Lesson 7: Understanding Salary Deductions
Now, let’s talk about salary. Every payslip you receive has deductions for mandatory government contributions, loan payments, or simply from your company’s policy. Taking note of these payroll deductions is essential, especially if you are saving money.
If you need help understanding the deductions in your salary, we would gladly explain them to you to help you know better.
Payroll Deductions
Here are the eight kinds of payroll deductions in your payslip
1. Late/Undertime Deduction
A deduction for tardiness. In a working environment, tardiness can affect productivity. We all know the struggles of unforeseen circumstances, and it is unavoidable. That is why you must be able to establish time management.
Giving your company manual a thorough read-through is always a good idea to know the possibilities that could happen if you are constantly late for work. It also teaches you how much the possible deduction would be when tardy. The basis for these deductions is a half-hour of the work.
2. Absences
Being absent from work means you won’t get compensated. Your salary is tied to your attendance record, and if you take too many days off work, then this would have an impact on your salary.
Every employer has a different company policy, so reviewing your company’s manual is needed to determine the best time to make a leave.
3. Social Security Systems (SSS)
As discussed in the previous cheat sheet, SSS can give benefits, and qualified SSS members can borrow money for various purposes. Your employer would deduct your contributions from your monthly salary.
Be informed that your contributions are based on your salary. And as of 2023, according to RA 11199, members’ contributions have increased from 13 to 14%, which your employer will shoulder the 1%. To see the latest contribution table, click here.
4. PhilHealth Contributions
Health is important. As the saying goes to Filipino adults, “Mahirap Magkasakit.” This statement is true for us, and as a working individual, you need to consider saving money for emergencies. Being a member of Philhealth can give you and your family health insurance coverage or provide financial assistance.
As of 2023, there is no increase in premium rates. They remain the same because Filipinos are still struggling with the effects of the pandemic.
5. PAG-IBIG Contributions
Pag-Ibig membership fund is also mandatory. This membership can offer members a housing loan and affordable financing alternatives. Aside from housing loans, Pag-Ibig also provides benefits such as calamity and multi-purpose loans, provident benefits, and death benefits.
6. Insurance Payments
Other companies offer their employees an option to enroll in various insurance plans. What happens here is your insurance payments will be deducted from your salary regularly or monthly, depending on the company’s policies.
7. Deductions from Specific Company Policy
In some cases, a company may have specific policies that allow salary deductions, an example of which is if an employee takes out a loan from the company. Before taking out any loan, reading your company manual is necessary to fully understand the terms and conditions.
8. Loan Payments
Borrowers of SSS salary loans or Pag-IBIG multi-purpose loans must make through their employers. Your employer will collect and send your monthly wage deductions for loan repayment. Your wages must be withheld for 24 months until your debt is fully repaid due to the two-year repayment period for Pag-IBIG and SSS loans.
