in my Facebook group shared this site with us so I came to take a look.

    I’m definitely loving the information. I’m bookmarking and will be tweeting this to my followers!
    Fantastic blog and terrific style and design.

  17. Hello there, I believe your blog may be having internet browser
    compatibility issues. Whenever I take a look at your site in Safari, it looks fine however, if
    opening in I.E., it’s got some overlapping issues. I merely wanted to provide you with a quick
    heads up! Aside from that, wonderful blog!

  18. I’m not sure why but this website is loading very slow for me.
    Is anyone else having this problem or is it a issue on my end?
    I’ll check back later on and see if the problem still exists.

    Feel free to visit my web-site – coupon

  19. Hello there! I could have sworn I’ve visited this site before but after browsing through a few of the posts
    I realized it’s new to me. Anyways, I’m definitely pleased I found it and I’ll be book-marking
    it and checking back often!

  20. I’ve been exploring for a little for any high-quality articles or blog posts on this sort of
    space . Exploring in Yahoo I eventually stumbled upon this website.
    Reading this information So i’m satisfied to convey that I have a very good uncanny feeling I discovered just what I
    needed. I most without a doubt will make sure to don?t omit
    this web site and give it a glance on a relentless basis.

    Also visit my blog; special

  21. Hmm is anyone else experiencing problems with the pictures on this blog loading?
    I’m trying to find out if its a problem on my end or if it’s the blog.
    Any feedback would be greatly appreciated.

  22. Nice blog here! Also your website loads up fast!

    What web host are you using? Can I get your affiliate link to
    your host? I wish my website loaded up as quickly as yours lol

    my blog: tracfone

  23. First of all, thank you for your post. bitcoincasino Your posts are neatly organized with the information I want, so there are plenty of resources to reference. I bookmark this site and will find your posts frequently in the future. Thanks again ^^