BUSINESS QUARTER 2 Week 3

MATH

NAME: ____________________________________ YR & SEC: _____________________

Competency:
The learner defines salary, wage, income and benefits. (ABM_BM11SW-IIc-1)
The learner computes gross and net earnings. (ABM_BM11SW-IId-2)

To the Learners:
Before Starting the module, I want you to set aside other tasks that will disturb you while enjoying the
lessons. Read the simple instructions below to successfully enjoy the objectives of this kit. Have fun!

1. Follow carefully all the contents and instructions indicated on every page of this module.
2. Write in your notebook the concepts about the lessons. Writing enhances learning that is
important to develop and keep in mind.
3. Perform all the provided activities in the module.
4. Let your facilitator/guardian assess your answers using the answer card.
5. Analyze conceptually the post-test and apply what you have learned.
6. Enjoy studying!

Expectations
This module was created to help you with the fundamental concepts as applied in salaries and
wages.
After the discussion on this module, you are expected to:
1. differentiate salary, income, wage and benefits,
2. define gross salary and net salary, and
3. compute an employee’s gross salary and net salary.

Pretest
Read the following questions carefully and choose the letter that best describes the answer.

1. It is a compensation received by employees in return for worked performed and is based on annual
compensation.
A. Benefits B. Income C. Salary D. Wage

2. It is a weekly compensation received by employees in return for worked performed.

A. Benefits B. Income C. Salary D. Wage

3. All of which are non-cash benefits for private employees EXCEPT.

A. GSIS B. Pag-Ibig C. PhilHealth D. SSS

4. A regular employee receives a bonus every year. Bonus is an example of

A. Benefits B. Income C. Salary D. Wage
5. The amount of money earned by a sari-sari store owner.
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A. Benefits B. Income C. Salary D. Wage

6. It refers to your total compensation before taxes or other deductions.

A. Deductions B. Net Income C. Gross Income D. Taxable Income

7. It refers to your total compensation after taxes or other deductions.

A. Deductions B. Net Income C. Gross Income D. Taxable Income

8. Which among the benefits below of a government employee must be mandatory to all employees,
assuming that the employee has worked for the entire year?
A. 13th month pay B. Maternity Leave C. Paternity Leave D. VAWC Leave

9. All benefits below of a government employee are being counter parted by the employer as their
share under the law EXCEPT.
A. GSIS B. Pag-Ibig C. Philhealth D. P.E.R.A.

10. Which true statement below can be made when an employee earns an average of Php.10,500
per month.
I. The employee is withholding tax exempted.
II. The employee is not entitled to a 13th month pay.
III. The employee is not entitled for any sick leave.
A. Only I B. Only III C. Both I and II D. All of which

Introduction

Aside from skilled experience and academic credentials, salary structures and wages in
the Philippines are determined by factors such as nature of work, workplace location, working hours,
type of industry/sector, and others. The salaries of those working in major cities and business districts
are relatively higher compared to those employed in provincial areas around the country.

But how salary, wage, income and benefits differ from each other. Below are the definition of
each. Read and take note of their differences.

Salary is a fixed amount of money or compensation paid to an employee by an employer in return

for work performed. Salary is commonly paid in fixed intervals, for example, monthly payments of
one-twelfth of the annual salary.

Wage a fixed regular payment, typically paid on a daily or weekly basis, made by an employer to an
employee, especially to a manual or unskilled worker.

Income is money (or some equivalent value) that an individual or business receives, usually in
exchange for providing a good or service or through investing capital.

Benefits include various types of non-wage compensation provided to employees in addition to their
normal wages or salaries. Instances where an employee exchanges (cash) wages for some other
form of benefit is generally referred to as a "salary packaging" or "salary exchange" arrangement. In
most countries, most kinds of employee benefits are taxable to at least some degree. The purpose of
employee benefits is to increase the economic security of staff members, and in doing so,
improve worker retention across the organization.[2] As such, it is one component of reward
management.

Whether you earn a salary or hourly wages, there are two different numbers on your salary slip.
These two numbers are commonly referred to as “net pay” and “gross pay.” Gross pay is the total amount of
money an employee receives before taxes and deductions are taken out. Your gross pay will often appear
as the highest number you see on your pay statement. It is a reflection of the amount your employer pays
BUSINESS MATH QUARTER 2 WEEK 3 P a g e 2|9
you based on the agreed salary or hourly wage. Net pay will be the amount that ends up in your salary after
taxes and other fees have been taken out. In most cases, your net pay appears in larger font on your
paycheck or pay statement and is often bolded to appear darker so that you can easily distinguish it from
your gross pay.

