Salaries, Wages, Benefits, and Deductions

Salary and Wage Management

• Salary vs. Wage: Salary is a fixed amount paid at regular intervals (monthly or annually) to professionals or executives. Wages are compensations based on hours worked or units produced, typically for manual or hourly labor.

• Monthly Wage Formula:   $\text{Monthly Wage} = \frac{\text{Annual Salary}}{12}$   Example: An annual salary of $₱624,000$ results in a monthly wage of $₱52,000$.

• Weekly Wage Formula:   $\text{Weekly Wage} = \frac{\text{Annual Salary}}{52}$   Example: A annual salary of $₱780,000$ results in a weekly wage of $₱15,000$.

• Hourly Wages: Total wages are calculated by multiplying the hourly rate by the total hours worked:   $\text{Wages} = \text{Hourly Rate} \times \text{Hours Worked}$

• Income: Encompasses total money received from all sources, including salary, wages, business, investments, dividends, and rent.

Employee Benefits and Deductions

• Mandatory Benefits: Required by law in the Philippines, including:

  • SSS: Social Security System (retirement, sickness, disability).

  • PhilHealth: Health insurance.

  • Pag-IBIG (HDMF): Housing and Development Mutual Fund.

  • 13th-Month Pay: Mandatory annual payment.

  • Paid Leaves: Service incentive, maternity, paternity, and solo parent leaves.

• Supplementary Benefits: Optional employer-provided perks such as life insurance, retirement plans, paid time off (PTO), educational assistance, and stock options.

• Gross vs. Net Income:

  • Gross Earnings: Total income before any deductions, including basic salary, overtime, bonuses, and commissions.

  • Deductions: Amounts taken for taxes or mandatory contributions.

  • Net Income: The final amount received after subtracting total deductions from gross income:       $\text{Net Income} = \text{Gross Income} - \text{Total Deductions}$

• Withholding Tax: Advanced income tax deducted by employers under the TRAIN Law. Employees earning $₱250,000$ or less annually are exempt from tax.

• 2025 BIR Tax Table:

  • $₱250,000$ and below: $0\%$

  • Over $₱250,000$ to $₱400,000$: $15\%$ of excess over $₱250,000$

  • Over $₱400,000$ to $₱800,000$: $₱22,500 + 20\%$ of excess over $₱400,000$

  • Over $₱800,000$ to $₱2,000,000$: $₱102,500 + 25\%$ of excess over $₱800,000$

  • Over $₱2,000,000$ to $₱8,000,000$: $₱402,500 + 30\%$ of excess over $₱2,000,000$

  • Over $₱8,000,000$: $₱2,202,500 + 35\%$ of excess over $₱8,000,000$

Financial Mathematics Concepts

• Techan's Triangle Components:

  • Percentage ($P$): The portion of the base being calculated.

  • Rate ($R$): The value the percentage is based on, usually accompanied by a $\%$ symbol.

  • Base ($B$): The original value.

  • Formulas: $P = R \times B$, $R = \frac{P}{B}$, $B = \frac{P}{R}$.

• Percentage Change: Measures the increase or decrease relative to the original value.

  • Percent Increase:       $\text{Percent Increase} = \frac{\text{New Value} - \text{Original Value}}{\text{Original Value}} \times 100$

  • Percent Decrease:       $\text{Percent Decrease} = \frac{\text{Original Value} - \text{New Value}}{\text{Original Value}} \times 100$

• Inflation: The general increase in prices over time, reducing purchasing power.

  • Inflation Rate Formula:       $\text{Rate} = \frac{\text{Current Price} - \text{Previous Price}}{\text{Previous Price}} \times 100\%$

Business Calculations for Retail

• Mark-on (Initial Mark): Difference between original selling price ($S$) and cost ($C$).

  • $MO = S - C$

  • $\text{Rate of Mark-on (RMO)} = \frac{MO}{C}$

• Markup vs. Markdown:

  • Markup: An increase in the original selling price.

