How to compute payroll in the Philippines is a sequence, not a single formula. You convert basic salary into the rates your policy actually uses, attach earnings that come from a reviewed daily time record, then subtract statutory and authorized deductions to reach net pay. Skipping the timekeeping step and jumping to SSS or tax is how a mathematically tidy register still pays the wrong person.
This article was last reviewed in September 2026. Premium percentages below follow the DOLE / BWC / NWPC 2024 Handbook on Workers’ Statutory Monetary Benefits; handbook editions can change. Contribution figures in the ₱30,000 example are based on the latest reviewed official 2025 schedules as of September 2026 and must be re-verified on the SSS, PhilHealth, Pag-IBIG, and BIR sites before processing.
TimeBoxHR is designed to support configurable payroll rules so the sequence below can start from approved DTR hours, leave, and holiday calendars rather than a reconstructed workbook.
The computation sequence
A repeatable cutoff looks like this:
- Confirm classification (monthly-paid or daily-paid), schedule, and the documented daily and hourly conversion method.
- Pull the reviewed DTR: days worked, unpaid absences, paid leave, rest days, holiday types, overtime, and night hours.
- Compute basic pay for the period, then absence deductions and leave substitutions.
- Add premiums: overtime, rest-day work, holiday work, night differential, using the matching handbook or CBA rate.
- Arrive at gross pay.
- Compute statutory employee shares (SSS, PhilHealth, Pag-IBIG) and BIR withholding from the correct bases.
- Subtract other authorized deductions.
- Release net pay and keep the register that can reproduce every line.
Steps 1–4 fail more often than step 6. How timekeeping improves payroll is the control for those steps. Philippine payroll deductions covers steps 6–7 in more detail.
Actual payroll depends on company policy, employee classification, the contract or CBA, the work schedule, and current government rules. There is no single required salary divisor for the whole country.
Rates before pesos: daily and hourly conversion
You cannot apply 125% or 10% until you know the hourly rate. Monthly-paid and daily-paid employees get there differently. Common monthly-to-daily factors in practice include 365, 313, 261, 26, and 22. None of them is universally required. See monthly versus daily paid and how to compute daily and hourly rates.
For the worked example below, the company documents a Monday–Friday plant and a 22-day factor for absence and premium conversion. That choice is an illustration, not advice to adopt 22 days.
| Item | Illustration |
|---|---|
| Monthly basic salary | ₱30,000 |
| Documented factor | 22 working days |
| Daily rate | ₱30,000 ÷ 22 = ₱1,363.64 |
| Hourly rate (8-hour day) | ₱1,363.64 ÷ 8 = ₱170.46 |
If the same ₱30,000 were converted on a 365-day factor, the daily rate would be (₱30,000 × 12) ÷ 365 = ₱986.30. Premiums and absence deductions would change. Do not mix 22 and 365 in the same period.
Worked example: ₱30,000 monthly, one calendar month
Employee facts for this illustration:
- Monthly-paid, ₱30,000 basic
- Covered rank-and-file, eight-hour day
- Documented 22-day factor as above
- Monthly salary is treated as covering the scheduled working days in the month, not a 365-day inclusion of every rest day and regular holiday
- One unpaid absence (no leave credit)
- Two hours ordinary overtime on a regular workday
- One regular holiday worked, first eight hours only; because this factor does not already pay unworked regular holidays inside monthly basic the way a 365-day monthly-paid method often does, the illustration pays the worked holiday at 200% as a separate earning and does not also leave the day inside an untouched ₱30,000 without comment—see the holiday note below
- Three ordinary night hours inside the regular eight on another workday (10:00 p.m. to 1:00 a.m.)
Holiday treatment needs an explicit sentence. Under a documented 22-day working-day method, a regular holiday that falls on a scheduled workday is not automatically “already inside” monthly basic the way it often is when monthly-paid staff use a 365-day factor. This illustration replaces that day’s slice of basic with the handbook worked-holiday amount of 200% of the daily rate for the first eight hours. Practically: keep ₱30,000, do not deduct the holiday as an absence, and add another 100% of the daily rate so the day totals 200%. If your company uses 365 and already includes unworked regular holidays in monthly pay, you add only the extra 100% when the employee works—the same peso add-on, reached from a different story about basic. Confirm your written method before copying either sentence into a register.
