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How to Compute Your Employee’s Daily

Rate?
Written by: Maria Lourdes M. Yanuaria, CPA, RFP

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With our years of experience in payroll computation, one of the most


common errors that we see in businesses is in how they compute their
employee’s daily rate. This is only applicable if your employee’s salary is fix
per month and you just deduct absences and add overtime pays. You might
be wondering why this is very important so Ill discuss some reasons below.

1. You need the correct daily rate of the employee when you are deducting
their absences. If you are deducting absences for your employees, you want
to make sure that you are not under-deducting or over-deducting them. The
same applied when you are deducting their tardy and undertime.

2. Their daily rates have an impact to their tax computation, minimum wage
earners have additional tax benefits here in the Philippines. You need to
make sure that their daily rate is correct so you can properly check if they
are minimum wage earners or not.

3. It’s important when computing overtime pays, if you incorrectly computing


your employee’s daily rates, it is more likely that you are incorrectly
computing their hourly rates as well which you normally use in computing
their overtime pays.

Here is how you should compute your employee’s daily rates, you can
surely come up with the same result with different formulas but at least this
is the most common formula that we see in many companies.

Daily Rate = (Monthly Rate x (Number of months in a year which is 12)) /


Total working days in a year
With that, how can you know the total number of working days in a year?
That is where the problem usually comes in. But to explain it simply..

We have 52 weeks in a year. If your employees are required to work from


Mondays to Fridays (5 days a week), just multiply 5 by 52 which is 260 but
during leap years we sometimes get additional 1 working day so some
companies actually use 261. You can also see the same figure in BIRs
guidelines about the this subject. You can find their document here.

Here is an example.

If you have an employee with a monthly rate of 11,000 and working 5 days a
week.

His\Her daily rate will be

(11,000 x 12) / 261 = 505.75

That 505.75 will be your basis when you are checking if the employee is a
minimum wage earner or not. Which if you look in the DOLE website in
NCR, that is above minimum wage earner so you should deduct taxes to the
employee’s salary assuming that there is no other applicable tax exemption.

If the employee is also required to work during Saturdays with the same
monthly rate. The computation of daily rate will be

(11,000 x 12) / 312 = 423.08

423.08 is below minimum wage and you don’t need to deduct withholding
tax to the employees salary, in fact at the time of this writing (June 2016)
423.08 is below minimum wage and should be increased to the correct
minimum wage.

That rate will also be your basis when computing their absences and their
hourly rates which will be your basis in the computation of their overtime
pays.

Trust is very important between employer and employees and correct salary
computation is one way to strengthen it.
You can make us an extension of your office by letting

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Disclaimer: The content of this article may become outdated because of


changes in the rules and regulations over time. It does not substitute the need
for inquiring professional advice.

Comments

BHONG says
January 30, 2014 at 10:16

can you gave me a salary distribution based on DOLE for a roving guard with
vehicle

teresa magtibay says


May 17, 2014 at 13:01

mam my i know how is the proper computation of salary .


sample the one month salary is 8000 how much her daily rate and if shes late
for 10 min. how much i deduct it.
tnx

Roma says
May 27, 2014 at 19:51

How will I know how much is my tax in every cut off? if example i’m earning
17,000 a month? thank you.

Jayl Rosario says


June 18, 2014 at 13:36

if an employee only works 10 months a year, shall i use 10 as “number of


months in a year” or still 12? thank you very much.
jeff says
July 23, 2014 at 19:18

how to compute the withholding tax of under minimum wage and not under
minimum wage? thanks

Pacita says
October 4, 2014 at 23:52

Hi,

What if the employee is working in a compressed week, he is working monday


to friday for a total 48 hours. His daily rate is computed monthly rate x 12 / 31.
He started sept 15 and our semi monthly payroll for 2nd half cut-off is sept 11-
25, how many days we have to deduct from his gross pay? Is it two day for sept
11-12 or including Sept 13 for a total of 3 days. Thanks.

Jaycee says
October 14, 2014 at 23:28

I am a new sole proprietor and I want to hire an assistant for P350 per day (net
of sss, Philhealth and Pag-ibig benefits) which I can only afford to pay as of
now… how should his monthly payslip computed? and how much should i remit
to SSS, PH & Pag-ibig?
Thank you.

nelmarie java says


October 23, 2014 at 09:45

a health personnel rendered his service 48 hours a week. how much will he get
in a week?

