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If you have been searching for the perfect payroll system in the Philippines, then you have come to the right place.
We have one that is most suitable for your needs.
But before anything else, what is a payroll system anyway, and how is it relevant to your business?
Payroll system is a progam used to streamline and manage employee benefits and payments.
The program is part and parcel of the payroll software that performs other tasks like planning, budgeting and monitoring employee relations.
The payroll software system is either on-premise or cloud-based and because of its robust system of integration and automation, the task of Human Resources is more streamlined.
This frees HR from repetitive tasks so that they can allocate more time and focus on planning, budgeting, and other business-forward initiatives.
How is payroll calculated in the Philippines?
The payroll system in the Philippines has some payroll requirements to follow.
The government mandates that the company should be able to register with the appropriate government agencies like the BIR, SSS, Philhealth, Home Development Fund (Pag-ibig) and the like.
As a business owner, you must decide on a certain payroll process and work with the most dependable payroll software in the Philippines.
You also need to learn about the statutory deductions for calculating your employees’ salaries.
Here are the 2 kinds of deductions:
1. Know The standard formula for calculating salaries is
Net Salary = Gross Salary – Deductions
2. Compute based on the standard payroll deductions in the Philippines such as the following:
- Social Security System,
- Philippine Health Insurance Corporation (PhilHealth), and
- Home Development Mutual Fund (Pag-IBIG)
Given these, you must also learn about the essential components of a salary structure based on the policies and procedures of the payroll system in the Philippines.
It is important to know the following elements of the payroll system in the Philippines.
1. The Minimum Wage
Minimum wages vary across the country.
A tripartite regional board has the final say on the said minimum age which will highly depend on the region, location, size and the kind of industry.
2. The Cost of Living Allowance (COLA)
This is a mandatory benefit which supports the minimum wage earners.
3. Overtime Pay
Every employee in the private sector belonging to the staff position are entitled to overtime for working beyond eight hours a day.
The overtime rate is 25% of the hourly rate on a regular workday while the rate on a holiday is 30% of the hourly rate.
4. Holiday pay
The payroll system in the Philippines is under the Philippine Labor Code.
The labor code mandates holiday pay in order to compensate employees working on a holiday.
An employee working on a regular holiday gets compensated with 200% of their salary for that day.
5. Social Security System (SSS)
This is a program of the government offering certain mandatory benefits like sickness, disability, maternity and multipurpose loans as well as death.
It actually cts as a state-run pension fund for lifetime SSS members.
Both employers and employees pay a share in employee SSS contributions.
6. Philippine Health Insurance Corporation (Philhealth)
It is a health insurance that covers all employees. Affordable and beneficial, Philhealth contributions is about 3% of the employee’s monthly salary.
The employer pays its share of 1.75% for the employee.
7. Home Development Mutual Fund (PAG-IBIG)
This is a fund with home loan provisions for affordable housing for employees in the Philippines.
The contribution rates depend on the salary.
The monthly contribution is capped at P100 each for the employer and the employee.
The Employer share is 2% while the employee share is also 2% if the monthly gross salary of employee is P1,500.
Now, let us start the ball rolling.
How can you set up a payroll system in the Philippines?
A business owner must be compliant and must follow these steps to set up payroll in the Philippines.
First, register the company with the BIR, Bureau of Internal Revenue and wait for the Employer Identification Number (EIN).
Second, register the company with the Social Security System, Philippine Health Insurance Corporation and Home Development Mutual Fund for the mandated and standard employee deductions.
With this, you will get a unique number for each institution that you can use for employee contributions.
Third, you need to create a database of your employees with their personal information and IDs and corresponding government ID nos.
Fourth, make your own payroll policy that is suitable to your needs and requirements.
And at the same time design a payroll system in the Philippines with considerations to the ff: working hours, allowances, leave benefits, overtime, absences, holidays, and salary cycle.
Fifth and last, keep all records safely and securely.
A reliable payroll software in the Philippines can do all these things listed above.
From start to finish, everything is accomplished smoothly with EasyHR.
EasyHR is a great tool your employees deserve.
Automate statutory payroll deductions like BIR, HDMF, SSS, and Philhealth. Automate DTR computation of tardiness, absences, undertime, overtime, Holidays and all leave types.
Automate manual and repetitive tasks like preparing reports for the BIR, HDMF, SSS, and PhilHealth.
Enough of looking. Get a closer look into the payroll system in the Philippines with EasyHR.
Book for a free demo now! https://human-incubator.com/easy-hr/
