Understanding Philippine Payroll Process
PUBLISHED: June 21, 2021
Payroll, the favorite time of the month for employees that also causes the headaches of many employers. But Payroll is not as easy as just giving money to employees. This important yet meticulous process requires loads of hours to finish, comply with different labor and governmental policies, and making sure that employees get what they worked hard for the previous month. But how Philippine Payroll Process works? What are the elements that makes it up? And how to do payroll efficiently?
THE PHILIPPINE PAYROLL PROCESS
To simplify the process, here are five steps that a HR master should follow:
- Employee Data Collection – the first step in ensuring the correct and accurate employee information for easier encoding and tracking.
- Identifying and Calculating Net Pay – after identifying the employee’s salary, the employer must now calculate the deductions and withholdings to come up with the net pay.
- Payroll Releasing – now is the favorite part of the employees, payroll release. Employers must now deposit or transfer their employees’ salaries to their respected bank accounts.
- Tax Reporting – the payroll master must now report to the BIR the taxes for proper complying with the government agency.
- Employer Filling – the employer must now guarantee that the deductions, taxes, and benefits are correctly filed to avoid any conflict in the future.
THE PHILIPPINE PAYROLL PROCESS ELEMENTS
Preparing such would not work if any of the following is missing:
- Employee and Employee Information – of course, without the employee itself or even their records, there will be nothing to process.
- Salary – the fixed amount that an employee will get by working for the company.
- Wages – the rate that employers would pay an employee based on their time worked.
- Employee Time – pertains to the amount of time that an employee worked for a period of time or pay.
- Overtime Pay – are hours that employees worked past the daily or weekly set working hours.
- Additional Pay – this comprises commissions, tips, and bonuses that an employee receives other than their salary or wage.
- Net Pay – the employee’s total take home pay after all the deductions and taxes are removed.
- Gross Pay – the total amount that an employee gets without deductions and taxes removed.
- Benefits – are types of compensation that a company provides to its employees and can vary from Medical Benefits, Educational Assistance, Health Insurance, Employee Discount and other benefits.
- Contribution – these are also a type of benefit that a company gives to its employees like SSS, Philhealth, and PAGIBIG.
- Deductions – are amount of money that are being subtracted to the gross pay whether for taxes, contributions, loans, and etc.
- Taxes – each employees have different taxes according to the amount of net pay they receive.
DOING IT EFFICIENTLY
Doing payroll is complicated. While there are companies that still conduct it manually, there are Payroll Software available that will help HR masters do it quickly and easily. Surely, a properly implemented payroll system will help a company produce timely, accurate and government compliant reports and faster and easier process.