Earnings
Ordinary overtime, 2024 handbook 125%:
| Item | Computation | Amount |
|---|---|---|
| Ordinary OT | 2 × ₱170.46 × 125% | ₱426.15 |
Worked regular holiday, additional 100% of daily rate (to bring the first eight hours to 200%):
| Item | Computation | Amount |
|---|---|---|
| Holiday premium (additional 100%) | ₱1,363.64 × 100% | ₱1,363.64 |
Ordinary night differential, 2024 handbook × 1.10 on hours in the window; the basic for those hours is already in monthly pay:
| Item | Computation | Amount |
|---|---|---|
| Night differential | 3 × ₱170.46 × 10% | ₱51.14 |
Unpaid absence:
| Item | Computation | Amount |
|---|---|---|
| Absence deduction | ₱1,363.64 × 1 day | (₱1,363.64) |
Gross pay:
| Component | Amount |
|---|---|
| Monthly basic | ₱30,000.00 |
| Less unpaid absence | (₱1,363.64) |
| Ordinary overtime | ₱426.15 |
| Regular holiday premium | ₱1,363.64 |
| Night differential | ₱51.14 |
| Gross pay | ₱30,477.29 |
Rates used for OT, holiday, and night come from the 2024 handbook (ordinary 100% / OT 125%; regular holiday 200% / OT 260%; night × 1.10; ordinary night OT 137.5%). This month had no rest-day work and no holiday overtime. Those stacks are in overtime pay, holiday pay, night differential, and rest-day pay.
Statutory contributions (employee and employer)
The contribution figures below are based on the latest reviewed official 2025 schedules as of September 2026 and must be re-verified before payroll processing.
SSS (January 2025 schedule). Monthly compensation ₱30,000 maps to a monthly salary credit of ₱30,000. Employee share ₱1,500. Employer share ₱3,030, including EC ₱30. See the SSS contribution table and how to compute SSS.
PhilHealth. Illustration uses 5% of ₱30,000 = ₱1,500, split equally ₱750 employee and ₱750 employer. Confirm the current premium rate, floor, and ceiling on the PhilHealth site. See the PhilHealth contribution table.
Pag-IBIG. Mandatory employee and employer shares are commonly 2% each of monthly compensation up to a ₱10,000 maximum fund salary. At ₱30,000, the mandatory amounts in this illustration are therefore ₱200 employee and ₱200 employer, not 2% of ₱30,000. Higher voluntary savings are a separate election. See the Pag-IBIG contribution table and the combined walkthrough in how to compute SSS, PhilHealth, and Pag-IBIG.
| Contribution | Employee | Employer | Notes |
|---|---|---|---|
| SSS (Jan 2025, MSC ₱30,000) | ₱1,500 | ₱3,030 | Employer amount includes EC ₱30 |
| PhilHealth (5% of ₱30,000) | ₱750 | ₱750 | Confirm current rate, floor, and ceiling |
| Pag-IBIG (mandatory at ₱10,000 MFS) | ₱200 | ₱200 | Not 2% of ₱30,000 |
| Total | ₱2,450 | ₱3,980 | Re-verify official 2025 schedules |
Whether SSS and PhilHealth should be based on basic ₱30,000 or on gross ₱30,477.29 is a configuration and agency-rule question. Many employers use monthly basic salary or the SSS compensation definition in the current circular, not every premium peso. This illustration uses ₱30,000 as the stated monthly compensation. Do not switch bases silently between employees.
Other deductions and net pay
Employee statutory shares: ₱2,450.00.
Subtotal after statutory contributions: ₱30,477.29 − ₱2,450.00 = ₱28,027.29.
BIR withholding tax applies to taxable compensation after allowable deductions under the current withholding rules. This article does not invent a tax peso amount. Open the current BIR table, apply it to the correct taxable base, and show tax as its own line. Other authorized deductions—SSS salary loan, Pag-IBIG loan, company cash advance with written authorization, union dues where lawful—come after you know they are authorized. See Philippine payroll deductions.
