Understanding Salary Deductions: How to Compute Them?


Have you ever wondered why your pay does not match the suggested gross compensation offered to you by your employer? This is owing to both taxes and employee perks, as odd as it may sound. It’s hilarious because it’s called an employee perk, yet it’s withdrawn from your normal salary, and you don’t currently receive it in the form of money. Most employee benefits are benefits that are postponed being withdrawn later; these are government-guaranteed, so they are guaranteed to be obtained later, particularly during the employee’s retirement years. So, as of the year 2022, how do salary deductions work in the Philippines?

Who are eligible for Employee Contributions?

The following workers are covered by government-mandated benefits from Pag-IBIG, PhilHealth, and SSS:

  • Employees under the age of 60 who are permanent, temporary, or provisional (hired by private enterprises) and earn more than $1,000 a month
  • Household workers earning at least $1,000 per month, such as kasambahays, drivers, cooks, and gardeners.
  • Filipinos working for Philippine or foreign-based firms, either locally or abroad
  • Foreigners under the age of 60 who live and work in the Philippines, save those exempted under the country’s totalization agreements.

If you are one of the types of employees mentioned above, then the following lists may be part of your salary deductions in the Philippines this 2022:

SSS Contributions

Social Security System (SSS) is a social insurance program that attempts to safeguard its members and beneficiaries, whereas GSIS is the counterpart social insurance program for government employees. Maternity, sickness, disability, retirement, funeral, and death benefits are available to SSS members. SSS also allows qualified members to borrow money for wages, housing, business, and education.

The employer is responsible for making contribution payments on time according to the payment schedule. As of 2022, the philippine salary deduction for SSS contribution is computed as follows: employees’ monthly contribution rate is 11% of their monthly salary credit, not to exceed P16,000. The employee contributes 3.63% of the monthly contribution, while their employer contributes the rest 7.37%.

Read Also: An Easy Guide for Paying SSS Contribution as a Self-Employed Individual

PhilHealth Contributions

The National Health Insurance Program exists to provide health insurance coverage and to ensure that health care services are inexpensive and accessible to Filipino residents. The PhilHealth contribution structure changed in January 2018 with the elimination of salary bands. So as of the year 2022, the salary deductions for PhilHealth contributions in the Philippines are calculated as follows:

Basic monthly salaryMonthly premiumEmployee’s shareEmployer’s share
P10,000.00 and belowP275.00P137.50P137.50
P10,000.01 to P39,999.99P275.02 to P1,099.99P137.51 to P549.99P137.51 to P549.99
P40,000.00 and overP1,100.00P550.00P550.00

PAG-IBIG Contributions

The Home Development Mutual Fund (HDMF), also known as the Pag-IBIG Fund Regular Savings Program is the primary savings vehicle available to its members. Members’ monthly donations are directed here, and yearly dividend profits are distributed. When the maturity date (20 years from the date of membership) arrives, the member’s cumulative savings are refunded. Retirement or other justifiable reasons can potentially cause the total savings return date to be earlier than the maturity date. According to the terms of Republic Act No. 9679, the monthly payment is worth PHP 100.00. Moreover, employed members can enjoy their employers’ counterpart share, which is also equal to PHP 100.00 monthly, doubling their contributions.

On the other hand, one of the benefits of being a member of the PAG-IBIG is the ability to obtain a housing loan. The PAG-IBIG Fund, offers a variety of incentives to its members in addition to providing an affordable financing alternative that allows average-income Filipinos to own homes.

Anyone, from those making the minimum wage to those earning more, can apply for a loan because they have programs that can handle both types of members. In addition, The Pag-IBIG Fund is now online and interactive in order to improve their services. Its website has evolved into a one-stop shop for everything from obtaining a member’s identification number (or MID) to printing

If you are planning to provide a safe and reliable at the same time affordable house and lot then we’ve got you covered. Bria Homes is a part of GOLDEN MV Holdings, Inc., one of the country’s major real estate corporations. BRIA Homes is poised to deliver high-quality, low-cost house and lot packages, as well as condominium apartments, to average Filipino families.

Read Also: How to Maximize Your Pag-IBIG Housing Loan Contributions

The Pag-IBIG Fund is now online and interactive in order to improve their services. Its website is now a one-stop shop for services ranging from obtaining a member’s identification number (or MID) to printing and verifying a house Registration, updating employer and employee information, and timely payment of payments are all required to avoid fines. Employers who fail or refuse to remit payments derived from employee salaries will still be obligated to provide government-mandated employee perks to their employees. Their loan applications with Pag-IBIG or SSS, however, will be denied.

Employees can check to see if their employers have paid their Pag-IBIG, PhilHealth, and SSS contributions. If they discover that their employers are not paying, they can submit a complaint, and the employer may be punished and imprisoned for violating Philippine labor laws.

Additional Salary Deductions

Aside from employee contributions, there are salary deductions to watch out for in your pay slip. As of the year 2022, here are additional salary deductions to lookout for as an employee in the Philippines.

1. Loan Payments

When you take out an SSS salary loan or a Pag-IBIG multi-purpose loan, your employer is responsible for collecting and remitting your loan payments through monthly salary deductions to SSS or Pag-IBIG. Furthermore, both Pag-IBIG and SSS loans are paid over a two-year period, which means your wages will be withheld for 24 months until your debt is completely paid off. When you change jobs, notify your new employer right away about your outstanding debt. This will ensure that you continue to make loan payments through wage deductions and avoid accruing late payment penalties.

Read Also: How Much Can You Loan Through Pag-IBIG?

2. Additional Deductions

Payroll deductions in the Philippines may include those governed by corporate policy, such as union dues, company loan payments, and supplemental insurance premiums provided to employees which are required depending on the nature of the job required.