Philippine Payroll Guide for Employers: Salaries, Deductions and Compliance

Technology salaries vary by experience, skills and location. These indicative Metro Manila software engineering bands summarize Permhunt’s 2026 salary guide. Amounts are gross monthly base salaries, excluding 13th-month pay.

Entry-level roles often begin around ₱25,000–₱35,000, while specialized senior roles may exceed ₱120,000. Use current job ads and candidate expectations when finalizing offers, and check the applicable regional minimum wage.

Most employers pay twice monthly. This differs from paying every two weeks: a semi-monthly schedule normally has 24 paydays per year; a biweekly schedule normally has 26. For covered employees, the Labor Code requires payment at least once every two weeks or twice a month, at intervals of no more than 16 days. An ordinary once-monthly schedule does not comply. Set clear cut-offs and payment dates, such as the 5th and 20th. Source: DOLE Labor Code, wage-payment rules.

Provide a payslip for each payment showing the pay period, basic salary, additional earnings, itemized deductions and net pay. Separate employee deductions from contributions paid by the company.

Calculate contributions using each agency’s monthly contribution base and applicable schedule. Allocate deductions across payroll cut-offs consistently; do not charge a full monthly contribution at both semi-monthly paydays.

SSS: The contribution rate effective January 2025 is 15% of the applicable MSC, split 10% employer and 5% employee. Use the official salary brackets, rather than multiplying uncapped gross pay. At the ₱35,000 maximum MSC, the employee pays ₱1,750 and the employer pays ₱3,500 plus ₱30 Employees’ Compensation (EC), totaling ₱3,530. At the ₱5,000 minimum MSC, the shares are ₱250 and ₱510 including EC. EC is entirely employer-funded. Source: SSS contributions and payment rules.

PhilHealth: The 5% total premium is shared equally. A ₱30,000 monthly basic salary produces ₱750 per side. The salary floor and ceiling mean ordinary employee and employer shares range from ₱250 to ₱2,500 each per month. Source: PhilHealth premium schedule.

Pag-IBIG: The reduced 1% employee rate applies to monthly salaries of ₱1,500 or less, not ₱5,000. Above ₱1,500 the employee rate is 2%, and the employer rate is 2%. With the ₱10,000 fund-salary ceiling introduced in February 2024, each side normally pays ₱200 at tech salary levels. Voluntary additional savings are separate. Source: UP’s implementation of Pag-IBIG Circular No. 460.

Withholding tax: Apply the BIR table for the actual payroll frequency to taxable compensation after excluding mandatory employee contributions and other applicable non-taxable items. Use Form 1601-C for monthly remittance, Form 1604-C and its required alphalist for annual reporting, and Form 2316 for the employee’s compensation and tax certificate. Annualize at year-end or separation. Source: BIR withholding tax guidance.

A marginal rate applies only to income within that band. If annual taxable compensation is exactly ₱1,200,000, annual income tax is ₱102,500 + (₱400,000 × 25%) = ₱202,500, equivalent to ₱16,875 monthly. A ₱100,000 gross monthly salary will have a different taxable base after contributions and other adjustments. Source: BIR Revenue Regulations No. 11-2018, 2023-onward table.

Assume an ordinary employee with ₱50,000 monthly basic salary, no additional taxable earnings, no absences and no other deductions. This is a monthly illustration; actual semi-monthly withholding uses the corresponding BIR table and is reconciled through annualization.

Using the rounded monthly BIR table: ₱1,875 + 20% × (₱46,800 − ₱33,333) = ₱4,568.40. Small rounding differences can arise at annual reconciliation. See the BIR withholding calculator and guidance.

The employer remits the employee amounts withheld together with its own statutory contributions. Remittance deadlines differ by agency, employer classification and filing channel; they are not universally the 10th of the following month. Maintain a separate deadline calendar and retain payment confirmations.

13th-month pay

Covered rank-and-file employees who worked at least one month during the calendar year receive at least total basic salary earned ÷ 12, payable by December 24. Employers may split payment provided the full statutory amount is paid on time. The combined exemption for 13th-month pay and qualifying other benefits is ₱90,000 annually. See DOLE’s benefits handbook and BIR tax guidance.

Examples: ₱30,000 × 12 ÷ 12 = ₱30,000. At ₱40,000 per month, a full year gives ₱40,000; six months gives ₱20,000. Use actual basic salary earned when unpaid absences or salary changes occur. See our 13th-month pay guide.

