Government Compliance, HRIS Articles, Payroll, ,

Introduction

For small and medium enterprises (SMEs) in the Philippines, payroll compliance isn’t just about paying employees on time. It’s about following strict rules set by DOLE, BIR, SSS, PhilHealth, and Pag-IBIG. Non-compliance can lead to hefty fines, labor disputes, and reputational damage.

This 2025 Payroll Compliance Checklist is designed to help HR managers, payroll officers, and business owners stay fully compliant and avoid costly mistakes.

📋 Payroll Compliance Checklist 2025

✅ 1. Employee Records & Contracts

  • Maintain 201 files with contracts, IDs, government numbers (TIN, SSS, PhilHealth, Pag-IBIG).
  • Ensure contracts clearly state salary, pay frequency, and benefits.
  • Track changes in status (regularization, promotion, separation).

✅ 2. Timekeeping & Attendance

  • Maintain accurate daily time records (DTRs).
  • Track overtime, undertime, night differential, and holiday pay.
  • Ensure attendance systems are tamper-proof (biometrics, GPS, or HRIS-based).

✅ 3. Payroll Periods & Cut-Offs

  • Follow legal pay frequency: at least twice a month (commonly 1–15 and 16–EOM).
  • Post payroll schedules for employee visibility.
  • Align cut-off dates with statutory deadlines.

✅ 4. Computation of Wages

  • Correctly compute basic pay, allowances, and deductions.
  • Include mandatory premiums:
    • Overtime (OT)
    • Night Shift Differential (10% of hourly rate)
    • Holiday Pay (special and regular holidays)
  • Ensure salary adjustments are reflected in computation.

✅ 5. Government Contributions (SSS, PhilHealth, Pag-IBIG)

  • Use updated 2025 contribution tables:
    • SSS: 14% MSC (Employer 9.5%, Employee 4.5%)
    • PhilHealth: 5% premium, ₱10k floor, ₱100k ceiling, 50-50 share
    • Pag-IBIG: 1–2%, capped at ₱5,000
  • Deduct correctly from payroll.
  • Remit via official portals (My.SSS, EPRS, Virtual Pag-IBIG).

✅ 6. Tax Withholding (BIR Compliance)

  • Apply BIR TRAIN Law tax tables.
  • Ensure proper withholding per income bracket.
  • File and remit using BIR Form 1601-C (monthly) and Form 2316 (annual).
  • Keep updated with BIR Revenue Regulations for 2025.

✅ 7. 13th Month Pay & Other Benefits

  • Compute 13th month pay = Total basic salary earned ÷ 12.
  • Release on or before December 24, 2025.
  • Provide other mandatory benefits (e.g., Service Incentive Leave, Maternity/Paternity leave).

✅ 8. Final Pay & Separation Compliance

  • Pay resigned/terminated employees their final pay (last salary, leave conversions, 13th month pay, deductions).
  • Release within 30 days of separation (per DOLE).
  • Issue Certificate of Employment (COE) upon request.

✅ 9. Payslips & Transparency

  • Provide employees with itemized payslips every payday.
  • Show breakdown: basic pay, OT, benefits, deductions, and net pay.
  • Keep electronic or printed copies for audit trail.

✅ 10. DOLE & Audit Preparedness

  • Be ready for DOLE payroll inspections.
  • Keep updated policies and payroll records for at least 3 years.
  • Ensure compliance with minimum wage laws per regional wage board.

🚨 Common Payroll Compliance Pitfalls (to Avoid in 2025)

  1. ❌ Using outdated contribution/tax tables.
  2. ❌ Missing deadlines for remittances.
  3. ❌ Incorrectly prorating pay for resigned or new employees.
  4. ❌ Not issuing payslips.
  5. ❌ Manual payroll errors due to spreadsheets.

💡 How Everything at Work HRIS Helps SMEs Stay Compliant

Manually managing payroll across multiple agencies is overwhelming. Everything at Work HRIS automates:

  • ✅ Accurate payroll calculations (with OT, ND, allowances).
  • ✅ SSS, PhilHealth, Pag-IBIG auto-computation based on updated tables.
  • ✅ BIR tax withholding compliance.
  • ✅ Automated 13th month pay & final pay processing.
  • ✅ DOLE-ready reports for faster audits.
  • ✅ Employee self-service payslip portal.

With EAW, SMEs can reduce payroll processing time by up to 70% and eliminate compliance risks.

Conclusion

Payroll compliance in the Philippines is complex — but it doesn’t have to be overwhelming. With this 2025 checklist, SMEs can ensure every payday is accurate, compliant, and on time.

Instead of worrying about penalties and audits, HR teams can focus on what really matters: supporting employees and growing the business.

Stay compliant with less effort. Book a Demo with Everything at Work and see how we can simplify payroll for your business.