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Module 4

Salaries and Wages

In our society, salaries and wages are usually used interchangeably.

Most labor and employment laws do not even have clear distinctions
between the two terms. In Philippine Labor Code, they use the term
“wages or salary rates”. Technically, there are differences between
the two terms. Let’s know those things in this module.

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4.1 Salaries
Salary is generally quoted on a fixed annual payment to an employee
for his services rendered. Based on the fixed annual amount, it can
furthermore be divided into periodic payments where salary rates can
be semi-annually, monthly, semi-monthly, bi-monthly, weekly or
daily. If an employee becomes late or absent, his earning may be
affected minimally or not be affected at all, it depends upon the
employment terms and laws. Salary is also known to be a package,
this means that employees do not only receive money as payment, but
also other compensations or benefits like medical insurance, retirement
fee, paid vacation leaves, educational plan, and other benefits. Since
salary has a fixed annual amount, overtime is usually ignored and will
not be compensated, regardless of how many hours are worked.

Ms. Grace is a permanent government employee. She has a fixed

gross annual salary worth Php300,000.

How much is her salary rate per month?

Salary Rate = Php300,000/12

= Php25,000 per month

Ms. Grace has a fixed gross salary rate worth Php25,000 per month.

In the Philippines, the usual practice of salary distribution is semi-

monthly. It issually paid during the 15th and the 30th day or the end of
the month. How much is the per semi-monthly salary rate of Ms.
Grace?

Salary Rate = Php25000/2

=Php12,500 per half of a month (semi-month)

Ms. Grace has a salary rate of Php12,500 per semi-month.

Ms. Grace loves to serve the public, she is always on an overtime

work. Will she receive additional compensation for this?

No, because she is a government employee having a fixed annual

salary. The government don’t usually give overtime pay. However in
the private sector, there might be fixed salary position which is still
entitled for overtime pay. It depends upon the company laws and
employment contract.

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Ms. Grace is a permanent government employee. She has a fixed

gross annual salary worth Php300,000.

How much is her bi-monthly salary rate?

Salary Rate = Php300,000/6

=Php50,000 per two months (bi-month)

How much is her quarterly salary rate?

Salary Rate = Php300,000/4

=Php75,000 per three months (quarter)

How much is her semi-annual salary rate?

Salary Rate = Php300,000/2

=Php75,000 per half of a year/6 months (semi-annual)

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4.2 Wages
Wage is a compensation that is usually based on an hourly or piece
rate basis. If a wage earner becomes late, he might have lesser
compensation. If he becomes absent he will get nothing at all, the
quotation usually applied here is “no work – no pay”. Since the
compensation is based on an hourly basis, workers may extend their
hours of duty and may have paid overtime work with proper
authorization from the management. Usually, wage earners have few
or no benefits, depending on the contract or employer-employee
agreement.

Mr. Franz is factory worker earning Php62.50 per hour. For the month
of November, he was able to work 8 hours in a day, 5 days in a week,
and 4 weeks in a month. Mr Franz received compensation worth
Php10,000.

Compensation = (Php62.50)(8)(5)(4) = Php10,000

.

Mr. Chan is an online freelance article writer whose compensation is

based on the number of work completed. He earns Php200 per 1000-
word article. For the Month of December, he wrote 30 articles. Mr.
Chan earns Php6000 for the month. His wage is computed based on
piece rate.

Compensation= (Php200)(30) = Php6000

Minimum Wage Earner

The term “minimum wage earner” shall refer to a worker in the private
sector paid the statutory minimum wage, or to an employee in the
public sector with compensation income of not more than the
statutory minimum wage in the non- agricultural sector where he or
she is assigned.

Daily Minimum Wage = Basic Wage + Cost of Living Allowance

Minimum Wage refers to the lowest wage that an employer can pay
his/her workers which may consist of the basic wage only or the sum
of basic wage and Cost of Living Allowance, if there is any.

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Basic Wage means all the remuneration or earnings paid by an

employer to worker for services rendered on normal working days and
hours.

Cost of Living Allowance (COLA) is to be paid by the employer to a

worker for services rendered intended to help the latter cope with the
rising cost of living and is not considered part of the basic wage.

For this discussion we will only utilize the Daily Minimum Wage
Rates (Non-Agriculture). The following are the data taken from the
Department of Labor and Employment

Region Basic Wage Cost of living Minimum

Allowance Wage
NCR 444.00-481.00 10.00 454.00-491.00
CAR 265.00-285.00 265.00-285.00
I 243.00-280.00 243.00-280.00
II 300.00 300.00
III 313.00-364.00 313.00-364.00
IV-A 293.00-378.50 293.00-378.50
IV-B 235.00-285.00 235.00-285.00
V 248.00-265.00 248.00-265.00
VI 256.50-298.50 256.50-298.50
VII 308.00-353.00 308.00-353.00
VIII 238.00 22.00 260.00
IX 296.00 296.00
X 303.00-318.00 303.00-318.00
XI 312.00 5.00 317.00
XII 295.00 295.00
XIII 260.00 20.00 280.00
ARMM 265.00 265.00

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Example 1

Mr. Dan is a contractual worker in Region I having a wage rate of

Php34 per hour.

How much does he earn in a normal work day?

Wage Rate = (Php34)(8)

= Php272 per day

Mr. Dan earns Php272 in a normal work day.

Is he a minimum wage earner?

Yes, Mr. Dan is a minimum wage earner because his wage rate is still
within Php243-Php280 minimum wage rate bracket of Region I.

Example 2

Mr. Pan earns Php45 per hour. He is currently working in Iloilo City
Philippines, in Region VI-Western Visayas.

How much is his daily wage rate?

Wage Rate = Php45x8

= Php360 per day

Is he a minimum wage earner?

No, Mr. Pan is not a minimum wage earner because his earning is
above the bracket for minimum wage in Region VI which is Php
256.50-Php298.50.

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Example 3

In a certain day, Mr. Khan in Region X earns Php330. His earning is

directly proportional to his worked hours. For that day, he just worked
from 1:00pm -4:00.

How much is his hourly rate?

Wage Rate = Php330/3

=Php110 per hour

Mr. Khan is earning Php110 per hour.

Is he a minimum wage earner?

No, because his hourly rate is above the minimum wage rate of Region
X expressed in an hourly basis.

Mr. Khan’s wage rate = Php110 per hour

Region X wage rate = Php37.88-Php38.50 per hour

Lower Limit = Php303.00/8

= Php37.88 per hour

Upper Limit=Php318.00/8
= Php39.75 per hour

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Example 4

In a certain day, Mr. San in Region II earns Php150. His earning is

directly proportional to his worked hours. For that day, he just worked
from 1:00pm -5:00.

How much is his hourly rate?

Wage Rate = Php150/4

=Php37.50 per hour

Mr. San is earning Php37.50 per hour.

Is he a minimum wage earner?

Yes, because his hourly rate is equal to the minimum wage rate of
Region II expressed in an hourly basis.

Mr. Khan’s wage rate = Php110 per hour

Region II wage rate = Php37.50 per hour

Wage Rate =Php300/8

= Php37.50 per hour

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Glossary
Salary – a fixed amount paid by the employer to the employee

Wages – a variable amount paid by the employer to the employee

which is usually paid in an hourly basis

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