How are salaries prorated in the Philippines?

In the Philippines, salaries are prorated based on the duration of the employees work within the designated salary cycle. Understanding how this cycle works will help understand how the employee's prorated salary is calculated.

Salary Cycle Breakdown

  1. 1st Half of the Month:

    • Pay Date: By the 15th of the month
    • Work Period: From the 26th of the previous month to the 10th of the current month
    • Includes: Basic salary for the period, plus any expenses and payroll variables (if applicable)

  2. 2nd Half of the Month:

    • Pay Date: By the 30th/31st of the month
    • Work Period: From the 11th to the 25th of the current month
    • Includes: Basic salary for the period


When the employment begins or ends partway through a pay period, the employee's salary is prorated based on the number of working days within that period. 


Please find below 2 example scenarios for non-hourly paid employees: 


Scenario 1: New Employee Joining Mid-Month

Details:

  • Monthly Rate: 50,000 PHP
  • Start Date: July 15, 2024
  • Payout Dates: July 30 and August 15

Calculations:

  1. Daily Rate: Daily Rate = Monthly Rate / 21.75
    Daily Rate = 50,000 PHP     / *21.75 ≈ 2,298.85 PHP

*21.75 = 261 days / 12 months (The general basis of which is the 261-days per year factor as mentioned in DOLE’s Handbook on Workers’ Statutory Monetary Benefits book. Kindly note that the 261 annual factor applies to all PH Horizons employees. We follow this consistently to avoid discrepancies and errors in the payroll process.)

  1. July 30 Payout:
    • Workdays from July 15 to July 25: 9 days First Salary (July 30) = Daily Rate * Days Worked
      First Salary (July 30) = 2,298.85 PHP * 9 ≈ 20,689.65 PHP
  2. August 15 Payout:
    • Workdays from July 26 to August 10

Second Salary (August 15) = 50,000 PHP / 2 = 25,000 PHP

 

Scenario 2: New Employee Joining Start of the Month

Details:

  • Monthly Rate: 50,000 PHP
  • Start Date: August 01, 2024
  • Payout Dates: August 15 and August 30th

Calculations:

  1. Daily Rate: Daily Rate = Monthly Rate / 21.75
    Daily Rate = 50,000 PHP / 21.75 ≈ 2,298.85 PHP

*21.75 = 261 days / 12 months (The general basis of which is the 261-days per year factor as mentioned in DOLE’s Handbook on Workers’ Statutory Monetary Benefits book. Kindly note that the 261 annual factor applies to all PH Horizons employees. We follow this consistently to avoid discrepancies and errors in the payroll process.)

  1. August 15 Payout:
    • Workdays from August 1 to August 10: 7 days First Salary (August 15) = Daily Rate * Days Worked
      First Salary (August 15) = 2,298.85 PHP * 7 ≈ 16,091.95 PHP
  2. August 30 Payout:
    • Workdays from August 11 to August 26

Second Salary (August 30) = 50,000 PHP / 2 = 25,000 PHP

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