Gross income essentially refers to your total compensation before taxes or other deductions.
This can be useful to know for a variety of reasons -- for example, when applying for a loan you'll
have to pay monthly, approval is usually contingent on your gross income exceeding a certain
amount. Here's how to calculate yours:

Calculating gross monthly income if monthly paid

If you are paid an annual salary, simply take the total amount of money (salary) you're paid for
the year, and then divide this amount by 12.

For example, if you are paid an annual salary of Php 300,00 per year, the formula shows that
your gross income per month is Php 25,000.

Calculating gross monthly income if hourly paid

For hourly employees, the calculation is a little more complicated. First, to find your yearly pay,
multiply your hourly wage by the number of hours you work each week, and then multiply the total by
52. Now that you know your annual gross income, divide it by 12 to find the monthly amount.

Note: If your hours vary week to week, use your best estimate of the average number of hours you
work.
For example, if you are paid Php 350 per hour and work 40 hours per week, your weekly gross pay is
Php 1200. Multiplying this by 52 shows an annual gross income of Php 62,400.00. Finally, dividing by
12 reveals a gross income of Php 5200 per month.

Calculating net monthly income

Below is an example of pay slip of an employee. A pay slip
is a record of your salary given every payday. It reflects your gross
monthly income, deductions and net pay for the month.

To compute for the net pay of an employee, refer to the steps below:

1. Determine the gross pay.

2. Determine the sum of your deductions. This includes absences,

tardiness, leave without pay, mandatory deductions such as
SSS/GSIS, Phil health, PAG-IBIG dues and taxes.

3. Calculate for net pay using the formula below:

Net pay = gross pay - deductions

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Under the provisions of Article 82 of the Labor Code of the Philippines. The following working hours
and compensation should be followed:
 The normal hours of work an employee has to render must not exceed eight (8) hours a day
and should be exclusive of the one (1) hour daily lunch break.

 Every employee shall be paid a night shift premium of not less than 10% of their regular wage
for each hour of work performed between 10:00 PM and 6:00 AM.
 Work may be performed beyond eight hours a day provided that the employee is paid for the
overtime work, which consists of an additional compensation equivalent to his regular wage
plus at least 25% thereof.
 Work performed beyond eight hours on a holiday or rest day shall be paid an additional
compensation equivalent to the rate of the first eight Every worker shall be paid his regular
daily wage during regular holidays, except in retail and service establishments regularly
employing less than 10 workers.
 The employer may require an employee to work on any holiday but such employee shall be
paid a compensation equivalent to twice his regular rate.
 When an employee is made or permitted to work on their scheduled rest day, they shall be
paid an additional compensation of at least thirty percent (30%) of their regular wage. They
shall be entitled to such additional compensation for work performed on Sunday only when it is
their established rest day.
 When the nature of the work of the employee is such that they have no regular work days and
no regular rest days can be scheduled, they shall be paid an additional compensation of at
least thirty percent (30%) of their regular wage for work performed on Sundays and holidays.
 Work performed on any special holiday shall be paid an additional compensation of at least
thirty percent (30%) of the employee’s regular wage. When such holiday work falls on an
employee’s scheduled rest day, they shall be entitled to an additional compensation of at least
fifty percent (50%) of their regular wage.
 When the collective bargaining agreement or other applicable employment contract.

Example computation is shown below:

Amy a call center agent earns Php a year 350,000. In the month of July, 2020 she has 24 days
scheduled work but incurred a 2 days absence and a tardiness of 15 minutes. She had 10 hours
regular overtime, a Php 1000 night differential and 1 day Holiday Pay. A Php 2000 allowance was
given. Compute for her July salary.

Gross Pay ÷ 12 = monthly gross pay 350 000 ÷ 12 = 29 166.67

Add: Overtime (10 hours) 189.89 x 10 = 1 898.90
Night Differential = 1 000.00
Holiday Pay (151.91 x 8) = 1 215.28 4 114.18
Gross Pay 33 280.85

Less: Tardiness (151.91/60=2.53 x 15) = 37.98

Undertime = 0
Leave without pay (151.91x8x2) = 2 430.56
Adjustments = 0
SSS Dues = 800.00
Philhealth Dues (1.5%x29 166.67) = 437.50
PAG-IBIG Dues = 100.00 3 806.05
Taxable Income 29 474.80
Less: Withholding Tax (20% x ((350 000 – 250 000)/12) = 1 666.67
SSS Loan = 0
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PAG-IBIG Loans = 0
Advance.Vale = 0
Union Dues = 0 1 666.67
27 808.13
Add: Allowances = 2 000.00
Commissions = 0 2 000.00

Net Pay
29 808.13

The following are the mandatory contribution tables:

PHILHEALTH

PAG-IBIG

SSS

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INCOME TAX

Activities

A. Classify the compensations below as to (A) Salary, (B) Wage, (C) Income or (D) Benefits. Write
the letter of your answer in the space provided.

