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BUSINESS MATH
Quarter II – Week 4
Benefits Given to Wage Earners

CONTEXTUALIZED LEARNING ACTIVITY SHEETS

SCHOOLS DIVISION OF PUERTO PRINCESA CITY
Business Math – Grade 11/12
Contextualized Learning Activity Sheets (CLAS)
Quarter II - Week 4: Benefits Given to Wage Earners
First Edition, 2020

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Published by the Schools Division of Puerto Princesa City

Development Team of the Learning Activity Sheets

Writers: Annielyn A. Lagan

Content Editor:Shiela M. Caab

Language Editor: Amie Tabi

Proofreader: Shiela M. Caab

Reviewer: Marie Vic C. Velasco, PhD.

Illustrator: Annielyn A. Lagan

Layout Artist: Aileen A. Gonzalvo

Management Team:
Servillano A. Arzaga, CESO V, SDS
Loida P. Adornado, PhD, ASDS
Cyril C. Serador, PhD, CID Chief
Ronald S. Brillantes, EPS-LRMS Manager
Marie Vic C. Velasco, PhD, EPS-Mathematics
Eva Joyce C. Presto, PDO II
Rhea Ann A. Navilla, Librarian II

Division LR Evaluators:
Ronald S. Brillantes, Amie Tabi

Division of Puerto Princesa City-Learning Resource Management Section (LRMS)

Sta. Monica Heights, Brgy. Sta. Monica, Puerto Princesa City
Telephone No.: (048) 434 9438
Email Address: [email protected]
Name: Grade & Section:
Kim Madarcos 11 EDISON

Lesson 1
Benefits given to Wage Earners

MELCS: Define each of the benefits given to wage earners

ABM_BM11SW-IIe-5
Distinguish taxable from nontaxable benefits
ABM_BM11SW-IIe-6
Enumerate the standard deductions with the corresponding computation
ABM_BM11SW- IIe-7

Objectives: 1. Define each of the benefits given to wage earners

2.Distinguish taxable from nontaxable benefits
3. Enumerate the standard deductions with the corresponding computation

Let’s Explore and Discover

Conversation via phonecall
between Human Resource Officer
and the Applicant.
UNLOCKING DIFFICULTIES
Wage is a fixed regular payment
typically paid on a daily and Hi! I am Alvin from ABM
weekly basis. Company. Is this Anne Garcia?
I have received your online
Benefit is a payment or gift made application in our company
by an employer, the state, or an May I know if you are still
insurance company. interested to be a part of your
company, as an Administrative
Taxes are the amount of money
Assistant?
that the government requires
people to pay according to their
income, the value of property for Yes, Sir I am interested.
the support of the government.
Okay, Let me give you a short
Taxable Benefits are extra
overview about the
advantage that employees receive
compensation package you will
in addition to their wage, whose
receive from our company. You
value is included when
will receive wage on a daily
calculating their tax.
basis. You will also have your
taxable and non taxable benefits
Non Taxable Benefits
like “De minimis” or allowances.
are benefits that are not taxed or
Kindly visit the company for the
only partially taxed.
final Interview.
“De Minimis” These are
relatively small in value and are Noted Sir, I will visit tomorrow.
not taxable. Thank you for considering may
application.

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Below is a list of possible benefits of a wage earner. Take note however that not all benefits
are obligatory. An example of this is when Company X gives hazard pay while Company Y
does not. This is only possible if Company X is a mining company and Company Y owns a
department store. The Presidential Decree 442, also known as the Labor Code of the
Philippines, provide list of benefits for wage earner.

THE BENEFITS OF WAGE EARNERS

1. MINIMUM WAGE .A minimum wage was set per region, province and industry
sector. This may vary depending on the number of employeesand gross sales of an
enterprise and its industry sector. It is exempted from Tax

2. OVERTIME PAY. An overtime pay is an additional compensation given to an employee

who renders service beyond the maximum number of working hours per day ( 8
hours per day). The additional compensation is equivalent is equivalent to at least
125% of the employee’s hourly rate.

