What is Payroll Management?

Payroll management is the administrative task of compensating employees for services rendered within a specific time frame. It contains details of all employees, such as gross earnings, incentives, bonuses, overtime compensation, allowances, disbursement, and net pay.

However, managing payroll isn’t restricted only to salaries that employees may get. There are other aspects the company or organizations must consider such as deductions of withholding taxes, provident funds, etc. that need to be calculated for every employee every month. 

This calculation process is handled by the company's payroll department or organization.

Why is Payroll Management Important?

Employees are the veins of a company when it comes to human resources, and on an honest note, they will always look forward to their paychecks every pay period. 

Paying employees in a timely and accurate fashion is an important part of keeping them engaged and motivated to do their job. Since it is up to Human Resources (HR) personnel to help retain valued workers, it is in the company’s best interest that they are well compensated for the number of hours they have spent working to boost their morale towards their duty. It will also promote a healthy and productive business.

In addition, proper payroll management also helps employees to easily access and track the current and historical payslips in one place, and easily monitor the employee's performance, turnover, and absenteeism. Effortlessly alter the salary structure with ongoing promotions and increments, and constantly observe the adherence to the government laws and regulations.

Why is Payroll Compliance Essential?

Payroll compliance means adhering to all government regulations that govern how employees are paid. This will protect the rights of employees by legislating workplace equity and making sure employees are paid and treated fairly. 

It also ensures the governments will receive the funding for certain programs such as social security, and health insurance contributions, which soon will assist retirees, people with disabilities, medical care, and even workers who have lost their jobs.

What is the Payroll Process in the Philippines?

The payroll process in the Philippines can be easy if managed properly.

Here’s the basic guide;

• Acquire required information from employee or contractor – this will include personal details and tax information
• Calculating gross pay – based on hours worked and salary rate
• Calculating net pay– gross salary deducted with tax, benefits, and social security contributions
• Pay workers – every pay period via their chosen payment method
• Pay relevant government agencies – ensure that both employer and employee tax and contributions are paid on time
• Keep records – keep all documentation related to payroll for the specified timeframe for future reference.

Payroll basic Information Employer needs to Know

Employers must be aware of the Labor Code of the Philippines to avoid potential legal problems. This includes legal working hours, overtime rules, minimum daily wage, tax and provident contributions, holiday compensation, leave entitlement, sick days, and maternity leave.

To give you the idea, here’s some information employer needs to know;

Legal Working hours

The legal hours of work an employee in the Philippines must not exceed eight (8) hours a day and should have one (1) hour daily lunch break. Philippine laws, however, do not prohibit work done for less than eight hours.

Overtime Rules

Work performed beyond eight (8) hours a day is considered to be calculated as overtime. An additional  25% compensation equivalent to the worker's regular wage shall be added.

Minimum Daily wage

Each region in the Philippines has a different minimum wage rate. Thus, in National Capital Region (NCR) and Western Visayas, the Department of Labor and Employment (DOLE) has recently announced a minimum wage increase.

This brings up the new minimum wage rate of PhP570 and PhP533 for the non-agriculture and agriculture sector workers for NCR. And PhP450 and PhP420  minimum pay for those working in a company that employs 10 people or less, and those in a firm that employs over 10 workers in Western Visayas.

Additionally, a wage increase of PhP500 brings the new monthly minimum wage rate for domestic workers to PhP4,500

Lastly, Payroll management has a lot to consider. It can be a little confusing so it is vital that businesses are aware of current changes or updates to payroll regulations. This often needs professional help that can assure accuracy and is perfectly in line with the laws.

What Westwise Consult Inc. can do?

We are a team of accounting professionals that handles different kinds of entities in the Philippines that are experts and knowledgable in Payroll management, taxation laws, and any other related accounting services. 

If you need help with payroll management in the Philippines, Contact Us! We are more than willing to help.