What kind of things will you consider when hiring employees in terms of salary structure. I read a survey article about what affects most when choosing a company. Every single person has different value in working but the top rank was "TAKE HOME MONEY".
It means you'd better design a salary structure which can be beneficial to both employer and employees. Fortunately, the Government reduced personal income tax recently exempting from PIT who earns gross taxable income up to P250,000 per year.
Without clear rule, you might encounter some trouble in labor relationship someday.
1. Gross Salary (or expenses for you)
How much can you afford based on your business plan or capital? How much is the average salary in the same/similar business sectors in the region?
2. How about the other manpower related expenses like 13th month, converted SIL, employer’s share of the contributions, holiday pay?
3. Is it good enough to hire qualified employees? You’d better include non-monetary benefits also as a part of overall compensation package.
4. How many salary level are you going to create? Are you gonna consider experienced new employee, promotion and/or tenure?
5. Is it legal? It’s the best way to check the related laws/regulations to avoid possible disputes.
In the Philippines, salary release is semi-monthly basis by law.
Daily Minimum Wage rule should be followed even though you opt to use monthly rate. For example, if you adopt day factor 313(6 days working per week), monthly basic salary should be bigger than P13,432 in National Capital Region(NCR with minimum wage P515). But, if you use day factor 261(5 days working), the monthly basic salary would be P11,201 to comply with the law. Can you see the difference? What will happen if you give monthly basic salary P13,000 for those who will work for 6 days a week? Yes, it’s illegal.
6. Is it a big burden to trace/prepare the payroll every two weeks?
You’d better keep it simple. Allowances will be pro-rated basis on attendance? Tardiness will be deducted from the salary? How about creating a lot of different kinds of incentives/allowance? In general, attendance affect payroll a lot but it’s a quite time consuming task for small businesses.
7. When to deduct? You will release salary semi-monthly basis but government mandated deductions are monthly/yearly basis. What items and how much you will deduct from each payroll? For example, you can deduct Withholding Tax/Loan from the 1st payroll and SSS/Philhealth/HDMF from the 2nd payroll. It's matter to some employees since they are expecting quite stable net income every payroll.
It means you'd better design a salary structure which can be beneficial to both employer and employees. Fortunately, the Government reduced personal income tax recently exempting from PIT who earns gross taxable income up to P250,000 per year.
Without clear rule, you might encounter some trouble in labor relationship someday.
1. Gross Salary (or expenses for you)
How much can you afford based on your business plan or capital? How much is the average salary in the same/similar business sectors in the region?
2. How about the other manpower related expenses like 13th month, converted SIL, employer’s share of the contributions, holiday pay?
3. Is it good enough to hire qualified employees? You’d better include non-monetary benefits also as a part of overall compensation package.
4. How many salary level are you going to create? Are you gonna consider experienced new employee, promotion and/or tenure?
5. Is it legal? It’s the best way to check the related laws/regulations to avoid possible disputes.
In the Philippines, salary release is semi-monthly basis by law.
Daily Minimum Wage rule should be followed even though you opt to use monthly rate. For example, if you adopt day factor 313(6 days working per week), monthly basic salary should be bigger than P13,432 in National Capital Region(NCR with minimum wage P515). But, if you use day factor 261(5 days working), the monthly basic salary would be P11,201 to comply with the law. Can you see the difference? What will happen if you give monthly basic salary P13,000 for those who will work for 6 days a week? Yes, it’s illegal.
6. Is it a big burden to trace/prepare the payroll every two weeks?
You’d better keep it simple. Allowances will be pro-rated basis on attendance? Tardiness will be deducted from the salary? How about creating a lot of different kinds of incentives/allowance? In general, attendance affect payroll a lot but it’s a quite time consuming task for small businesses.
7. When to deduct? You will release salary semi-monthly basis but government mandated deductions are monthly/yearly basis. What items and how much you will deduct from each payroll? For example, you can deduct Withholding Tax/Loan from the 1st payroll and SSS/Philhealth/HDMF from the 2nd payroll. It's matter to some employees since they are expecting quite stable net income every payroll.
Sample
Salary Table (Day Factor - 261)
The
amounts used here are not related with any actual or average salary rate here
in the Philippines.
Just
paying basic salary is totally okay as long as you pay more than daily minimum wage. If
you expect that your business will prosper soon, you may create sub-position
level since you will have many employees. For example, you may want supervisory
1, 2, 3 levels under supervisory position based on tenure or title/role.
Incentives wise, I strongly encourage you to include at least Perfect
Attendance Incentive to improve the attendance rate of your employees. All
compensation related information is strictly confidential, so no employees will
be allowed to disclose it to any other employees except you or your
representative like HR manager.
|
Category
|
Rank
& File
|
Supervisory
|
Managerial
|
|
Basic Salary
|
11,500
|
13,500
|
15,500
|
|
Position Bonus
|
|
1,000
|
2,000
|
|
Rice Subsidy
|
500
|
1,000
|
1,000
|
|
Attendance Incentive
|
1,500
|
1,500
|
1,500
|
|
Performance Incentive
|
1,000
|
1,000
|
1,000
|
|
Total
|
14,500
|
18,000
|
21,000
|
|
●
Upon regularization, there will be P1,000 basic salary increase.
●
There is no automatic annual salary increase.
●
There could be a lot of different kinds of performance incentive. An employee
should meet some conditions to receive it.
|
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