Salary, Wage, Income, Benefits

L
E Learning Competencies
S At the end of this lesson, you are able to:

S Define salary, wage, income and benefit

(ABM_BM11SW-IIc-1)
Differentiate between salary and wage.
O Compute gross and net earnings (ABM_BM11SW-IId-2)
Differentiate gross from net income. (ABM_BM11SW-
N IId-3)

1
 How are doctors being compensated?
 How about teachers and other government employees?
 Engineers? Lawyers?
 Tricycle Drivers? Construction workers?

People who work for a living expect a monetary return for the services they
rendered.

LESSON PROPER

WAYS OF SERVICE PAYMENT

I. SALARY AND WAGES

Salary is the compensation usually quoted annually or monthly for an employee. It is a

fixed amount of money for each time period worked. The amount is determined usually in a
contract or appointment which is signed before employment starts. Wage, on the other hand
is the compensation quoted in an hourly or daily rate for an employee. The employee is paid
at a regular rate for a stated minimum number of hours.

Salary earners usually get paid every 15 days (bi-monthly) while wage earners usually get
paid either weekly or sometimes evenly monthly, at their employer’s convenience.

Salary earners are not paid less if they work for only a fraction of the required number of
hours and they are also not paid for working overtime while wage earners are under the “no
work, no pay policy” which means they are only paid the actual number of hours or days
that they worked and given higher rate for extra hours worked (overtime hours).

Percentage
Compendium of Notes: Business
Mathematics
Examples:

1. The annual salary of a teacher in senior high school with a Teacher II

position is Php312,624.00. How much is his monthly salary?

Solution:
Php312,624.00 divide it by 12 months, then his monthly salary is
Php26,052.00

2. A fast food service crew is paid per hour. If he is paid at an average wage of
Php67.75.00 per hour. How much will he get if he works 8 hours and 6 days
a week for 4 weeks?

Solution:
If he works for 8 hours a day and 6 days a week for 4 weeks;
Php 67.75 x 8 hours x 6 days x 4 weeks, then he earns a total of
Php13,008.00 for that month.

3. A tutor who is paid Php200 per hour is earning a wage. How much does he
earn if he works 12-hour week work?

Solution:
Php200 x 12 hours; then he will be paid P2,400 for that week.

4. A Senior Medical Technologist is usually given a monthly salary. If his

salary is Php35,630.00 per month, how much does he get every two weeks?

Solution:
If he gets Php35,630.00 per month (divide it by 2), then he is paid
Php17,815.00 every two weeks.

5. Laborers and carpenters are paid daily, usually Php500-Php600 per day and
is a wage earner.

Let’sAthink of this!
tricycle driver and a meat vendor are neither salary nor wage earners. Why?

Compendium of Notes: Business

Mathematics
 Other Examples:

1. A call center agent earns a salary of Php20,000.00 per month. Assuming that he
works 8 hours a day for a 20-day work month, how much does he get per day?
Per hour?

Solution:
Php20,000/20 days=Php1,000.00
Php1,000.00/8 hours=Php125.00

Thus, he is earning a wage of Php1,000.00 per day and Php125.00 per hour.

2. An employee is paid a monthly salary of Php16,000.00 for working 20 days in a month.

A bus driver earns Php750 per day. Assuming both works 8 hours a day, who has a
higher hourly wage?

Solution:
Employee: Php16,000.00/20=Php800 per day, Php100 per hour
Bus Driver: Php750.00 per day, Php93.75 per hour
Therefore, the employee has a higher hourly wage rate.

II. INCOME AND BENEFITS

Definition:
Income is a money that an individual receives in exchange for providing a good/service or
through investing capital.

Some Sources of Income

1. Farmers, fishermen and vendors earn income by providing goods such as crops, fish and
vegetables.
2. Individuals may earn income by investing their capitals in stocks, mutual funds, and
bank deposits.

Definition:

Benefit is employee compensation given by an employer on top of the basic salary/wage. It may
be in the form of cash or kind.