3. PREMIUM PAY. A premium pay is an additional compensation if an employee worked

within 8 hours during non-working hours such as rest day and special holidays. If
an employee did not rendered work or not required to work on this day, then he is
not entitled to a compensation.

4. HOLIDAY PAY. Based on the Labor Code, all employees shall be paid with their daily
basic wage for regular holidays whether they work on that day or not.

5. NIGHT SHIFT DIFFERENTIAL. An employee who work between 10:00PM and

6:00PM receives an additional 10% premium called night shift differential.(NSD)

6. 13th MONTH PAY. It is a monetary bonus which is mandated by the law that is given
either in two installments (May and December) or in full (before December
24).Generally, 13th Month pay is 1/12 of the employee’s annual income or equivalent
to one month basic pay.

7. SERVICE CHARGE .It is the amount collected by some restaurants, hotels, night
clubs and the like. For Employees collecting service charges are entitled to an equal
share in the 85% of the total charges, while the remaining 15% of the charges
may be retained to the management.

8. SERVICE INCENTIVE LEAVES. An employee who has rendered at least one (1) year
of service is entitled to Service Incentive Leave (SIL) of five days with pay which can
be used for sick and vacation leave purposes. At the end of the year, unused SIL
can be converted into cash based on the salary rate.

9. PARENTAL LEAVES.
A. MATERNITY LEAVE. According to the Expanded Maternity Leave (EML) Bill,
the law grant each pregnant employee 105 days of maternity leave credits . It
also allows new mothers to extend this leave for additional 30 days, but this
will be an unpaid leave.

B. PARENTAL LEAVE. The R.A 818, or Paternity Leave Act of 1996, grants seven
(7) days of fully paid leave to married fathers that is effective up to the first
four deliveries of legitimate spouse. Under the EMI, seven days of a woman’s
paid maternity leave credits can be transferred to fathers, extending the
allowed seven-day paternity to be extended to 14days.

C. SOLO PARENT LEAVE. Seven (7) days leave with pay are given to solo or single
mothers and father for every year service, aside from their other leave
privileges (maternity or paternity). Solo mother can extend their leave for 15
days, and these are paid leaves.
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10. SEPARATION PAY. A regular employee who is validly dismissed or terminated from
a company is entitled to a separation pay, except those who are terminated due to
misconduct or crime involvement.
11. RETIREMENT PAY. Upon reaching the retirement age, an employee is entitled to a
retirement pay equivalent to at least half-month salary every year of service. A
fraction of 6 months is considered as one whole year. An employee may retire
upon reaching the age of 60 or more (voluntary retirement age)provided that he
served for at least 5 years in the same company.

(Source: Bryan Roy C. Lopez, Leah C. Martin-Lundag, and Keneth Adrian P. Daga, Business
Math, Quezon City: Vibal Group Inc., 2016, 130-135.)

12. DE MINIMIS BENEFITS. These benefits are given to employees other than regular
wages. These are relatively small in value and are not taxable.
As stated in the Revenue Regulation No. 11-2018( RR 11-2018) of the
Bureau of Internal Revenue, the following are not taxable (de minimis benefits).

DE MINIMIS BENEFITS NOT SUBJECT TO WITHHOLDING TAX

a. Monetized unused vacation leave credits to employees not exceeding ten (10) days
during the year;
b. Monetized value of vacation and sick leave credits paid to government officials and
employees;
c. Medical cash allowance to dependents of employees, not exceeding P1,500 per
employee per semester of P250 per month;
d. Rice subsidy of P2,000 or one sack of 50kg rice per month amounting to not more
than P2,000;
e. Uniform and clothing allowance not exceeding P6,000 per annum;
f. Actual medical assistance, e.g. medical allowance to cover medical and healthcare
needs, annual medical/executive check-up, maternity assistance, and routine
consultations, not exceeding P10,000.00 per annum;
g. Laundry allowance not exceeding P300 per month;
h. Employees achievement awards, e.g. for length of service or safety achievement,
which in the form of a tangible personal property other than cash or gift certificate,
with an annual monetary value not exceeding P10,000 received by the employee
under an established written plan which does not discriminate in favor of highly
paid employees;
i. Gifts given during Christmas and major anniversary celebrations not exceeding
P5,000 per employee per annum;
j. Daily meal allowance for overtime work not exceeding twenty five percent (25%) of
the basic minimum wage;
k. Benefits received by an employee by virtue of a collective bargaining agreement
(CBA) and productivity incentive schemes provided that the total annual monetary
value received from both CBA and productivity incentive schemes combined do not
exceed ten thousand pesos (Php 10,000.00)per employee per taxable year;

