ITEMS OF PAY INCOME TAX COMPUTATIO 13TH MONTH RETIREMENT MULTIPLE

N OF OT OR PAY PAY/BENEFIT EMPLOYERS

PREMIUM
1.) Basic Pay √ √ √ √ √

2.) OT √ √ × × √
Pay/Premium *If you do it for
Pay a considerable
number of time,
then it is
already practice
- you cannot
take it back
(Labor Code
discourages
generosity on
the part of the
employer).
3.) 13th Month Not included if it × √ √ √
Pay does not exceed
*If you have P82K
worked for at
least 1 month
with the
employer
4.) ECOLA √ × × × √
*Distinct and *But only for
separate from FULL TIME

1
basic pay multiple
employers

Exhibit A

Now, in one column you have the ITEMS OF PAY:

1.) Basic Pay

2.) OT Pay/Premium Pay
3.) 13th Month
4.) ECOLA

In the rows you have the following:

1.) Income tax

2.) Computation of OT or Premium
3.) 13th Month pay
4.) Retirement Pay/Benefit
5.) Multiple Employers

1.) Basic Pay

Is basic pay included in the computation of income tax?income tax is tax from compensation. Withholding
describes the manner in which it is gotten from you. Wa pa gani ka kakita ana, wa na - gi withhold na na
saimo. Technically speaking, they cannot do it. That’s confiscation. But because there is a law, therefore it is
legal. Income taxation, the basic pay is included in the computation.

In the computation of overtime pay or premium pay. What is OT pay? It is additional compensation for work
done in excess of 8 hrs. Premium pay is additional compensation for work done on days when you need not

2
work - rest day, regular holiday. If you’re made to work during that day, as long as it does not exceed 8 hrs,
it is called premium pay. If you are made to work in excess of 8 hrs during a regular holiday, then as to the
excess of 8 hrs, it is both OT and Premium Pay. It is an additional payment. Is it included in the computation
of OT? Yes.

13th month pay, what is 13th month pay? If your base pay for the entire year divided by 12, that is your 13th
month pay. If you’re a part-time worker, you still have 13th month pay. You sum up all your compensation for
the entire year then you divide it by 12, that is your 13th month pay. Now, basic pay is the basis for 13th month
pay. BASIC PAY/12 = 13th month pay.

Retirement computation. Is basic pay included? Yes.

Multiple employers - if you have more than 1 employer, is your basic pay used in the computation of your
multiple employers? Yes.

2.) OT and/Premium Pay

Is it included in the computation of your income tax? Yes

Is it included in the computation of the 13th month pay? No, not included. But if it is included and you do it for
a considerable period of time, then it becomes a matter of right. That is what happened to Davao case. You
cannot take it back anymore. It just tells you that the Labor Code is not kind to generous employers. It
penalizes generous employers. It discourages generosity on the part of the employer.

Is it included in the computation of retirement benefits? Statutory retirement benefits, no - the one that is
found in the LC. Because the law says, retirement benefits is 1/2 month basic salary for every year of service.
A fraction of at least 6 months.

Multiple employers - yes, they are entitled. Is that possible? OT ka didtos isa, OT pud ka dri, patay ka! That’s

3
what nurses do in NYC and California do.

3.) 13th Month

Is it included in the computation of your income tax? It is not included for as long as it is not in excess of P82k,
combined 13th month and other bonuses. There is the latest law signed by PNoy.

Is it included in the computation of OT? No.

Is it included in 13th month? Of course it is.

Is it included in the computation of the retirement benefits? Yes. For every year of service, you include 5 days
SIL + 1/12 of 13th month for every year so that when the law only says 1/2 a month for every year of service,
it’s actually 22.5 days of salary per year of service. Because 1/12 of 13th month is included in the
computation.

Multiple employers, are they entitled to 13th month? Yes. What entitles you to 13th month is if you have
worked for at least 1 month with that employer. 1 month divided by 12, that is your 13th month. Now when
you are fired, when do you demand your 13th month? When you are fired, demand it, because it has already
accrued. Very few know that. You can still ask for your accrued 13th month, because a person who has worked
for at least 1 month per year is entitled to 13th month.

4.) ECOLA - Emergency Cost Living Allowance

This is a device used in the RTWPB when the animosity between the employee and the employer is so fierce.
Muingon ang employer na di lagi ko muhatag ug increase. Muingon ang employee na kinahanglan lagi ug
increase. As a compromise, instead of increasing the basic pay, muhatag na lng ka ug ECOLA. ECOLA helps
in meeting cost of living. But it is the burden of the employer. Why? Because COLA will not be part of OT,
because it is distinct and separate from basic pay.

4
COLA will not be part of the determination of 13th month.

COLA will not be part of the computation of retirement benefits. That is why, in the next increase or
adjustment of minimum wage, the workers will fight, and then the employers will say, ok, dli mi makahatag
ug increase but the COLA which they are already giving will now be integrated into the basic pay.that comes
from the pocket of the employer. But that is up to the basic pay. But as to the roll-up costs - 13th month pay,
OT - musaka na ang costs kay mudako naman ang basic pay. You get the logic? That is how very heated the
opposition between the employees and the employer are compromised.