Bonus is a form of additional compensation given to employees on top of their basic salary. Bonuses can either be performance, tenure or as mandated by the government.
System-defined bonus type is a bonus mandated by the Philippine government based on the Labor Code. In Salarium, the system-defined bonus type available is the 13th Month Pay. In most cases, 13th month pay is equal to the employee’s one whole month salary.
User-defined bonus type is a bonus that is given by the employer to its employees in addition to the government-mandated bonus. It is possible that not all employees will be entitled to this type of bonus.
When adding bonus types, amount basis must be defined. There are two options available which are as follows:
Fixed Basis
A bonus that is classified under Fixed Basis is that whose amount is specifically defined by the employer. For example, the employer provides an Attendance Bonus to all employees who get perfect a attendance for the month. This can be set to a fixed amount of PHP 5,000.00.
Salary-Based Basis
A bonus that is classified under Salary-based is that whose amount depends on the employee’s salary. The computation of this bonus is based on a percentage of the salary defined during setup. Upon assigning the salary-based bonus per employee, the following will appear as options that affects bonus computation
Bonuses may be released in two different ways: periodically or one-time.
One-Time: When selected, bonuses are released only once.
Periodic : When selected, an employee receives the bonus more than once. How many times a bonus is released and when it will be released will be defined during setup.
Taxable - A bonus may be classified as taxable which allows the employer to include the bonus in computation of the employee’s withholding tax.
Non Taxable - A bonus may be classified as non taxable. It means it will not be included when calculating the employee’s withholding tax.
In Philippine Labor Code, the maximum non taxable amount limit is up to PHP 90,000.00. This limit applies to both performance-based bonuses and non performance-based bonuses like the 13th month pay. When the total combined amount of these bonuses does not exceed PHP 90,000.00, no tax must be applied. However, if the total amount exceeds the maximum non taxable amount limit, the excess is subject to income tax.
Example B: