In the Philippines, salaries are prorated based on the duration of the employees work within the designated salary cycle. Understanding how this cycle works will help understand how the employee's prorated salary is calculated.
Salary Cycle Breakdown
1st Half of the Month:
Pay Date: By the 15th of the month
Work Period: From the 26th of the previous month to the 10th of the current month
Includes: Basic salary for the period, plus any expenses and payroll variables (if applicable)
2nd Half of the Month:
Pay Date: By the 30th/31st of the month
Work Period: From the 11th to the 25th of the current month
Includes: Basic salary for the period
When the employment begins or ends partway through a pay period, the employee's salary is prorated based on the number of working days within that period.
Please find below 2 example scenarios for non-hourly paid employees:
Scenario 1: New Employee Joining Mid-Month
Details:
Monthly Rate: 50,000 PHP
Start Date: July 15, 2024
Payout Dates: July 30 and August 15
Calculations:
Daily Rate: Daily Rate = Monthly Rate / 21.75
Daily Rate = 50,000 PHP / *21.75 ≈ 2,298.85 PHP
*21.75 = 261 days / 12 months (The general basis of which is the 261-days per year factor as mentioned in DOLE's Handbook on Workers' Statutory Monetary Benefits book. Kindly note that the 261 annual factor applies to all PH Remote People employees. We follow this consistently to avoid discrepancies and errors in the payroll process.)
July 30 Payout:
Workdays from July 15 to July 25: 9 days First Salary (July 30) = Daily Rate * Days Worked
First Salary (July 30) = 2,298.85 PHP * 9 ≈ 20,689.65 PHP
August 15 Payout:
Workdays from July 26 to August 10
Second Salary (August 15) = 50,000 PHP / 2 = 25,000 PHP
Scenario 2: New Employee Joining Start of the Month
Details:
Monthly Rate: 50,000 PHP
Start Date: August 01, 2024
Payout Dates: August 15 and August 30th
Calculations:
Daily Rate: Daily Rate = Monthly Rate / 21.75
Daily Rate = 50,000 PHP / 21.75 ≈ 2,298.85 PHP
*21.75 = 261 days / 12 months (The general basis of which is the 261-days per year factor as mentioned in DOLE's Handbook on Workers' Statutory Monetary Benefits book. Kindly note that the 261 annual factor applies to all PH Remote People employees. We follow this consistently to avoid discrepancies and errors in the payroll process.)
August 15 Payout:
Workdays from August 1 to August 10: 7 days First Salary (August 15) = Daily Rate * Days Worked
First Salary (August 15) = 2,298.85 PHP * 7 ≈ 16,091.95 PHP
August 30 Payout:
Workdays from August 11 to August 26
Second Salary (August 30) = 50,000 PHP / 2 = 25,000 PHP