Understanding Employee Payroll Costs

Employee payroll costs can have a significant impact on your business’s bottom line. Understand what they are and how to manage them effectively with our expert team at Global Squirrels. We can help you evaluate your current payroll expenses, identify areas for improvement, and implement cost-saving measures that work for your business. Contact us today to learn more.

How Employment Costs Impact Your Business

As a business owner, you know that your employees are your biggest asset. However, employing staff comes with a range of costs that can add up quickly. From salaries and benefits to taxes and insurance, employee payroll costs can have a significant impact on your bottom line.

Costs include both direct and indirect expenses of employee

  • Salaries and wages
  • Health insurance and other benefits
  • Payroll taxes and contributions to government programs
  • Workers’ compensation insurance
  • Retirement plans and pensions
  • Training and development programs

Understanding your employee payroll costs is critical to managing your business effectively. By keeping these costs under control, you can increase your profitability and ensure that your business remains sustainable over the long term.

We at Global Squirrels, we specialize in helping businesses of all sizes optimize their employee payroll costs. Our team of experts can help you evaluate your current payroll expenses, identify areas for improvement, and implement cost-saving measures that work for your business.

Whether you’re looking to reduce your labor costs or streamline your payroll processes, we have the knowledge and expertise to help. Contact us today to learn more about how we can help you manage your employee payroll costs and improve your bottom line.

Country wise Employee Payroll Cost

  1. India payroll cost for employee

Indian Mandatory Payroll Cost (Monthly) – Total 15.75%

a – Provident Fund (PF)12%. The PF 12% includes, employee’s provident fund (EPF – 8.33%) and employee’s pension scheme (EPS – 3.67%)
b – Employee’s State Insurance (ESI). – 3.25%. It is compulsory for employers with more than 10 employees
Administrative charges 0.5%

Indian Mandatory Employee Benefits (Not Monthly) 

a – Gratuity – Gratuity = (15 × last drawn salary × working tenure)/30
• Resignation after a minimum of 5 years of employment
• On death or disablement due to accident or disease

b – Special payment of bonus act 1965 in India – Either a minimum of 8.33% of salary or Rs.100 whichever is higher

c – Salary packages and allowances – Special allowances on top of the basic pay and it can be equated to approximately 40% of the total compensation.

2. Philippines employee payroll cost

Mandatory Payroll Cost (Monthly) – Total 18.25%

a – Social Security System, including Employer Contribution and Provident Fund (WISP). The maximum contribution 2,880 PHP. – 14%

b – Home Development Mutual Fund (HDMF) – 2%

c – Philippine Health Insurance Corporation (PHIC) salary ceiling 80,000 PHP. – 2.25%

Mandatory Employee Benefits (Not Monthly)

a – Overtime pay – At least 25% more than their normal rate for any hours worked beyond eight hours a day.

b – Premium pay

30% more than regular pay- working on a rest day or special
• 50% extra pay- special holiday that is also a rest day
• 100% extra pay- working on a regular holiday
• 160% more than regular- regular holiday that is also a rest day
• 200% extra pay- double holiday and/or rest day together

c – 13th month pay – Total basic salary / 12 = 13th month pay

d – Separation pay 

• The pay is ½ month pay per year of service- if the separation reasons are retrenchment of the company to save from loss, the
sudden closure of functions due to bankruptcy, and incurable illness causing threat to colleagues.

• The pay is 1-month pay per year of service- if the employee got terminated because of the implementation of machinery or
devices which doesn’t require labor, overstaffing, and impossible situations to reinstate the job position.

3. Mexico employee payroll cost

Mandatory Payroll Cost (Monthly) – Total 39.694%

a – Disease And Maternity Insurance 20.40%
b – INFONAVIT 5.00%
c – Seniority Insurance 3.15%
d – State Payroll Tax (depends on employee state and gross salary) 3.00%
e – Retirement 2.00%
f – Disablement and Life Insurance 1.75%
g – Maternity & Illness (extra quota) 1.10%
h – Maternity & Illness – retired medical expenses quota 1.05%
i – Nursery and Social Benefits 1.000%
j – Maternity & Illness – cash benefits quota 0.70%
h- Labor risk insurance 0.544%

Mandatory Employee Benets (Not Monthly)

a – Christmas bonus or Aguinaldo or 13th Month Pay – At least 15 days of pay, but some employers may choose to give 20 days of pay or 30 days of pay.

b – Paid Time-offs and vacation bonus – A minimum of 12 days of vacation time to a maximum of 32 days (Depends on tenure period). Vacation premium must be at least 25% of their salary for that period.

c – Sunday premium – 25% of the employee’s salary and serves as an incentive for employees to work on Sundays when necessary.

d – Severance pay

• Employees who voluntarily quit- Full and final settlement amount including bonuses, unpaid working days, etc.
• Employees who terminated with cause (justified dismissal)- 12 days of salary for every year worked
• Employees fired without case (unjustified dismissal)- 20 days of daily wage for each year worked, as well as 90 days of daily wage as Constitutional Indemnification

e – Profit sharing – Distribute 10% of their pre-tax profits to their employees

f – Seniority premium – Equal to 12 days’ worth of wages for each year of service

Employee Payroll Cost Guide Global Squirrels
Download for Free – Employee Payroll Cost Guide

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