Payroll Processing in the Philippines (Gross-to-Net)

From Gross to Net: How Philippine Payroll Works

Every pay period, employers must translate an employee’s agreed compensation into a correct net pay figure — accounting for statutory deductions, fringe benefit rules, and tax obligations. Getting this computation wrong creates BIR exposure for the company and trust problems with employees.

The standard gross-to-net flow in the Philippines:

1. Gross pay — basic salary plus any taxable allowances and overtime for the period
2. Less: employee statutory contributions — SSS (employee share), PhilHealth premium (2.5% of monthly basic salary), and Pag-IBIG (generally 2%, capped at ₱200/month)
3. Taxable compensation — gross pay minus non-taxable de minimis benefits and employee contributions
4. Less: BIR withholding tax — applied to monthly taxable compensation using the TRAIN Law bracket table currently in effect; the first ₱20,833 of monthly taxable compensation is exempt
5. Net pay — the amount deposited to the employee’s bank account or released via payroll card

2026 Contribution Snapshot

As of 2026, the statutory contribution landscape has shifted:

• SSS — total rate of 15% of Monthly Salary Credit (MSC); employer shoulder is 10%, employee is 5%. MSC floor is ₱5,000; ceiling is ₱35,000.
• PhilHealth — 5% of monthly basic salary (2.5% employer, 2.5% employee); floor salary is ₱10,000, ceiling is ₱100,000.
• Pag-IBIG — 2% each (employer and employee) on monthly compensation up to ₱10,000, capping each party’s contribution at ₱200.

For a detailed breakdown with remittance deadlines, see our statutory contributions guide.

Semi-Monthly vs Monthly Processing

Most Philippine companies run semi-monthly payroll: the first cut-off covers the 1st to 15th, paid around the 20th; the second covers the 16th to month-end, paid around the 5th of the following month. Statutory contributions are computed on a monthly basis even if pay is disbursed twice — employers must avoid double-remitting or under-remitting across the two cuts.

Chamberlain configures payroll runs to your exact cycle, handles mid-period adjustments (new hires, resignations, salary changes), and reconciles contributions monthly before filing.

Payslip and Record-Keeping Requirements

Philippine law requires employers to provide each employee a payslip showing gross pay, itemised deductions, and net pay each period. Chamberlain issues digital payslips automatically each cycle and retains payroll records in line with BIR and DOLE requirements.

Book a consultation to discuss your team’s pay structure, or see transparent pricing for our fixed monthly payroll fees. For tax withholding detail, visit our BIR withholding tax guide.