Payroll & Compliance – Important Legislative Updates in Q3!
ADP Quarterly Chronicle – Jun to Sept 2019
Guidelines on the Computation of Salary for Maternity Leave
The Department of Labour and Employment (DOLE) has issued a Department Advisory 1-2019 to guide all concerned, on the computation of salary differential of female workers during maternity leave, and its criteria for exemption pursuant to Republic Act No. 11210, otherwise known as the “105-Day Expanded Maternity Leave Law“.
How to compute Salary Differential?
The employer shall pay the salary differential between the full salary (monthly salary X maternity period in months) of female worker during her maternity leave, and the actual cash benefits received from the Social Security System (SSS) which shall be computed as follows:
- Ascertain the employees’ premium contribution share for SSS, Philippine Health Insurance Corporation (PhilHealth), and Home Development Mutual Fund (Pag-IBIG) covering the maternity period
- Determine the amount of SSS maternity leave benefit of the female worker based on the prescribed formula and computation by the SSS
- Deduct from the amount of full pay the total amount of employee’s premium contribution share and SSS maternity leave benefit
To illustrate, below is a sample computation:
Taxability of such Salary Differential
The amount of salary differential shall be treated as taxable income of the female worker, subject to the rules and regulations of the Bureau of Internal Revenue.
What is the effect of such differential pay on “THIRTEENTH (13th)” Month Pay
The salary differential shall be included as part of the basic salary for purposes of computation of the 13th month pay of the rank-and-file employee.
Exemption of payment of salary differential
Establishments in the private sector mentioned in Section 5, Rule VI of the Implementing Rules and Regulations of RA 11210, who are:
- Regularly employing not more than 10 workers,
- Micro enterprises whose total assets are not more than Three Million Pesos (PHP 3,000,000.00)
- Establishments who are already providing similar, or more than, the benefits provided in RA 11210 and its IRR.
May be exempted from paying the salary differential by submitting the below documents within the first semester of every calendar year, in duplicate copies, at the DOLE
- DOLE-prescribed Application Form
- Copy of Certificate of Registration issued by the Department of Trade and Industry or the Securities and Exchange Commission or the Cooperative Development Authority, as the case may be, and
- Copy of the latest Business Permit issued by the Local Government Unit.
NEW BIR Form No. 1604-C
The Bureau of Internal Revenue has issued Revenue Memorandum Circular No. 73-2019 revising BIR Form 1604-C (Annual Information Return of Income Taxes Withheld on Compensation).
The new format are available based on alphabetical list of employees. The new form is simplified into two schedules from the earlier five schedules. The new alphabetical list are as below:
- The employment status of employees: Regular (R), Casual (C), Contractual/ Project based (CP), Seasonal (S), Probationary (P), Apprentice/ Learners (AL); and
- The reason of separation, if applicable: Terminated (T), Transferred (TR), Retirement (R), and Death (D).
Note: The revised manual return and alphabet-list format are already available in the BIR Portal under the BIR Forms-Payment/ Remittance Forms section. However, the returns are not yet available in the Electronic Filing and Payment System (eFPS) and Electronic Bureau of Internal Revenue Forms (eBIRForms). But these enhanced forms shall be used starting submission of calendar year 2019.
BIR Form 2316 Revised
The Bureau of Internal Revenue through Revenue Memorandum Circular No. 100-2019 has revised BIR Form No.2316 [Certificate of Compensation Payment/Tax Withheld]. The same was revised due to the implementation of Republic Act (RA) No. 10963 also known as Tax Reform for Acceleration and Inclusion (TRAIN).
The revised BIR Form No. 2316 shall be issued to every employee receiving salaries, wages and other forms of remuneration, providing details of total amount paid and the taxes withheld for the year. This is to be issued to payee on or before 31 January of the succeeding or in cases where there is termination of employment, it is issued on the last payment of wages is made.
Hope you have enjoyed this quarter’s Payroll & Compliance updates, you may access the PDF version here to share with your colleagues.