Akash Nimodiya says


November 27, 2014 at 22:42

Is monthly wage rate calculated in Philippines ? If yes, can you send me that
document as attachment to mail

Dj Marmolejo says
December 8, 2014 at 16:50

In 10,500 how much my daily income. Except sundays because its my dayoff.

Jerick Allan Dimaano says


December 11, 2014 at 16:42

Hello good day. I’m Jerick, web developer and working with a small company.
Our salary are given every 15th and last day of the month. Saturdays and
Sundays are our day off. We have a monthly fixed salary like even if we only
work for 10 days or 11 days in a certain cutoff period we received the same
amount every time. Our cutoff periods are 26-10 given on 15th and 11-25 given
on the last day of the month.

Our Boss wants to change the payroll dates from every 15th and last day of the
month to every 7th and 22nd day of the month and also the cutoff period from
26-10 to 1-15 and 11-25 to 16-last day of month. He said the reason for the
change is to make it easier for them to do the book keeping, something like
that.

So to make the adjustments happen, our company will do like this, knowing that
today is December 11, 2014 when I sent this letter.
-On Monday December 15, 2014 the company will give us our salary from
November 26 to 30 2014 and they said it is computed for 3 days only, because
Nov 29 and 30 are saturday and sunday.
-Then on December 22, 2014, we will get our salary for the period of December
1-15, 2014.

My question is, Is it right that we will only receive 3 days amount for Nov 26 –
30?

Marja Echano says


January 2, 2015 at 16:51

Hi, tanong ko lng regarding sa monthly fixed rate. pag nakuha ko n yung daily
rate assuming na 10,000 a month tpos we are working for mondays to
saturdays , including special non-working holidays. yung daily rate n nakuha ko
yun n gagamitin or kinuha lng daily rate for the deductions of absences and
overtime?

10000 x 12 / 303= daily rate?

Tama po ba? kasi kasama yung special non-working nmin.

Thank you.

robert maglaque says


March 2, 2015 at 09:31

good day po. tanong ko lang po dito po company namin ang computation ng
salary dati at (monthly salary÷ 25.25) ngayon po (monthly salary÷26)
naguguluhan po ako sa binigay niyong fomula. monday to saturday po pasok
ko. salamat and god bless

lester tan says


March 2, 2015 at 19:17
what computation if it falls in the month of february…

Jonathan Santiago says


March 17, 2015 at 13:23

panu naman po yung daily rate! kapag meron pong holiday and special hoidays
po.

arnel D. Red says


March 25, 2015 at 09:16

Ako ay security guard,tanong ko lang po kung tama sang binibigay na salary


mula sa agency ko.ang contracts po ng company’s sa agency nmim ay
16,000,ang binibigay lang po ng agency ko na salary ko ay 10,000 don pa po
binabawas an sss .magkano po ba dapat any tamang salary ko mula as agency
ko. SG.red po.type po and godbless you all,ASA po ako satullong nyo.

Sheena says
April 7, 2015 at 10:36

Hi, ask ko lang kung tama ba na kahit ang basis ng wage computation namin
eh sa factor 261 days (daily wage earner) kapag hindi pumasok ang employee
on special non working holiday eh hindi paid. Pero based on the salary above
minimum earner ang employee. Diba applicable lang ang “no work, no pay” sa
minimum wage earner? ngkataon lang na ang basis ng computation ng salary
eh sa 261 days factor?. I confused and i need a valid reason and link na
maiiexplain ko sa supervisor. It’s unfair kasi sa employee na hindi bayad ng
regular day sa SP Non working kahit above minimum/ fixed rate salary ang
employee.

Lia B. says
May 21, 2015 at 13:24

what if an employee is a monthly paid employee and her salary is 14000,


working 5 days a week. does it mean that if i compute for her daily rate and it
falls below the minimum daily rate then i have to adjust her monthly salary ?

neslie says
July 14, 2015 at 10:50

Hi..ung father ko ndi fixed ang salary kasi per byahe sya..1600 per byahe kasi
trucking driver sya..married pero unemployed ang mother ko..exempted ba sya
o taxable?highest na byahe nya 8 lowest is 2 pero ang deduction ng company
more than 1k..tama ba un?thanks

carlo taladtad says


July 20, 2015 at 21:34

sir’/mam’ ask ko lng po diba dun sa sample nyu kung panu malalaman ung
daily rate ng employees” is 10000x(days of work)/? ?? san nyu po n a kuha ung
divider?? answer plzz.. asap”