______ 1. Money received every payday of a government worker.

______ 2. Money received by a construction worker every Saturday.
______ 3. Money received by an online seller at the end of a transaction.
______ 4. Money received by an employee after retirement.
______ 5. Money received by an employee every Christmas season.

B. Complete the table below by supplying the necessary mandatory contributions for each employee.
Monthly
Annual Gross Monthly Pag- Taxable
Employee SSS Phil Health withholding
Salary Salary Ibig Income
Tax

A 200 000 16 666.67 660 100 250 Tax exempted 0

B 300 000 25 000.00 800 100 375 50 000 833.33

C 400 000 33 333.33 800 100 500 150 000 2 500

Remember
The compensation employees receive may differ in terms but all of which are money earned
from hard work.
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WAGE INCOME BENEFITS
SALARY
Received Received Received in
Received addition to
every week from
every month
investments compensation

Net Pay = Gross Pay - deductions

Check your Understanding

A. Classify the following compensation according to the category in the table. Write then letter only.
A. Pay check

B. Weekly Salary

C. Mark Up Cost

D. Health Insurance

E. Christmas Bonus

B. Solve the following problems:

1. What is the annual gross pay of an employee if he receives Php12 000 monthly gross pay?

2. What is the amount of contribution in the following agency if an employee earns Php45 000 a
month?
a. SSS
b. Phil health SALARY WAGE INCOME BENEFIT
c. PAG-IBIG
d. BIR (Tax)
3. What will be the net pay of an employee earning
Php15 000 a month. No absences, no tardiness,
only mandatory deductions such as SSS, Phil
health, PAG-IBIG and tax are collected?

Write your solutions here:

1 2 3

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Post-test

Read the following questions carefully and choose the letter that best describes the answer.

1. It is a compensation received by employees in return for worked performed and is based on annual
compensation.
A. Benefits B. Income C. Salary D. Wage

2. It is a weekly compensation received by employees in return for worked performed.

A. Benefits B. Income C. Salary D. Wage

3. All of which are non-cash benefits for private employees EXCEPT.

A. GSIS B. Pag-Ibig C. PhilHealth D. SSS

4. A regular employee receives a bonus every year. Bonus is an example of

A. Benefits B. Income C. Salary D. Wage

5. The amount of money earned by a sari-sari store owner.

A. Benefits B. Income C. Salary D. Wage

6. It refers to your total compensation before taxes or other deductions.

A. Deductions B. Net Income C. Gross Income D. Taxable Income

7. It refers to your total compensation after taxes or other deductions.

A. Deductions B. Net Income C. Gross Income D. Taxable Income

8. Which among the benefits below of a government employee must be mandatory to all employees,
assuming that the employee has worked for the entire year?
A. 13th month pay B. Maternity Leave C. Paternity Leave D. VAWC Leave

9. All benefits below of a government employee are being counter parted by the employer as their
share under the law EXCEPT.
A. GSIS B. Pag-Ibig C. Philhealth D. P.E.R.A.

10. Which true statement below can be made when an employee earns an average of Php.10,500
per month.
I. The employee is withholding tax exempted.
II. The employee is not entitled to a 13th month pay.
III. The employee is not entitled for any sick leave.
A. Only I B. Only III C. Both I and II D. All of which

Additional Activities

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A. You may look for sample pay slips in the internet. In the box below, list down different
compensations received by people and classify it. Use the diagram below.
SALARY WAGE INCOME BENEFIT

B. Make your own detailed computation of the net pay of three employees. Supply the entries
in the table.
Employee Monthly Absences Allowance Night Commission
Gross Pay Differentials
A
B
C

Reflection
After learning a lot of concept about problem solving on systems of linear equations, it is
time for you to reflect about the things you found out, the things that you found interesting

1.

2.
3 things I found out
3.

1.
2 things I found interesting
2.

1.
1 question I still have is
and the question you still have in your mind. Just complete the table below.

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