  • Markdown: A reduction in the original selling price.

  • $\text{Rate of Markdown (RMD)} = \frac{\text{Markdown}}{\text{Original Selling Price}}$

• Sales Incentives and Taxes:

  • Commission: Earned as a percentage of sales ($\text{Sales} \times \text{Commission Rate}$).

  • Piecework: Paid per item produced ($\text{Rate per Item} \times \text{Number of Items}$).

  • Discounts: Amount deducted from the selling price ($\text{Original Price} \times \text{Discount Rate}$).

  • VAT (Value Added Tax): A $12\%$ tax on goods and services in the Philippines ($\text{Amount} \times 0.12$).

• Profit and Loss:

  • Profit/Loss: $S - C$. Profit occurs if S > C; Loss occurs if S < C.

  • Gross Profit: $\text{Net Sales} - \text{Cost of Goods Sold}$.

  • Net Profit: $\text{Gross Profit} - \text{Operating Expenses}$.

Mathematical Patterns and Sequences

• Patterns: Regular arrangements that allow for prediction. Types include repeating, growing, and symmetrical. Natural examples include spirals in shells (Fibonacci numbers) and symmetry in leaves.

• Fibonacci Sequence: Named after Leonardo Bonacci, where each term is the sum of the two preceding terms ($F_1=1, F_2=1, F_3=2, F_4=3, F_5=5, ...$).

  • Formula for $n^{th}$ term using Golden Ratio ($\varphi \approx 1.618034$)):       $F_n = \frac{\varphi^n - (1 - \varphi)^n}{\sqrt{5}}$

• Arithmetic Sequence: A sequence with a constant common difference ($d$).

  • $n^{th}$ term: $a_n = a_1 + (n - 1)d$

• Geometric Sequence: A sequence with a constant common ratio ($r$).

  • $n^{th}$ term: $a_n = a_1 r^{n-1}$

Series and Sigma Notation

• Sequence vs. Series: A sequence is an ordered list of terms. A series ($S_n$) is the sum of those terms.

• Arithmetic Series Formulas:

  • $S_n = \frac{n}{2}(a_1 + a_n)$

  • $S_n = \frac{n}{2}[2a_1 + (n - 1)d]$

• Geometric Series Formulas:

  • Finite: $S_n = a_1 \left( \frac{r^n - 1}{r - 1} \right)$

  • Infinite (where |r| < 1): $S = \frac{a_1}{1 - r}$

• Sigma Notation ($\sum$): A compact way to represent repeated addition based on a rule, featuring a lower limit (start), upper limit (stop), and the formula for terms.

Questions and Discussion

Genyo Review Questions

• What is the difference between mandatory and supplementary benefits? Mandatory benefits are required by law (like SSS and PhilHealth), while supplementary benefits are extra incentives offered voluntarily by employers (like stock options or educational assistance).

• Why do companies offer employee benefits? They serve as additional compensation to attract and retain talent and improve employee wellbeing.

• Is the current system of mandatory benefits in the Philippines adequate? This is a reflection prompt for proposing changes to existing laws.

Activity Riddles

• I am an odd number. Remove one letter from my name, and I become even. What number am I? Seven (removing 's' leaves 'even').

• What comes next in the sequence: 8, 16, 14, 28, 26, 52, …? 50 (The pattern is multiply by 2, then subtract 2).

• Elevator Problem: An elevator starts on floor 2, goes up 8, down 3, up 6, down 5, and up 4. What floor does it stop on? Stop floor is 12.

• Machine Pattern: $2 \rightarrow 6$, $3 \rightarrow 12$, $4 \rightarrow 20$, $5 \rightarrow ?$ Output is 30 (The rule is $n \times (n + 1)$).

• Look-and-Say Sequence: 1, 11, 21, 1211, 111221, …? Next term is 312211.