Your guide to payroll process in the Philippines

As an employer, it is your responsibility to manage financial records, including wages, benefits, and deductions for employees and tax compliance for the government. This process is labor-intensive and time-consuming, which is why many Philippines companies began to consider outsourcing.

The law requires employers to contribute to their employees. This contribution is a reduction in the monthly salary of the employees.

There are certain mandatory government agencies in which the company must be registered. The Social Security System is a social security program for employees that will provide them with financial support.

Philippine Health Insurance Corporation or PhilHealth is a health insurance corporation that will provide employees with health care. The Home Development and Mutual Fund is a national savings program that will provide housing loans to workers in the Philippines.

Also, you need to register the company with the Bureau of Internal Revenue that will review and collect the business tax. All these identification numbers are necessary to enter all the data and details of the company and its employees.

Employee information such as name, gender, address, date of birth, tax status, number and names of qualified dependents, and identification numbers mentioned previously must be submitted to the company at the time of enrollment.

This information should be organized and updated whenever employee information changes. All collected data can be used for the Philippine payroll process and filed at the end of each month.

There are mandatory rules and policies regarding employer and employee rights, and payroll is one of the employee’s rights. The company must adopt the payroll policy. All company policies regarding employee attendance, leave, vacation pay, number of working hours, etc., must be following the law.

Employers can pay employees weekly, biweekly, monthly by cash, check, or wire transfer. These methods have pros and cons; the company has to choose what is suitable for its business. They must be determined as they are essential for the payroll process. It will identify how fast the process needs to be and what documentation employees need to be paid.

The payroll process you are familiar with is simply multiplying employee hours by the pay rate and reducing deductions like tax withholding, government contributions, etc. It is much more than that.

Along with registering government documents and submitting them on a regular schedule, you must adopt ever-changing labor laws, update the established employee database, and ensure you make payment to your employees on time, be it manual or deposit in their bank.

Payroll is not just simply paying the employees. It is a complex process that takes hours to complete as you need to comply with various labor and government policies and ensure that employees get what they worked for.

Even though many companies adopt the manual processing of payrolls, many opt for payroll software that can increase the ease of operations and make the job of the HR department much more accessible and accurate. You might want to try automation as it might just be the thing you need.


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