OM
S.Y. ‘24 - ‘25 | SEM 2Q2 | OM MODULE
WEEK 11:
PAYMENT
– SEM 2 Q2 WEEK 11 –
1.0
COMMON
PAYMENT
MODES
OF
2. Flat rates
 Firms with flat rates do not
consider skills and seniority as
factors
for
giving
compensation.
 Companies
pay
their
employees the same amount
regardless of rank.
3. Compensation through incentives
 These are payments based on
output.
 The most popular forms of
incentive pay are the following:
a. Merit pay - this is given in
recognition of outstanding
performance and based on the
results of a performance
evaluation.
 The merit pay is a one-time
payment given as an
incentive for outstanding
performance in a certain
task or project, or for an
outstanding evaluation of
job performance within a
certain period of time.
a. Across-the-board increase pay adjustments provided to all
employees with the same rate
regardless of rank.
b. Merit increase - salary or
wage
increase
given
to
employees on the basis of
performance.
c. Cost-of-living allowance
(COLA) - a monetary allowance
given to employees to help
them cope with the prevailing
conditions of the economy
related to the standard of living
and increasing prices of
commodities due to inflation.
PPT | LECTURE | MODULE : OM
MODES
d. Seniority pay - this is given to
employees based on the
number of years of service in
the company.
OF
1. Payment for time-worked
 Majority of employees are paid
on the basis of time worked.
 Monthly-paid employees are
those who are paid each day of
a particular month including
unworked rest days, special
days, and regular holidays.
 Daily paid employees are paid
on the basis of the days they
actually worked and unworked
regular holidays.
 Payments for time worked have
adjustments based on any of
the following:
COMMON
b. Piece rate pay - this is given
to employees who are paid a
fixed rate per product produced.
 For example, seamstresses
working in a garments
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OM
S.Y. ‘24 - ‘25 | SEM 2Q2 | OM MODULE
WEEK 11:
PAYMENT

factory are given wages
based on the number of
pieces of clothing they
make.
c. Commission - this is
compensation based on an
achieved sales quota.
 Companies usually pay
their
sales
associates
commissions based on
their sales performance.
 For
example,
car
companies usually pay
their sales representatives
a commission for every unit
they sell.
d. Group incentives - this is
given to a team that has
achieved a particular sales or
production target.
 The group is given a
commission upon reaching
a prescribed target.
 Group effort is essential in
attaining this incentive as
all members of the team
are rewarded.
4. Payment based on skills
 This is based on the number of
skills the employees gain while
working for the company.
 In order to avail of this
particular compensation, an
employee must acquire a
certain skill prescribed by the
company.
PPT | LECTURE | MODULE : OM

COMMON
MODES
OF
His or her pay increase is then
based on the new skill acquired.
This mode of payment is not
widely used in the Philippines
because companies prefer to
give
other
compensation
packages.
5. Payment based on knowledge or
credentials
 Continuous learning is one of
the
motivations
for
an
employee to attend seminars
and conferences related to his
or her field of expertise.
 Compensation is therefore
given to employees who attend
seminars and conferences and
gain additional knowledge that
improve their performance in
the company.
 Attending conferences also
aids
the
employee
in
accumulating points for higher
ranking and eventual pay
increase.
 Highly-skilled and specialized
jobs such as lawyers and
doctors need to pass licensure
examinations
and
earn
additional credentials to qualify
for higher pay.
 This is also true for academic
institutions where instructors
and professors are required to
engage in graduate or postgraduate studies, participate in
seminars and conferences, and
publish articles in academic
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OM
S.Y. ‘24 - ‘25 | SEM 2Q2 | OM MODULE
WEEK 11:
PAYMENT

journals to merit promotion and
pay increase.
6. Executive payment
 This payment given to chief
executive
officers,
the
chairman of the board, and
other
members
of
top
management.
 Executive payment is high
since the success of the
organization depends on the
overall skills of the executive
officers.
a. Overtime pay - this covers
work done beyond the normal
schedule of eight hours a day,
and is given on top of the basic
salary.
 The rates depend on the
day and number of hours
worked.
 The minimum overtime pay
rates also vary according to
the day the overtime work
is performed. They are
determined as follows:
For work in excess of
eight hours performed
on overtime pay is 25%
of the hourly rate.
ordinary working days,
PPT | LECTURE | MODULE : OM
MODES
OF
For work in excess of
eight hours performed
on a scheduled rest
day, a special day, and
a
regular
holiday,
overtime pay is at 30%
of the hourly rate.
b. Holiday pay - this is payment
for an unworked regular holiday
based on the employee's daily
rate.
 An employee is paid 100%
of his or her daily rate
(minimum wage and COLA)
even if he or she does not
report for work, provided
that he or she was present
or on leave with pay on the
work day preceding the
holiday.
 If an employee works on a
regular holiday, he or she
is paid 200% of his daily
rate.
 The following are the 12
regular holidays under
Executive Order No. 292, as
amended by Republic Act
9849:
7. Special payment
 This
is
additional
compensation given in special
cases. It includes the following:

