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10 Employee Compensation - Payroll Deductions
10 Employee Compensation - Payroll Deductions
PAYROLL DEDUCTIONS
Lesson Objectives
At the end of this lesson, the students should be able to:
1. define employee compensation;
2. differentiate salary, wage, and income;
3. solve problems related to piece-rate earners and hourly-paid earners
including overtime pay;
4. convert annual salaries to monthly, semi-monthly, and weekly
salaries;
5. enumerate and define the different benefits given to an employee;
6. compute for overtime pay;
7. compute for gross earnings to include overtime pay and net
earnings/pay considering the different payroll deductions;
8. distinguish taxable from non-taxable employee benefits; and
9. use e-spread sheet in the computation of regular pay, overtime pay,
gross earnings, deductions, and net pay.
Lesson Objectives
At the end of this lesson, the students should be able to:
1. identify the different payroll deductions;
2. compute the different standard payroll deductions;
3. compute for net pay;
4. prepare a salary graph; and
5. use Excel to compute for gross earnings and net pay.
Wages
refer to the earnings received by a worker on a piece rate,
hourly rate, or daily rate
Piece Rate
Tammy is paid on a per piece basis at the rate of ₱1.20 per
piece. If she finishes 360 pieces for a week, how much is her
total earnings?
Total earnings = Quantity × Rate
= 360 × ₱1.20
= ₱432
Hourly Rate
If an employee worked for 40 hours during the week and his
rate is ₱10 per hour, his wage is:
40 hours × ₱10/hour = ₱400.
Consumption of Overtime Pay
Assuming that the minimum daily wage rate is ₱340, how
much is the overtime rate per hour?
On Ordinary Day
Regular hourly rate = Daily wage rate ÷ 8 hours
= ₱340 ÷ 8 hours = ₱42.50 per hour
Overtime rate = Regular rate + 25% of Regular rate
= ₱42.50 + (25% of ₱ 42.50)
= ₱42.50 + ₱10.625
= ₱53.125
Consumption of Overtime Pay
On Rest Day and Special Day
The hourly rate on rest day and special day is 130% of the regular rates.