Payroll Items

Payroll Items are the building blocks of payroll processing. This guide covers creating and configuring payroll items for your organization.

What is a Payroll Item?

A Payroll Item represents an individual line item on a payslip. Items can be:

• Earnings - Amounts added to pay (salary, allowances, benefits)
• Deductions - Amounts subtracted from pay (contributions, taxes, loans)
• Employer Contributions - Amounts paid by employer (government share)

Payroll Item List

Viewing Items

1. Go to Payroll > Settings > Payroll Items
2. View all configured payroll items
3. Filter by category
4. Search by name or code

Item Information

Creating a Payroll Item

Step 1: Navigate to Create

1. Go to Payroll > Settings > Payroll Items
2. Click Create Item

Step 2: Enter Basic Information

Step 3: Select Category

Step 4: Configure Calculation Type

Step 5: Configure Tax Settings

Step 6: Save

Review settings and save the payroll item.

Payroll Item Categories

Constants

Reference values used in other calculations. Not directly applied to payroll.

Examples:

• Minimum wage rates
• Tax bracket thresholds
• Contribution rate tables

Gross Pay

Items that make up the employee's total compensation before deductions.

Examples:

• Basic Salary
• PERA (Personnel Economic Relief Allowance)
• ACA (Additional Compensation Allowance)
• Longevity Pay
• Hazard Pay
• Overtime Pay

Statutory Deductions

Government-mandated contributions deducted from employee pay.

Examples:

• GSIS RLIP (Employee Share)
• PhilHealth (Employee Share)
• Pag-IBIG/HDMF (Employee Share)
• Withholding Tax

Other Deductions

Additional deductions beyond statutory requirements.

Examples:

• Union dues
• Cooperative contributions
• Insurance premiums
• Salary advances

Other Benefits

Additional compensation beyond base pay.

Examples:

• Bonus payments
• Incentive pay
• Cash gifts

De Minimis Benefits

Tax-exempt benefits subject to annual limits.

Examples:

• Rice subsidy
• Clothing allowance
• Laundry allowance
• Medical benefits

Employer/Government Share

Employer contributions to government agencies (not deducted from employee).

Examples:

• GSIS RLIP (Employer Share)
• GSIS ECIP
• PhilHealth (Employer Share)
• Pag-IBIG (Employer Share)

Loans

Employee loan deductions from various sources.

Examples:

• GSIS Loans
• Pag-IBIG Loans
• Salary Loans
• Emergency Loans

Configuring Item Limits

Some payroll items have limits on the amounts that can be applied.

Limit Types

Limit Periods

Configuring Limits

1. Edit the payroll item
2. Set Limit Type (None, Fixed Amount, or Percentage)
3. If Fixed Amount:
   • Enter the Limit Amount
   • Select the Limit Period
4. If Percentage:
   • Enter the Limit Percentage
   • Select the Reference Item
5. Save changes

Limit Example: De Minimis Rice Subsidy

Item: Rice Subsidy
Category: De Minimis Benefits
Limit Type: Fixed Amount
Limit Amount: ₱2,000.00
Limit Period: Monthly

This configuration ensures rice subsidy doesn't exceed ₱2,000 per month. Amounts beyond the limit are treated as taxable income.

De Minimis Benefits

De Minimis benefits have special tax treatment with annual limits.

Configuring De Minimis

1. Create the payroll item
2. Set Category to "De Minimis Benefits"
3. Enable Is De Minimis
4. Configure the limit amount

De Minimis Behavior

When an item is marked as De Minimis:

1. System tracks year-to-date amounts
2. Amounts within limit are tax-exempt
3. Amounts exceeding limit become taxable
4. Automatic splitting between exempt and taxable portions

Common De Minimis Items

Note: De minimis limits are set by the Bureau of Internal Revenue and may change. Verify current limits before configuration.

Payroll Item in Payroll Types

Adding Items to Payroll Types

1. Go to Payroll > Settings > Payroll Types
2. Open a payroll type
3. Click Add Item
4. Select the payroll item
5. Set the display order
6. Save

Item Order

The order of items in a payroll type determines how they appear on:

• Employee setup forms
• Payslips
• Reports

Reordering Items

1. Open the payroll type
2. Drag items to reorder
3. Save changes

Standard Payroll Items

Gross Pay Items

Statutory Deductions

Employer Contributions

Loan Items

Best Practices

Naming Conventions

• Use clear, descriptive names
• Include agency abbreviation where applicable
• Indicate employee/employer share when relevant
• Use consistent naming patterns

Code Standards

• Use uppercase letters and underscores
• Make codes meaningful and short
• Ensure codes are unique
• Don't change codes after they're in use

Category Assignment

• Assign correct category for proper calculations
• Verify tax implications
• Consider reporting requirements
• Check accounting treatment

Limit Configuration

• Review current BIR regulations
• Update limits when regulations change
• Document limit sources
• Test limit calculations

Common Issues and Solutions

Issue: Item Not Appearing in Setup

Possible Causes:

1. Item not added to payroll type
2. Item is disabled
3. Payroll type not selected

Solutions:

• Add item to the payroll type
• Enable the item
• Verify payroll type selection

Issue: De Minimis Not Splitting

Possible Causes:

1. Is De Minimis not enabled
2. Limit not configured
3. YTD tracking not working

Solutions:

• Enable Is De Minimis flag
• Configure limit amount and period
• Verify year-to-date calculation

Issue: Calculation Incorrect

Possible Causes:

1. Wrong calculation type
2. Reference item incorrect
3. Formula error

Solutions:

• Verify calculation type setting
• Check reference item configuration
• Review formula syntax

Issue: Cannot Delete Item

Possible Causes:

1. Item used in payroll types
2. Item used in employee setups
3. Item used in payroll runs

Solutions:

• Remove item from payroll types first
• Items with historical data cannot be deleted
• Consider disabling instead of deleting