What is the Net Pay Threshold?

 

The net pay threshold is set by the employer in percentage or amount. Any financial obligations incurred by any employee shall not be deducted from his/her salary if such deduction will lower his/her net pay threshold. 

 

The amount or the percentage entered will take effect after the mandatory deductions have been deducted from the total basic salary. You can drag the items you would like to put under the Non-Mandatory fields for prioritization. 

 

Here are the different setups of the Net Pay Threshold that can be found under Setup > Company > Profile:

 

Option 1: Threshold Amount

 

Sample Set-up #1: Allow partial deduction

 

 

For Example:

 

Under the employee profile the adjustments are: 

 

Under Payroll Run tab not yet processed:

 

So when you processed the payroll, you will noticed, the salary adjustment for miscellaneous becomes 1,755.08 instead of 5,000 because the setup net pay threshold is 5,000 and you also click allow partial deduction of adjustments.

 

Breakdown: 

Basic: 10,000

Absences: 766.77

Mandatory deduction according to prioritization:

SSSEE: 290.65

HDMFEE: 550 (50+500 additional)

PHICEE: 137.50

HDMF Loan: 250

Salary Adjustment (SA): 1,000

Total: 7,005.08

5,000  (this should be the net pay per setup)

Remaining balance for deduction for non-mandatory:

SSS Loan: 250

Miscellaneous (misc): 1,755.08

Net Pay: 5,000

 

Sample Set-up #2:  When the partial deduction of adjustments is not allowed, with the same adjustments stated above:

 

 

As you have notice below, the miscellaneous adjustment were removed resulting to the net pay of 6,755.08 instead of 5,000.

 

 

 

Option 2: Threshold in Percentage

 

Sample Set-up #1: Allow partial deduction

 

 

With the same adjustments as shown above, when you reprocessed the payroll the net pay will become 3,502.54.

 

Breakdown: 

Basic: 10,000

Absences: 766.77

Mandatory deduction according to prioritization:

SSSEE: 290.65

HDMFEE: 550 (50+500 additional)

PHICEE: 137.50

HDMF Loan: 250

Salary Adjustment (SA): 1,000

Total: 7,005.08

x 50%= 3,502. 54 (this should be the net pay per setup)

Remaining balance for deduction for non-mandatory:

SSS Loan: 250

Miscellaneous (misc): 3,252.54

Net Pay: 3,502.54

 

Sample Set-up #2: When you disallowed partial deduction of adjustments, with the same adjustments stated above:

 

With the same adjustments as shown above, when you reprocessed the payroll the net pay will become 6,755.08 excluding adjustments

 

Breakdown: 

Basic: 10,000

Absences: 766.77

Mandatory deduction according to prioritization:

SSSEE: 290.65

HDMFEE: 550 (50+500 additional)

PHICEE: 137.50

HDMF Loan: 250

Salary Adjustment (SA): 1,000

Total: 7,005.08

x 50%= 3,502. 54 (this should be the net pay per setup if no adjustments for non-mandatory deduction)

Remaining balance for deduction for non-mandatory

SSS Loan: 250

Miscellaneous (misc): 0 (it's not included since partial deduction is not allowed in the setup)

Net Pay: 6,755.08 

 

 

You can also check the deducted adjustment through the payroll register in excel file. 

 

Click the Net Pay Threshold on the second sheet.