COMMON
12 REGULAR HOLIDAYS
New Year's Day
January 1
Maundy Thursday
movable date
Good Friday
movable date
Araw ng Kagitingan
April 9
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OM
S.Y. ‘24 - ‘25 | SEM 2Q2 | OM MODULE
WEEK 11:
PAYMENT
COMMON
MODES
Labor Day
May 1
Independence Day
June 12
Ninoy Aquino Fay
August 21
National Heroes' Day
last Monday of
August
All Saints Day
November 1
Eid al-Fitr
movable date
Last Day of the Year
December 31
Eid al-Adha
movable date
Bonifacio Day
November 30
Christmas Day
December 25
Rizal Day
December's 30



OF
THREE SPECIAL HOLIDAYS


There are Muslim holidays
in specific provinces in
Mindanao on certain days
of the year.
Other
provinces
also
declare
holidays
for
celebrations
and
commemorations specific
to their areas.
There are also special days
declared by cities and
municipalities such as
Muntinlupa Day, Las Piñas
Day, etc.

d. Night differential payment this is an additional 10% of
basic rate for each hour of work
performed between 10:00pm to
6:00am.
 COLA is not included in the
computation of night shift
differential.
c. Premium pay - this is
payment given to employees
who work during rest days and
special holidays.
 The three special holidays
under Executive Order 292
are the following:
PPT | LECTURE | MODULE : OM
Premium pay is also given
on
special
holidays
declared by the President
of the Philippines.
Additional pay of at least
30% of the basic daily pay
is
given
for
work
performed during these
days.
If a special day is also an
employee's rest day and he
or she performs work on
that day, he is entitled to
an additional pay of 50% of
his basic daily pay.
e. Service charge - this refers
to fees charged to cover
services
related
to
the
production of a product or
provision of service.
 Establishments such as
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OM
S.Y. ‘24 - ‘25 | SEM 2Q2 | OM MODULE




WEEK 11:
PAYMENT
restaurants, hotels, and
bars often charge a service
charge above their regular
fees.
Employees who collect
service
charges
are
entitled to 85% of the total
service charges collected.
The remaining 15% is
retained by management
for
distribution
to
managerial employees and
for losses or breakages.
Some establishments do
not impose a service
charge but instead rely on
tips given by customers.
If this is the case, the total
amount of collected tips
shall be distributed in the
same manner as the
service charge.

severance
pay
The
computation
severance pay shall
include COLA.
g. Retirement pay - an
employee who is 60 or 65 years
old shall receive one-half month
salary for every year of service
provided that he or she has
rendered
five
years
of
continuous service to the
company. The pay will include
the following:
1. Basic salary worth fifteen
days based on the retiring
employee's latest rate
2. Five days service incentive
is
PPT | LECTURE | MODULE : OM
OF
equivalent to half a month's
pay for every year of
service.
However, the employee is
entitled to a full month's
salary for every year of
service if the employee is
separated because of any
of the following authorized
causes:

1. Retrenchment to prevent
further losses
2. Closure of a firm
3. Illness that may affect his
or her performance or is
highly contagious
The
MODES
1. Imposition of labor-saving
devices
2. Redundancy or duplication
of functions or abolition of
a
certain
department
where
the
employee
belongs
3. Transfer
to
another
department is not possible
f. Severance or separation pay
- it is the duty of the firm to
provide separation pay to
employees who are terminated
with authorized cause. An
authorized cause may be one
of the following:

COMMON
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OM
S.Y. ‘24 - ‘25 | SEM 2Q2 | OM MODULE
WEEK 11:
PAYMENT
COMMON
MODES
OF
leave
3. One-twelfth of his 13th
month pay or two and a
half days


Overall,
a
retiring
employee should at
least get 22.5 days
equivalent pay for every
year of service.
COLA is not included in
the computation of
retirement pay.
h. Thirteenth month pay employees are entitled to
thirteenth month pay provided
that they have worked for at
least one month in a calendar
year.
 This is given not later than
December 24 of that
particular year.
PPT | LECTURE | MODULE : OM
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