Business
Mathematics
Chapter 4 : SALARIES
AND WAGES
Lesson 1 : Employee
Compensation
Lesson Objectives
1. Employee compensation;
2. Diff erentiate salary, wage and income;
3. Solve problem related to piece rate
earner, and hourly paid earners including
overtime pay;
4. Enumerate and define the diff erent
benefits given to an employee
Lesson Pre-assessment
1. Rolando earns P30.00 per hour. For
the week, he worked at a total of 35
hours. How much did he earn?
2. Pearl works as a dressmaker. She is
paid P150.00 for every dress that
she finishes. For the week, Pearl
finished 5 dresses. How much did
she earn?
Salary
A fixed regular payment typically
paid on a monthly or bi-weekly
basis but often expressed as an
annual sum, made by an employer
to an employee, especially a
professional or white-collar worker
Earning of employees paid on a
monthly or annual basis is generally
referred to as salary. It is sometimes
necessary to convert salaries on
annual basis into monthly, weekly
to monthly, monthly to semi-
monthly,. In these case we should
always remember that:
1 year= 12 months=24 semi-monthly= 6 bi-monthly
1 year= 52 weeks = 26 bi-weekly
1 month= 2 semi-monthly
bi-monthly = every two months
bi-weekly = every two weeks
Let us try;
Assuming an annual salary of
P72,000
1. Monthly salary ?
2. Semi-monthly ?
3. Weekly salary ?
4. Bi-weekly salary ?
Let us try;
Assuming an annual salary of
P72,000
1. Monthly salary = P6,000
2. Semi-monthly = P3,000
3. Weekly salary = P1,384.62
4. Bi-weekly salary = P2,769.24
Wages
refer to the earnings received by
a worker on a piece rate, hourly
rate, or daily rate.
Piece Rate
A worker employed on a
“piecework” basis is paid in
proportion to the quantity of
work he or she finishes.
The rate used can be fixed
irrespective of the quantity
produced, in which case it is
called a fixed piece-rate plan.
On the other hand it can be
graduated increasing as the
quantity produced increases, in
which case it is called
diff erential piece-work plan.
Example:
Annie is paid on a per piece
basis at the rate of P1.20 per
piece. If she finishes 360 a
week, how much is her total
earnings?
Example:
Annie is paid on a per piece basis
at the rate of P1.20 per piece. If
she finishes 360 a week, how much
is her total earnings?
Total earnings= Quantity x rate
=360 x P1.20
= P432.00
Ho urly Rate
Many employees are paid in an
hourly basis. To compute for the
pay, simply multiply the number of
hours work by the hourly rate.
Employees who work in excess of
required number of hours are
entitled to overtime pay.
Articles; Labor Code on relevant hours and
overtime work
Article 83 of the Labor Code enunciates that the
normal hour of work of any employee shall not
exceed eight (8) hours a day. This exclusive of
the one (1) hour break. Article 85 provides that
subject to such regulations as the secretary of
Labor may prescribe, it shall be the duty of
every employer to give employees not less than
sixty (60) minutes time off for their regular
meals.
Articles; Labor Code on relevant hours and
overtime work
Article 87 provides that work may be performed
beyond 8 hours a day provided that the employee
is paid for the overtime work an additional
compensation equivalent to his regular wage plus
at least 25% thereof. Work performed beyond 8
hours on a holiday or a rest day shall be paid an
additional compensation equivalent to the rate of
the fi rst 8 hours on a holiday or rest day plus at
least 30% thereof.
Articles; Labor Code on relevant hours and
overtime work
Article 94 provides that:
a. The employer may require an
employee to work on any holiday, but
such employee shall be paid a
compensation equivalent to twice his
regular rate.
Articles; Labor Code on relevant hours and
overtime work
Article 94 provides that:
b. Work on a regular holiday shall be
paid 200% of regular hourly rate.
c. Work on a rest day which falls on a
regular holiday shall be paid 260% of
regular hourly rate.
“Labor Codes”Dole gov.Retrieved April 30, 2015 from
http:www.dole.gov.ph/labor_codes/view/4
“Business Mathematics by Norma D. Lopez-Mariano,
PhD”_Chapter 4-Salaries and Wages
Computation for Overtime Pay
Minimum daily wage rate is P340.00. How much is overtime rate per hour?
On Ordinary Day
Compute for the hourly rate of employee:
Regular hourly rate = Daily wage rate
= 340.00
= P 42.50 per hour
Now determine the overtime rate per hour:
Overtime rate = Regular hourly rate + 25% of regular hourly rate
= 42.50 + ( 25% of 42.50)
= 42.50 + 10.625
= P 53.125
Minimum daily wage rate is P340.00. How much is overtime rate per hour?
On a Regular Holiday
Compute for the hourly rate on regular holiday:
Hourly rate (on regular holiday) = 200% of regular hourly rate
= 200% x 42.50
= P85.00 per hour
to determine the overtime rate per hour:
Overtime rate = hourly rate on regular holiday + 30% of regular hourly
rate on regular holiday
= 85.00 + ( 30% of 85.00)
= 85.00 + 25.50
= P 110.50
Income
Wages and salaries are income to the person receiving it. However for people who are not
employees their income may not be in a form of salaries and wages, they can be
commission income, rental income, investment income, etc.
Employees Benefi ts covers remuneration other than basic pay, it includes vacation and
sick leave, maternity leave, medical and hospitalization benefi t, meal allowance,
transportation allowance, clothing allowance, 13 t h month pay, bonuses, etc.
• Vacation Leave: Thirteen vacation day, with additional one vacation day every year
starting 2 n d year of service and convertible to cash at the end of each year. Maximum
vacation leave is 18 days.
• Sick Leave: Twelve days per year for the fi rst two years of service. With additional one
day sick leave every year, starting on 2 n d year of service. Maximum total sick leave is
15 days.
• Maternity Leave: benefi t received by the pregnant employee to time off from
a job to give birth and to take care of a new born baby.
• Meal allowance or so called food allowance, is a set amount of money
given to employees for them to use to purchase food.
• 13 t h month: is a mandatory benefi t given to employee, pursuant to
presidential decree No. 851, employee shall be grant 13 t h month pay,
employee should be receive 13 t h month pay not later than December 24.
How to compute
13 t h month pay = Basic Salary x Employment length
Lesson 2: PAYROLL DEDUCTIONS
An employee’s gross earning are not what he or she take home. The
take home pay of an employee is his or her gross earning less certain payroll
deduction. These are certain deductions from gross earning to arrive at or
compute for an employee’s net pay.
1. Employee’s SSS contribution for private employees
2. Employee’s GSIS contribution for government employees
3. PhilHealth contribution for all employees
4. Withholding taxes for all employees
5. Salary advances and Union dues
Rate of Contribution to SSS
All employees of private enterprises are covered by the Social Security
System. Self employed individuals can also become members. The monthly
contributions are based on the compensation of members. The current SSS
contribution rate is 11% of the monthly salary credit not exceeding P16,000.00
and this is being shared by the employer (7.37%)and employee(3.63%)
Rate of Contributions to PhilHealth
All employees, whether of private entities or government entities, are to
be member of PhilHealth. This is basically intended to cover them and their
benefi ciaries help in time of sickness.
Rate of Contribution to GSIS
All government employees holding permanent and non permanent
position are member of GSIS. Premium contributions are based on monthly
compensation.
There are two types of insurance coverage.
1. Regular – refer to compulsory premium payments on life insurance and
retirement benefi ts
2. Employees Compensation Fund – refer to a premium payment paid by your
government agency so you get full coverage in case of a work related
accident
