Setting Up Statutory Deductions

Statutory Deductions refer to mandatory deductions required by law, such as:

• Withholding Tax
• Government-Mandated Contributions (e.g., SSS, PhilHealth, Pag-IBIG)
• GSIS (If Government)

Fareclock allows you to define these deductions to ensure accurate payroll summaries and compliance with local regulations.

Set Up

Step 1: Go to the Fareclock Admin Console and go to Settings. Under ‘Settings’ find and click ‘Payroll’.

Step 2: Click the Statutory Deductions tab above.

Step 3: To create a new statutory deduction, click on the "+ New Net Pay Statutory Deduction" button.

Basic Settings:

1. Name - Specify the statutory deduction (e.g., Social Security System, Withholding Tax). This field is required.

2. Active - Uncheck the box to deactivate the statutory deduction.

3. Order - The order must be a number greater than 0, used to determine the display sequence in reports and pay stubs.

4. Abbreviation - Enter the abbreviation of the statutory deduction (e.g., SSS, PhilHealth). This field is optional.

5. Worker deduction abbreviation - Enter a short label for the employee's share of the deduction (e.g., SSS-EE, WC-HDMF). This appears in reports for easy identification. This field is optional.

6. Employer deduction abbreviation - Provide an abbreviation for the employer portion of the deduction (e.g., SSS-ER). It will be shown in reports for clarity. This field is optional.

7. Pay Classes - Restrict the deduction to specific pay classes, or leave blank to apply to all.

8. Deduction Schedule - Specify the pay periods to which this statutory deduction should apply. If the selected pay period (e.g., 2nd–4th) does not exist in a given month, the deduction will be applied to the last available pay period.

9. Bracket formula - Select whether the bracket is determined by Salary Base Pay or Gross Pay.

• Base Pay: If Salary Base Pay is selected and the pay class is Hourly, both an Hourly pay rate and a Salary pay rate are required for each worker. The Salary pay rate will determine the matching bracket.
• Gross Pay: If no Salary pay rate is assigned to an Hourly worker, or if Gross Pay is selected, the Hourly pay rate will be used to calculate the gross pay, and this value will be used to determine the appropriate bracket.

10. Bracket Graduated - If checked, the percentage will apply only to the pay above the bracket's minimum. If unchecked, it will apply to the entire pay.

11. Bracket pay excludes other statutory deductions - If selected, bracket pay will be calculated based on Base/Gross Pay minus other statutory deductions. If multiple statutory deductions are enabled, only those without this setting will be subtracted.

Brackets:

Brackets for statutory deductions define the pay ranges to which specific deduction percentages apply. These brackets help calculate the correct amount of deductions based on a worker's pay, ensuring accurate payroll processing.

You can also import brackets by uploading a CSV file for quicker setup.

Click ‘+ New Bracket’ to create one:

1. Min. pay - This specifies the minimum pay required for this bracket to apply.

2. Max. pay - If Max pay is left blank, then the bracket will have no upper limit.

3. Worker amount - Enter a fixed amount to deduct from the worker’s pay. This can be used alone or in combination with the worker percentage.

4. Worker % - Enter the percentage of the worker’s pay to deduct. This can be used alone or combined with a fixed amount.

5. Employer Amount - Enter the fixed amount the employer must contribute. This can be used alone or combined with a percentage.

6. Employer % - Enter the percentage of the worker’s pay that the employer must contribute. This can be used alone or with a fixed amount.