Overtime and night shift differential

For covered employees, ordinary workday overtime beyond eight hours is paid at 125% of the regular hourly rate. At ₱800 daily or ₱100 hourly, one overtime hour pays ₱125; two pay ₱250, bringing that day’s pay to ₱1,050. Rest-day and holiday overtime use higher applicable rates.

Covered night work between 10 PM and 6 AM attracts at least an additional 10% of the applicable hourly rate. At ₱100 per hour, four night hours from 10 PM to 2 AM add ₱40. Six paid night hours add ₱60. Exclude unpaid breaks; when overtime or holiday premiums apply, calculate the differential on the applicable premium rate. Source: Labor Code, hours of work and premiums.

Check statutory coverage before applying these rules. Genuine managerial employees and qualifying field personnel may be excluded; a senior or lead title alone does not establish an exemption. For holiday rates, see our holiday pay guide.

Service incentive leave

Eligible employees receive five paid service incentive leave (SIL) days after one year of service. Unused statutory SIL is cash-convertible, including at separation. Coverage has exceptions, including certain small establishments and employees already receiving equivalent or better paid leave. Additional company vacation or sick leave follows the applicable policy or agreement. Source: DOLE benefits handbook.

Maternity and paternity leave

Maternity leave for live childbirth is 105 days, with an additional 15 days for qualified solo mothers and an optional 30 days unpaid. Miscarriage or emergency termination of pregnancy has a 60-day entitlement. For eligible private-sector employees, the employer advances the SSS maternity benefit and generally pays the salary differential, subject to lawful exemptions; SSS reimbursement covers the benefit, not automatically the entire salary. Source: DOLE expanded maternity leave guidance.

Paternity leave is seven days with full pay for a qualified married male employee for the first four deliveries of his lawful wife with whom he cohabits, including miscarriage. It is employer-paid, not an SSS reimbursement. Maternity leave allocation may provide a separate additional entitlement. Other statutory leave, including qualifying solo-parent and special leave, may also apply. Source: DOLE benefits handbook.

Employer contributions add 9.96% to this salary. Adding a monthly ₱4,166.67 provision for 13th-month pay brings the annual budget to ₱709,760 before overtime, insurance, equipment and other benefits. Employee deductions come out of the ₱50,000 gross salary; do not add them again as company costs.

Employees: The company processes wages, tax withholding, social contributions and applicable statutory benefits. Budget for the full employment package and maintain attendance and payroll records.

Independent contractors: A genuinely independent provider invoices for services and manages their own business taxes and social protection obligations. Employee payroll benefits do not automatically apply. The payer may still have expanded withholding tax obligations. There is no universal 2% contractor rate: the applicable rate depends on the payment category, payee status and required declarations. Source: BIR withholding regulations.

Assess the actual relationship, including control over how work is performed, rather than relying on the contract label. Fixed hours and close company direction can indicate employment; multiple clients, independent methods and business risk may support contractor status. Misclassification can lead to unpaid-benefit and contribution liabilities. Have uncertain arrangements reviewed before onboarding.

DOLE’s general rule is to release final pay within 30 days of separation, unless a more favorable policy or agreement applies. Reconcile unpaid wages, prorated 13th-month pay, unused statutory SIL, other convertible leave, tax adjustments and any separation pay or benefits due. Separation pay is not automatic for every resignation or dismissal.

Organize property returns and clearance promptly so they do not become a routine reason to miss the deadline. Any deductions need a lawful basis. A certificate of employment should be issued within three days of the employee’s request. Source: DOLE final-pay and certificate guidance.

• Register the employing entity with BIR, SSS, PhilHealth and Pag-IBIG; retain its BIR Certificate of Registration (Form 2303).
• Collect employee TINs, agency membership details, prior-employer Form 2316 where relevant, and payment information securely.
• Set compliant pay dates, attendance cut-offs and approval responsibilities.
• Calculate contributions using current salary bases, floors and ceilings; reconcile them each month.
• Withhold compensation tax, file Form 1601-C and complete annual Form 1604-C, alphalist and Form 2316 requirements.
• Track each agency’s actual remittance deadlines and retain payment and filing acknowledgments.
• Issue detailed payslips and keep payroll evidence; employees do not issue business invoices for wages.
• Pay statutory 13th-month pay by December 24 and check DOLE’s current reporting instructions and deadline.
• Review overtime, night work, holidays, leave balances and any more favorable company benefits.
• Release final pay within the applicable deadline and retain payroll records for the required retention periods.

Assign an owner to review official DOLE, SSS, PhilHealth, Pag-IBIG and BIR updates. Record when payroll settings change and check a sample payslip before the next live run.