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Salary Structures and Wages in the Philippines

Salary structure and wages in the Philippines vary by some factors, such as professional experience, academic credentials, nature of work, working hours, type of industry, etc. It can also depend on the location of the entity. Usually, those working in the major cities of business districts receive higher pay than those working in provincial areas.

Philippine laws, however, grant fair compensations and benefits to all types of employees regardless of differentiating factors such as those previously mentioned. Among these compensations and benefits are minimum wages, the thirteenth-month pay, health and insurance benefits, and holiday pays.

Government Agency Responsible for Wages in the Philippines

The Department of Labor and Employment (DOLE) and its affiliate agency, the National Wages and Productivity Commission (NWPC), are mandated to enforce the provisions of the Labor Code of the Philippines – which prescribes employment regulations and labor laws for companies operating in the Philippines.

Minimum wage rates in the Philippines vary in every region. The Regional Tripartite Wages and Productivity Board (RTWPB) monitors economic activities and adjusts minimum wages based on the region’s growth rate, unemployment rate, and other factors.

The Regional Minimum Wage Rate

In October 2022, NPWC released an updated summary of regional daily minimum wage rates to guide employers on the minimum daily amount legally required to pay their employees.

Regional Daily Minimum Wage Rates
(As of October 2022) 
NCR ₱533.00-570.00₱533.00₱533.00
SOURCE: National Wages and Productivity Commission – Department of Labor and Employment

How to Compute Your Salary

Computing salary varies on what day it falls since there are entities that require their employees to work during holidays and special days. Wage rates are also computed differently when employees work overtime or rest days.

That said, there are different formulas when calculating employee compensation, such as the following:

Computing Pay for Work Done on

  • A Regular Day (basic daily rate = monthly rate x number of months in a year (12) / total working days in a year)
  • A Special Day (130% x basic daily rate)
  • A Special Day, which is also a scheduled Rest Day (150% x basic daily rate)
  • A Regular Holiday (200% x basic daily rate)
  • A Regular Holiday, which is also a scheduled Rest Day (260% x basic daily rate)

Computing Night Shift

  • Ordinary Day (110% x basic hourly rate)
  • Rest Day and Special Day (143% x hourly rate)
  • Regular Holiday (220% x hourly rate)

Computing Overtime

  • On Ordinary Days
    • Number of hours in excess of 8 hours (125% x hourly rate)
  • On a Rest Day or Special Day
    • On a Rest day and Special Day (130% x hourly rate)
    • Number of hours in excess of 8 hours (169% x hourly rate)

Computing 13th Month Pay

  • Total basic salary earned for the year exclusive of overtime, holiday, and night shift differential pay divided by 12 = 13thmonth pay

Conditions of Employment and Benefits Provided for Employees

  • Employment Conditions
    • Normal working hours shall not exceed eight (8) hours a day
    • Payment of overtime work shall consist of an addition of at least 25% of the regular wage per hour worked or 30% thereof during holidays or rest days
    • Minimum wage rates for Agricultural and Non-Agricultural lines of work vary in every region and should be properly observed
    • Minimum age of employment is 18 years old but those aged 15 to 18 can be employed given that they work in non-hazardous environments
    • In the event of a bankruptcy or liquidation, workers shall be paid their full salary before other creditors may establish any claim to a share in the employer’s assets
  • Mandatory Benefits and Contributions
    • Companies are mandated by the Labor Code to give their regular employees a 13th month pay equivalent to one (1) month of their annual salary
    • Service incentive leave of at least 5 days with pay for every year of service
    • Employees have a right to a weekly rest period of not less than 24 consecutive hours after every 6 consecutive normal work days
    • Withholding a portion of an employee’s monthly salary to remit as contributions to government agencies is a requisite for employers, these agencies are as follows:
      • Social Security System (SSS)
      • Home Development Mutual Fund (HDMF)
      • Philhealth
    • Provision of holiday pay
    • Paternity and maternity leave benefits

As an employer it is essential that your employees compensation and benefits are computed correctly. It is also equally important that you align their salaries with the imposed labor regulations of the government to ensure that they’re receiving what’s rightfully earned.

Stay Updated with the Latest Compensation Packages

Businesses must always ensure to provide a comprehensive salary package that meets the current market demands in their respective industries. Keeping track of the latest compensation and benefits packages is essential. If you find salary computation challenging, you may seek help from business consulting firms to ensure that your employees’ salaries are updated with the current wage rate.

Stay Updated with Philippine Labor Laws and Regulations

With a large pool of experienced lawyers, we are dedicated to helping you properly align your employees’ benefits and compensation packages with the imposed Philippine labor laws.

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