Issuance of payslips and maintenance of payroll

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Published — October 1, 2018

The following post does not create a lawyer-client relationship between Alburo Alburo and Associates Law Offices (or any of its lawyers) and the reader. It is still best for you to engage the services of your own lawyer to address your legal concerns, if any.

Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.

Read Also: Payment of Salary, and Prohibitions Regarding Wages

Every now and then, the Department of Labor and Employment (“DOLE”) has been reminding employers to issue payslips to their employees. Such reminders are being made because non-issuance of payslips is now becoming quite common among employers.

Relative to this, quite a number of employers feel that they have no obligation to issue payslips to their employees, as many of them believe that our Labor Code does not specifically require payslips to be issued. For many employers, what is important is that as long as their workers are receiving the correct amount of their salaries in a timely manner, they are compliant with labor laws.

Despite the law’s silence, jurisprudence, however, has made relevant pronouncements regarding issuance of payslips. Surely, the Supreme Court has already declared in the past of its awareness of the practice among employers of not issuing payslips precisely to evade possible liabilities for violating various labor standards laws and social legislation [See: G.R. No. 124630; G.R. No. 126586].

DOLE’s stand on issuance of payslips

Under the Labor Code, there is no direct mandate for employers to issue payslips to its employees. However, DOLE has made it clear that being issued their payslips is the employees’ right. “Regardless of their work status, casual or regular employees, job designation, and rate of wages, they are entitled to receive pay slips from their employers.” [See; DOLE to employers: Issue pay slips]

Information contained in payslips

The payslip is a vital employment document, as it contains important information about an employee’s compensation and benefits for a given payroll period. A typical payslip indicates the amount of the employee’s salary and other earnings such as 13^th month pay, overtime, paid leaves, night shift differential, holiday and premium pay, other remuneration in the form of commissions, incentives, and allowances, as well as the actual deductions from the employee’s pay due to SSS, Pag-IBIG and PhilHealth contributions, withholding taxes, and other allowable items for salary deduction.

Such information may be used by the employee to verify whether the pay he receives include the abovementioned items of compensation, and whether his SSS, Pag-IBIG and PhilHealth contributions are being deducted.

On the other hand, the employer may also use the same information contained in the payslip to prove that all such amounts indicated therein were actually paid to the employee in case the latter claims non-payment, and to prove the amount and nature of deductions if the employee later on complains that certain items were wrongfully removed from his salary. Employers, though, have to make sure that the payslips they issue are duly received and acknowledged by the concerned employees for it to become substantial proof of actual payment [See: G.R. No. 154985].

Indication of existence of employer-employee relationship

In determining who is the employer of a particular worker, one of the questions that are usually asked is: “Who pays for his wages?”

Ordinarily, only an employer would pay the wages of his employees. Thus, in case of confusion as to who between two or more parties is the true employer, the one who issues the employee’s payslip is invariably regarded as such employer. This finds particular significance in case of contracting or subcontracting arrangements, where the contractor’s employees sometimes confuse the principal as their employer.

Issuance of payslip for household workers

By express provision of R.A. No. 10361, otherwise known as the “Batas Kasambahay,” employers are required, at all times, to provide the domestic worker a copy of the payslip containing the amount paid in cash every pay day, and indicating all deductions made, if any. The copies of the payslip shall be kept by the employer for a period of 3 years [See: Sec. 26].

Maintenance of payroll

Despite having no direct mandate to issue payslips under the Labor Code, its Implementing Rules, however, require employers to maintain a payroll. Book III, Rule X, Section 6 thereof provides that every employer shall pay his employees by means of a payroll wherein the following information and data shall be individually shown:

1. Length of time to be paid;
2. The rate of pay per month, week, day or hour, piece, etc.;
3. The amount due for regular work;
4. The amount due for overtime work;
5. Deductions made from the wages of the employees; and
6. Amount actually paid.

Surely, a payslip is such an important document, not only to the employees concerned, but also to the employer who pays his wages. It is so because issuance of payslips to the employees not only promotes transparency in payment of compensation and benefits, but also provides for a powerful reference in resolving conflicts involving money claims against the employer. Though it is not directly mandated by law, issuance of payslips is regarded as among the good practices in the field of human resources. Thus, it is advisable for employers to adopt the same as a consistent practice in their respective workplaces.

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Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries regarding labor standards, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.

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