(Source:“Withholding Tax,” Bureau of Internal Revenue, accessed December 18,2020,

https://www.bir.gov.ph/index.php/tax-information/withholding-tax.html.)

SUMMARIZED TAX RULES

SALARIES AND WAGES Taxable

(Basic Compensation)
De Minimis Benefits Non- Taxable
Excess of De Minimis plus 13th Month pay and Bonuses Non- Taxable
( maximum of P90,000)
Benefits and Bonuses in excess of P90,0000 Taxable
All other Benefits Taxable

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Example:
Mr. Masipag received the following compensation and benefits during the entire year.
Annual Salary P360,000
13th Month Pay and Bonuses 90,000
Rice Subsidy 30,000
Laundy Allowance 3,600
Clothing Allowance 10,000

Computation of the Taxable Income and Taxable and Non-Taxable Benefits

Description Taxable Non-Taxable
De-Minimis Benefit Other Benefits &
Excess
Annual Salary P360,000
13th Month Pay and Bonuses P90,000
Rice Subsidy P 24,000 6,000
Clothing Allowance 6,000 4,000
Laundy Allowance 3,600
Total P100,000
As shown in the table the total of 13th month pay and excess of the given de minimis
benefits exceeded the maximum amount of P90,000 by P10,000 therefore:
Total Taxable Amount = P360,000 +10,000 =P370,000
Aside from earnings and benefits, certain deductions are usually taken out before they
can receive their take-home pay.Employers withhold or deduct taxes, contributions for
SSS, Philhealth, and Pag-IBIG and other required deductions.

STANDARD DEDUCTIONS are mandatory and fixed amount or percentage of the basic
salary held by any authority as a form of necessary dues

DIFFERENT STANDARD DEDUCTIONS

A. SSS Contribution. All employees of private companies and enterprises in the
Philippines are covered by the Social Security System(SSS). The monthly
contributions are based on the monthly salary bracket of each member.
SSS Contribution Table

(Source: “New SSS Contributions Table for Employed SSS Members,” Social Security System,
accessed December 18, 2020, https://sssinquiries.com/contributions/sss-contributions-
table-and-payment-deadline-2020/.)

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Example:
Rodel is a service crew in one of the fastfood in Puerto Princesa City, received a
monthly salary of P16,000.00.How much will be his SSS Contribution?

As shown in the table his SSS contribution is P660.00

B.Philhealth Contribution
All employees ( private and government), are to be members of PhilHealth. This agency
helps the members and their beneficiaries in times of sickness. Philhealth monthly
premium is shared equally by the employer and employee.

Philhealth Contribution Table

Year Monthly Basic Salary Employee’s Share
P10,000 and below P150
2020 P10,000.01- P59,999.99 1.5%
P60,000 and above P900
P10,000 and below P175
2021 P10,000.01-P69,999.99 1.75%
P70,000 and above P1,225

(Source: “PhilHealth sets new contribution schedule,” Philippine Health Insurance

Corporation, accessed December 18, 2020
https://www.philhealth.gov.ph/news/2019/new_contri.php#gsc.tab=0.)
Example:

On November 2020, Rizza received a monthly basic salary of P20,000.00. How much
is her Philhealth Contribution,Since the Philhealth is equally shared by employee and
employer the rate of 1.5% will apply.