Examples:
1. Cash Benefits: 13th month pay, bonuses, rice subsidy, transportation allowance
2. Non-cash benefits: SSS/GSIS, Pag-ibig, PhilHealth

Compendium of Notes: Business

Mathematics
 GROSS INCOME

Definition:

The Gross Income of an individual refers to the total amount he/she earned
before deductions are made. Other adjustments maybe payments for loans, etc.

Examples:

1. A newly hired teacher who gets a basic salary of Php23,877.00 per month and a
living allowance of Php2,000.00 per month. How much is his gross income for a
year?

Solution:
(23,877 x 12)+(2,000 x 12)= Php310,524.00

2. How much is the annual gross income of a police officer who gets a basic salary
of Php49,528.00 per month, a living allowance of Php2,000.00 per month, a
clothing allowance of Php200.00 per month, a regular subsistence allowance of
Php4,500.00 per month, and a hazard pay of Php540.00 per month?

Solution:
(49,528 x 12) + (2,000 x 12) + (200x 12) + (4,500 x 12) + (540 x 12 )
=Php681,216.00

3. A university professor has a basic monthly salary of Php80,000.00, a living

allowance of Php2,000.00 per month, and also has an investment of
Php300,000.00 which earns an interest of 5% per year. Compute his annual
gross income.

Solution:
(80,000 x 12) + (2,000 x 12 ) + (300,000 X 0.05) = Php999,000.00

4. A minimum wage earner in Tarlac is paid P420.00 for an 8-hour workday. If he

works for 22 days in one month, how much will be his gross income?

Solution:
(420 x 22)=Php9,240.00

Compendium of Notes: Business

Mathematics
 NET INCOME

Definition:
The Net Income of an individual is the difference between his/her gross income
and deductions. Example of deductions applicable are income tax, GSIS or SSS
contributions, PhilHealth and Pag-ibig contributions. The deductions can be a fixed
amount or a percentage of the basic salary.

Examples:

1. A newly hired teacher who gets a basic salary of Php23,877.00 per month and a
living allowance of Php2,000.00 per month has a gross annual income of
Php310,524.00.

Supposed this teacher has to pay every year Php22,500.00 for income tax,
Php4,500 for PhilHealth, Php1,200 for Pag-ibig, and Php6,975.00 for GSIS
contributions, then his annual net income is,
310,524-(22,500 + 4,500 + 1,200 + 6,975)=Php275,349.00

2. The annual gross income of a police officer who gets a basic salary of
Php49,528.00 per month, a living allowance of Php2,000.00 per month, a
clothing allowance of Php200.00 per month, a regular subsistence allowance of
Php4,500.00 per month, and a hazard pay of Php540.00 per month is
Php681,216.00.

Supposed this police officer has to pay annual Php45,000 for income
tax,Php6,000 for PhilHealth, Php1,200 for Pag-ibig and Php35,000 for GSIS
contributions, then his net annual income is,
681,216-(45,000 + 6,000 + 1,200 + 35,000) = Php594,016.00

3. A university professor has a basic monthly salary of Php80,000.00, a living

allowance of Php2,000.00 per month, and also has an investment of
Php300,000.00 which earns an interest of 5% per year. His annual gross income
is Php999,000.00.

Supposed the university professor has to pay each year Php245,880 for income
tax, Php12,000 for PhilHealth, Php2,400 for Pag-ibig and Php86,400 for SSS
contributions, then his net actual income is,
999,000 - (245,880 + 12,000 + 2,400 + 86,400)=Php652,320.00

4. A minimum wage earner in Tarlac is paid P420.00 for an 8-hour workday. If he

works for 22 days in one month then he will receive a monthly gross income of
Php9,240.00

A minimum wage earner is exempted from paying income tax. Suppose his
deductions per month are Php100 for Pag-ibig, Php200 for PhilHealth and Php400
for SSS, the his monthly income is 9240 – (100+200+400)=Php8,540.00

References
Compendium of Notes: Business
Mathematics
Sangalang, Vincent. Business Mathematics. Salaries and Wages
Teaching Guide for Senior High School: Business Mathematics.2016.
Commission of Higher Education. pp. 124-131
www.coursehero.com
https;//nwpc.dole.gov.ph/regionalwages/region-iii-central-luzon/
https://socialbuzzy.com
https://governmentph.com/

Compendium of Notes: Business

Mathematics