If the only remaining items were statutory contributions, net pay before tax would be ₱28,027.29. After tax and any loans, net is lower. The register should still reconstruct gross ₱30,477.29.
| Step | Amount |
|---|---|
| Gross pay | ₱30,477.29 |
| Less SSS, PhilHealth, Pag-IBIG (EE) | (₱2,450.00) |
| Subtotal before tax and other deductions | ₱28,027.29 |
| Less BIR withholding | Per current BIR table |
| Less authorized loans / other | If any, and documented |
| Net pay | Gross − all employee deductions |
Employer statutory cost on this illustration is ₱3,980 on top of gross earnings. That is not a deduction from the employee’s net. It belongs on the employer remittance side and on statutory reports.
Simplify payroll computation with TimeBoxHR
TimeBoxHR is designed to support configurable payroll rules so basic pay, absence, overtime, holiday premiums, and night differential can be assembled from a reviewed DTR. SSS, PhilHealth, and Pag-IBIG contribution tables are configurable and versioned. Statutory reports for SSS, PhilHealth, Pag-IBIG, and BIR are part of the same payroll path. That is not a claim that every tax case or exemption is decided for you.
What the DTR must have already decided
The ₱426.15 OT line is only as good as the two hours behind it. Before cutoff, timekeeping should have:
- Punches or approved corrections for every date
- Rest-day assignment per employee
- Holiday type per location (regular, special non-working, special working)
- Overtime request or confirmation
- Night-hour split for any tour that crossed 10:00 p.m. or 6:00 a.m.
- Leave approvals that prevent an unpaid-absence deduction
A DTR system that stores minutes without a day type will dump rest-day and holiday work into ordinary 125%. Leave that never reached the DTR will look like an absence. Employee leave benefits, service incentive leave, and leave credit calculation matter here because a paid leave day and an unpaid absence use the same daily rate in opposite directions.
Special working days are typically treated as ordinary working days for pay unless a proclamation or policy says otherwise. Do not give them 130% or 200% because the date was printed in red on a consumer calendar.
Monthly-paid versus daily-paid in the same register
If a second employee earns a daily rate of ₱1,363.64 and is daily-paid, the month is built from days actually worked plus entitled unworked regular holidays, not from a ₱30,000 block minus one absence. Rest days are usually unpaid unless worked. The OT, holiday, and night percentages can be the same handbook figures; the basic construction is not. Putting both people through the ₱30,000 template will mispay the daily-paid employee on every unworked Saturday.
A payroll system for the Philippines should store the pay type and the factor, not hide them in a filename.
Semi-monthly cutoffs
Many employers pay twice a month. The sequence does not change. What changes is how you split ₱30,000 (equal ₱15,000 cuts versus actual working days in each half), when you run SSS and PhilHealth (usually monthly, often on the second half or as configured), and how you avoid deducting a full-month contribution twice. Document the split. Employees contest a first-half payslip that withheld a full ₱1,500 SSS and a second-half payslip that withheld it again.
Absence and overtime still attach to the dates inside that cutoff. A holiday on the 12th belongs in the first-half register if that is when you pay the 1st–15th.
Common errors in the full computation
- Using a daily factor no one can find in a policy
- Applying 365-day holiday logic to a 22-day shop, or the reverse
- Computing OT on ₱30,000 ÷ 30 ÷ 8 because thirty is a round number
- Paying rest-day OT at 125%
- Using 2% of ₱30,000 for Pag-IBIG when the mandatory maximum fund salary is ₱10,000
- Taking PhilHealth on gross including overtime without checking the current premium base
- Withholding tax on ₱30,000 without subtracting allowable statutory shares
- Deducting a company loan that has no written authorization
- Publishing net pay that cannot be walked back to punches
Each of those is cheaper to catch on a review screen than on payday.
How TimeBoxHR Handles This
TimeBoxHR starts from DTR scanning or geofenced mobile attendance, then lets leave requests and approvals flow into the same DTR and into payroll. Holiday calendars can be regular or special and can differ by branch or location. Overtime requests support configurable statutory pay, including night differential and holiday premiums.
SSS, PhilHealth, and Pag-IBIG contribution tables are configurable and versioned so a January 2025 schedule can be stored as a version rather than hardcoded forever. Statutory reports for SSS, PhilHealth, Pag-IBIG, and BIR sit with the payroll run. TimeBoxHR is designed to support configurable payroll rules; it does not replace official tables, a CBA, or professional advice.
The ₱30,000 walkthrough above is a teaching register. Re-verify every government figure before you pay it.