Philhealth Contribution =Monthly Salary x rate

= P20,000 x.015
=P300
C.GSIS Contribution. All government employees (permanent and non-permanent) are
members of the Government Service Insurance System (GSIS). It is a government owned
and controlled .It is social insurance institution that provides defined benefit schemes for
it’s member under the law.

GSIS Contribution Table

Monthly Basic Salary Employee’s Share
Maximum Average Monthly 9%
Compensation (AMC) Limit and Below

(Source: “Premium payments,” Government Service Insurance System, accessed December 18,
2020, https://www.gsis.gov.ph/agencies/remittances2/premium-payments/.)

Mr. Dela Cruz a Senior High school Teacher receives a monthly basic salary of
P22,316.00. How much will be his GSIS Contribution?
GSIS Contribution =Monthly Salary x rate
=P22, 316.00 x 0.09
=P2,008.44

D.Pag-ibig Contribution. The Home Development Mutual Fund (HDMF), more popularly
known as Pag-ibig Fund is a government-owned and controlled corporation established
to provide national savings program, short term loans and affordable shelter financing
for Filipino workers.

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 Pag-ibig Contribution Table
Monthly Salary Employee’s Share
P1,500 and below 1%
P1,500- P4,999 2%
P5,000 and above P100

(Source: “Updated Pag-IBIG Contribution Table for 2019,”Pag-IBIG Fund, accessed

December 18, 2020, https://www.pagibigfund.gov.ph/.)

Ms.Garcia receives a monthly basic salary of P20,000.00. How much will be her Pag-ibig
Contribution? How much will be her Pag-ibig Contribution?

Based on the given table since She will have P100 Pag-ibig Contributes since her monthly
salary is P5,000 and above.

E.Income Tax. Income is taxed rate of an individual worker is based on the tax table.
Annual Tax Table
Annual Taxable Income Annual Income Tax
P250,000 and below None (0%)
over P250,000 up to P400,000 20% of excess over P250,000
over P400,000 up to P800,000 P30,000 +25% of excess over P400,000
over P800,000 up to P2,000,000 P130,000+30% of excess over P800,000
Over P2,000,000 up to P8,000,000 P490,000 +32% of excess over P2000
above P8,000,000 P2.41million + 35% of excess over P8 million

Tax base Tax rate minimum

(Source: “Annual Tax Table,” Bureau of Internal Revenue, accessed December 18, 2020,
https://www.bir.gov.ph/index.php/tax-information/withholding-tax.html#wt11.)
Example:
Arman, a regular employee in a private company, has a monthly basic salary of
P30,000.
Solve for his mandatory deductions.

a.SSS Contribution = P800 ( His monthly salary is beyond the maximum of P20,0000)
b.Philhealth Contribution = monthly basic salary x rate
=P30,000 x .015%
=P450
c.Pag-ibig Contribution =P100 ( His monthly salary is beyond the maximum of P5,000)
d.Annual Gross Income = gross monthly income x12
=P30,000X12
= P 264,000
e.Total Annual Contribution =(SSS+Philhealth+Pag-ibig)*12
=(P800+P450+100)*12
=(P1350)*12
= 16,200
f.Annual Taxable Income = Annual Gross Income -Total Annual Contribution
=P360,000-16,200
=P343,800
Annual Taxable Income Annual Income Tax
over P250,000 up to P400,000 20% of excess over P250,000
Monthly Income Tax = Tax base + ((Annual taxable Income-Min)xRate)
= 0+(P343,800 -P250,000)*0.20)
12
=0+( 93,800*0.20)
12
=18,760
12
=P1,563.33
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 Let’s Practice

Directions: Draw a happy face if it is a wage benefits given to earners

otherwise Put an X if it is NOT.Write your answer on the space provided.

