Philippine payroll means deducting withholding tax on compensation for the BIR and remitting separate contributions to SSS, PhilHealth and Pag-IBIG, each through its own portal with its own table and deadline. You also owe 13th month pay by 24 December. Employers register with all three agencies before the first hire.
Running a Philippine payroll involves four separate relationships. The BIR receives tax withheld from employees' compensation, SSS receives social insurance contributions, PhilHealth receives health insurance premiums and the Pag-IBIG Fund receives savings and housing contributions. Each has its own registration number, portal, payment reference and schedule, so a payroll is really four remittance processes that share one salary schedule.
Employers register themselves with the three agencies and register each employee. The BIR side requires the employer's withholding obligation to be listed on its Certificate of Registration. An employer that hires first and registers later will find itself back-filing.
The tables for SSS, PhilHealth and Pag-IBIG are published by each agency and are revised from time to time. At the time of writing, SSS contributions are a percentage of the employee's monthly salary credit, with the employer carrying the larger share. PhilHealth premiums are a percentage of basic monthly salary within a floor and ceiling, shared equally between employer and employee. Pag-IBIG contributions are a small percentage of monthly compensation within a maximum fund salary, matched by the employer.
Because the rates, floors and ceilings change, copy them from the agency websites, not from a colleague's spreadsheet. A payroll that applies last year's table underpays contributions, and agencies bill the shortfall together with penalties.
Employers withhold tax on compensation under the graduated rates for individuals and remit it monthly through the BIR, reporting on Form 1601-C. After year end, they issue each employee a Form 2316, and file annual information returns and alphalists. Employees with a single employer typically have their tax finalised through this process.
The 13th month pay, due by 24 December, is a separate cash event. Employers should accrue one-twelfth of basic salary every month so that the December payment does not arrive as a surprise. Under the tax rules, 13th month pay and certain other benefits are exempt up to an annual ceiling, so any excess is added to taxable compensation.
The Labor Code and special laws govern service incentive leave, holiday pay, night shift differential, overtime and the various statutory leaves such as maternity, paternity and solo parent leave. Regional wage boards set minimum wages, which differ between regions, so a company with employees in Metro Manila and Cebu must apply two wage orders.
Keep timesheets, leave approvals and signed contracts in the employee file. In a labour dispute the employer carries the burden of proving that pay and benefits were correct, and a clean time and leave record is the most persuasive evidence.
4softhr.net keeps employee records, leave and timesheets. It supports your HR administration, but payroll calculation in the ecosystem is available for Romania only. For the Philippines it does not calculate contributions, produce payslips or send remittance files, so the arithmetic and the filings are done by your payroll provider or accountant.
4notify.net can send SMS or e-mail messages that you write, for example a reminder to staff to submit timesheets before cut-off. Verify the numbers in each agency's portal, and keep the official receipts and confirmations with the payroll file.
Imagine an office in Quezon City with ten staff and a payroll cut-off on the 25th. By the 20th the HR clerk confirms timesheets and approved leave. On the 22nd the accountant computes gross pay, adds overtime, deducts the employee shares of the three agencies and the tax withheld, and prepares net pay for the bank file. Salaries go out through the bank on the 30th.
The remittances follow on a different clock: the BIR return for tax withheld, then each agency's contribution payment through its own portal or authorised bank. The employer's own shares are expenses of the company, not deductions from the employee. Reconcile the total remitted to the payroll register every month.
When an employee leaves, the final pay includes unpaid salary up to the last day, prorated 13th month pay and the cash value of any leave that company policy or law converts. Withholding tax is adjusted on the final payroll so that the Form 2316 reflects the correct annual total. Issue a clearance and certificate of employment on request.
Project-based and fixed-term employees are still employees. They have the same rights to the statutory contributions and to the benefits that apply to their status. Mislabelling an employee as an independent contractor is a common cause of claims, so review the real working arrangement, not just the contract title.
Keep payroll registers, payslips, time records, leave forms, contribution payment receipts and copies of every filed return. The Department of Labor and Employment can inspect payroll and working conditions, and the agencies can audit contribution payments and request records.
A file per employee that holds the contract, TIN, agency numbers, and every pay change with an approval is the quickest way to answer inspectors and to resolve disagreements about what was agreed.
Typical errors include classifying employees as contractors to avoid contributions, applying one region's minimum wage to staff in another, forgetting the last-pay items on resignation such as prorated 13th month pay and unused leave conversion, and failing to issue Form 2316 on time. Labour inspectors and the agencies pay close attention to exactly these points.
Run a pre-payroll checklist: new hires registered, rate tables current, overtime approved, leave applied, loans from SSS and Pag-IBIG deducted where applicable. Sign off the checklist each cycle.
SSS, PhilHealth and Pag-IBIG contribution tables are updated at different times of the year. The payroll spreadsheet carries stale rates for months after each update, resulting in under-remittances and penalty letters.
Check the current contribution tables on the SSS, PhilHealth and Pag-IBIG sites and calculate contributions in your own payroll process. 4softhr does not calculate payroll or statutory contributions for the Philippines (payroll calculation is Romania only).
Preparing and submitting separate monthly remittances to SSS, PhilHealth and Pag-IBIG takes half a working day, using three different portals and three different file formats.
Prepare remittances and file them in each agency portal (SSS, PhilHealth, Pag-IBIG) and BIR 1601-C. 4softhr keeps employee and leave records you can refer to; it does not produce payslips or agency remittance files.
A new hire is paid for a month before the employer has registered the employee with SSS, PhilHealth and Pag-IBIG.
Collect the hire's TIN and agency numbers before the first payroll, or register the employee within the periods each agency allows, and record the registration date in the personnel file.
Employers remit contributions to the Social Security System, PhilHealth and the Pag-IBIG Fund, and withhold tax on compensation for the BIR. Each agency publishes its own contribution table and remittance deadline, and shares between employer and employee differ. Tables change from time to time, so verify the current rates on each agency's website before running payroll instead of copying last year's spreadsheet.
Yes. Presidential Decree 851 requires rank-and-file employees to receive 13th month pay of at least one-twelfth of the basic salary earned in the calendar year, paid not later than 24 December. Under current tax rules, 13th month pay and certain other benefits are exempt from income tax up to a set annual ceiling. Check the ceiling that applies in the year you pay.
Employers file the monthly remittance return for taxes withheld on compensation, Form 1601-C, and give each employee a certificate of compensation payment and tax withheld, Form 2316, after year end. They also submit an annual information return and alphalist. Because filing dates and the electronic filing channels are updated by the BIR, check the BIR calendar rather than rely on an old reminder.
The Labor Code gives employees with at least one year of service five days of service incentive leave a year, subject to exceptions. Separate laws provide maternity leave of 105 days, paternity leave of seven days for married male employees and solo parent leave of seven days. Company policy and collective agreements may grant more, and managerial employees and some others are excluded from specific benefits.
No. 4softhr.net keeps employee records, leave and timesheets, but payroll calculation in the ecosystem is available for Romania only. It does not produce payslips for the Philippines, compute SSS, PhilHealth or Pag-IBIG contributions, or send remittance files to the agencies. Run the calculation with a payroll provider or your accountant and keep the supporting records in your files.
Keep employee, leave and timesheet records. Contributions and withholding are handled with the agencies.