________1.13th month Pay

____________ 2.Rice subsidy

________3.Philhealth premium
________4.Night Shift Differential
________5.Income Tax

Directions: Identify the following benefits if it Taxable or Non-Taxable by placing it

in proper box.
Medical cash allowance 13th month pay
Holiday pay Overtime pay
Rice subsidy Night shift differential
TAXABLE NON- TAXABLE

1. OVERTIME PAY 1. MEDICAL CASH ALLOWANCE

2. HOLIDAY PAY 2. RICE SUBSIDY
3. NIGHT SHIFT DIFFERENTIAL 3. 13TH MONTH PAY

Differentiate Taxable and Non Taxable benefits? Explain briefly.

____________________________________________________________________________________
Wages, salaries, and tips are all taxable. Bonuses are taxable and must be reported on your
____________________________________________________________________________________
Form W-2. Even if you don't get a Form 1099-MISC to report it, cash paid "under the table" is
taxable. Nontaxable: Your employer may provide you with nontaxable perks that you are not
required to include in your taxable income.

Let’s Do More

Directions: Solve the given problem. Do the required task.

Anne, working as Administrative Assistant supposed She received the
following wage and benefits within the year of 2020.
Annual Wage = P300,000
13 Month Pay and Bonus =
th 90,000
Rice Subsidy = 30,000
Uniform Allowance = 10,000
Medical Cash Allowance = 3,000

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Compute the taxable income and determine her taxable and taxable benefits by
completing the table
Description Taxable Non-Taxable
De-Minimis Benefit Other Benefits &
Excess
Annual Salary 300,000
13th Month Pay and 90,000
Bonuses
Rice Subsidy 24,000 6,000
Uniform Allowance 6,000 4,000
Medical Cash Allowance 3,000
Total 100,000
TOTAL TAXABLE AMOUNT = 300,000 + 10,000 = 310,000

Directions: Complete the missing values of the payslip of Mr. Juan Garcia.You
can use separate paper for your computation.
Name of Employee JUAN GARCIA
Payroll Oct 1 -30, 2020

EARNINGS DESCRIPTION TAXABLE NON

TAXABLE
Basic Salary P28,000 Annual Basic Salary 336,000
RiceSubsidy/month 2,000 Annual RiceSubsidy 24,000
Laundry 300 Annual Laundry 3,600
Allowance/month Allowance
Gross Earning 30,300 Total 27,600

DEDUCTIONS
SSS Contribution 800
PhilHealth 420
Pag-ibig 100
Income Tax 1,169.33
TOTAL DEDUCTION 2,489.33
NET PAY
Monthly Net: 27,510.67

Why are employees wages are subject for mandatory deduction? What is the purpose?
Explain briefly__________________________________________________________________________
Employees have the option of having more money deducted from their paycheck
to cover the costs of various benefits. These are called voluntary payroll deductions,
and they can be withheld either before or after taxes (if
authorized under Section 125 of the Internal Revenue Code).

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 Let’s Sum It Up
Activity
Directions: Choose from the box the correct answer to each question. Write the letter that
on the space provided.
A. Standard Deduction D. Service Charge
B. De minimis Benefits E.13th Month Pay
C. Separation pay
____1.It
E is a monetary bonus which is mandated by the law that is given either in two
installments (May and December) or in full.
____2.These are the amount collected by some restaurants, hotels, night clubs and the
D
like.
____3.It
C is given to employee who validly dismissed or terminated from a company.
____4.These
B benefits given to employees other than regular wages. It is relatively
small in value and are not taxable
____
A 5.These are mandatory and fixed amount or a percentage of the basic salary held
by any authority as a form of necessary dues.

Let’s Assess
Directions: Carefully read each question. Write the letter of your answer on the space
provided before each number.

___1.What
B is the compensation given to employees who are validly dismissed or
terminated from the company?
A.Holiday pay B. Separation pay C. Retirement pay D. Overtime pay

___2.Which
B of the following is a paid leave of 105 days granted to pregnant employees?
A.Sick Leave B. Maternity leave C.Vacation Leave D.Parental Leave

___3.What
C is a benefit given to an employee upon reaching the age of 60-65, equivalent
to at least half month salary for every year of service?
A.Holiday pay B. Separation pay C. Retirement pay D. Overtime pay

___4.Which
D of the following is the benefit given to an employee who work between
10:00PM and 6:00PM.?
A.Holiday pay C. Overtime pay
B. Separation pay D.Night Shift Differential

___5.Which
C of the following is NOT an example of Standard Deduction?
A. GSIS premium C. 13th month pay
B. SSS Contribution D. Philhealth Contribution

___6.Which
A of the following is a de minimis benefits of an employee?
A.Rice Subsidy C. Overtime pay
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 B. Service Charge D.Night Shift Differential

___7.Which
A of the following is NOT a benefit by the wage earner?
A. Income Tax B. Separation pay C.Overtime pay D.Holiday pay

___8.How
B much is the allowable limit for the 13th month , bonuses and excess of de
minimis?
A. 70,000 C.90,000
B. 80,000 D.100,000

___9.
A Ana receives a monthly basic pay of P15,000. How much will be her Pag-ibig
contribution per month?
A.P100 B.P200 C.P300 D.P400

___10.
A Mr. has an annual taxable income of 280,000 how much is his monthly income
tax?
A.500 B.550 C.600 D.650

Answer Key
Let’s Practice

Activity 1 Activity 2
TAXABLE NON- TAXABLE
1.
1.Overtime Pay 1.Medical Cash Allowance
2.
2.Holiday Pay 2.Rice Subsidy
3. 3.Night Shift 3.13th Month Pay
Differential
4.
5. X

Let’s Do More

Activity 1
Description Taxable Non-Taxable
De-Minimis Other Benefits &
Benefit Excess
Annual Salary P300,000
13th Month Pay and P90,000
Bonuses
Rice Subsidy P24,000 6,000
Uniform Allowance 6,000 4,000
Medical Cash Allowance 3,000
Total 100,000
TOTAL TAXABLE AMOUNT = P300,000+10,000 =P310,000

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 Activity 2
EARNINGS DESCRIPTION TAXABLE NON
TAXABLE
Basic Salary P28,000 Annual Basic Salary 336,000
RiceSubsidy/month 2,000 Annual RiceSubsidy 24,000
Laundry 300 Annual Laundry 3,600
Allowance/month Allowance
Gross Earning P30,300 Total P27,600

DEDUCTIONS
SSS Contribution P800.00
PhilHealth 420.00
Pag-ibig 100.00
Income Tax 1169.33
TOTAL DEDUCTION P2489.33
NET PAY
Monthly Net: P27,510.67

Let’s Sum it Up
1.E 2. D 3. C 4.B 5. A

Let’s Assess
1. B 2. B 3. C 4. D 5. C 6. A 7. A 8. C 9. A 10. A

References
Book
Lopez, Bryan C., Leah C. Martin-Lundag, and Keneth Adrian P. Daga, Business
Math, Quezon City Pasig City: Vibal Group Inc., 2016.

Websites

Bureau of Internal Revenue, “Withholding Tax”, accessed December 18, 2020,

https://www.bir.gov.ph/index.php/tax-information/withholding-tax.html.

Social Security System,“New SSS Contributions Table for Employed SSS Members”,
accessed December 18, 2020, https://sssinquiries.com/contributions/sss-
contributions-table-and-payment-deadline-2020/.

Philippine Health Insurance Corporation, “PhilHealth sets new contribution

schedule”, accessed December 18, 2020,
https://www.philhealth.gov.ph/news/2019/new_contri.php#gsc.tab=0)

Government Service Insurance System, “Premium payments”, accessed December

18, 2020, https://www.gsis.gov.ph/agencies/remittances2/premium-
payments/.

Pag-IBIG Fund “Updated PAG IBIG Contribution Table for 2020” accessed
December 18, 2020, https://www.pagibigfund.gov.ph/.

Bureau of Internal Revenue, “ Annual Tax Table” accessed December 18, 2020,
11
 https://www.bir.gov.ph/index.php/tax-information/withholding-
tax.html#wt

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