Automating Year-End Bonus Using HRIS

As the year draws to a close, employees eagerly look forward to their year-end bonuses, especially the mandatory 13th-month pay in the Philippines. Although this financial reward annually occurs, calculating it accurately is tricky because of the varying factors that influence the final amount. In addition, the manual process can be time-consuming and prone to errors, leaving HR teams overwhelmed. This is where automating year-end bonus using HRIS can surely be a great help.

In this blog, we will explore the advantages of using HRIS for year-end bonus calculations. We will also discuss how HRIS can improve transparency and efficiency in your compensation processes.

Tired of the manual hassle as well as risks of miscalculations? Discover how having an HRIS can streamline your HR processes that will significantly benefit your business and employees.

Payroll Components in the Philippines

Understanding the components of the payroll components is undeniably essential for accurate salary calculations and compliance with local regulations. Let us break down the key components:

• Base Salary

Base salary or base compensation is the foundation of an employee’s overall compensation. It generally refers to the fixed income an employee earns in exchange for their work. It is typically paid monthly or bi-weekly. Accurate tracking of base pay is crucial, especially when calculating year-end bonuses, as any discrepancies can result in incorrect bonus amounts.

• Taxes and Government Deductions

Employers in the Philippines are required to deduct contributions as mandated by the government. These deductions affect both net pay and bonus calculations. Here is the rundown of the usual mandatory deductions:

- SSS Contributions: Social Security System payments are for retirement, disability, as well as death benefits. Furthermore, it is under the Republic Act No. 11199, or the Social Security Act of 2018. The contribution is basically 14% of the monthly salary (as of 2024), shared between the employer and employee.
- PhilHealth Contributions: The Philippine Health Insurance Corporation payments, which is under the National Health Insurance Program, are contributions for healthcare coverage. As of 2024, PhilHealth contributions are 5% of the monthly salary for employees.
- PAG-IBIG Contributions: The Home Development Mutual Fund is under the virtue of Presidential Decree No. 1752. As a matter of fact, this program enables Filipino citizens to file for housing loans and savings. PAG-IBIG contributions are usually 1% of the monthly salary for employees earning up to PHP 1,500, while it is 2% for those earning above.
- Withholding Tax: Income tax withheld from employee salaries based on their income bracket. This is deducted by employers and paid directly to the government on behalf of the employee. It basically helps ensure that individuals meet their tax obligations throughout the year.

• Other Allowances

Many companies offer additional allowances, such as transportation or meal allowances, which contribute to an employee’s overall compensation. Moreover, these allowances can vary depending on the organization and the position held by the employee. Nevertheless, these can complicate bonus calculations if not tracked properly.

• Personal Deductions

Employees may also have personal deductions, such as loan repayments, that must be factored into their payroll calculations. These deductions vary by individual and still need to be accurately applied to ensure precise paycheck amounts. Overlooking personal deductions can lead to incorrect payments, potential disputes, and even legal complications.

• Bonuses

All throughout the year, employees may receive various bonuses. This is awarded by the company beyond the normal pay of the employees. These can include the mandatory 13th month pay, performance bonuses, holiday bonuses, and profit-sharing bonuses. Each type of bonus has its own calculation method and criteria, often tied to the recipient’s performance or the company’s profitability.

Benefits of Automating Year-End Bonus Using HRIS

Automating year-end bonus using HRIS indeed brings positive advantages to organizations such as:

1. Boosted Accuracy and Efficiency

Automating the calculation and distribution of year-end bonuses ensures precision by eliminating manual data entry errors. With an HRIS, complex bonus structures and eligibility criteria are handled seamlessly. This results in accurate bonus amounts for each employee. This efficiency also speeds up the entire process and allows quicker payroll runs, while reducing the administrative burden on HR teams.

2. Significant Time Saving

Implementing an HRIS can streamline the processing of year-end bonuses by significantly cutting down the time needed for calculations and paperwork. With an HRIS, HR professionals no longer need to dedicate hours to manually verifying data or calculating bonuses. Instead, they can rely on the system to handle these tasks quickly and accurately. This efficiency also ensures precision and frees up HR teams to concentrate on more strategic activities, such as employee development and organizational planning.

3. Consistency and Fairness

An HRIS ensures that bonus calculations are in strict alignment with company policies and consistently applied across the entire workforce. This uniformity fosters fairness as well as transparency in the bonus distribution process, which is essential for maintaining employee trust and morale. When employees see that the bonus process is standardized, they are more likely to feel valued and confident that they are being treated equitably.

4. Enhanced Reporting and Analytics

Hurey and other HRIS offer advanced reporting capabilities that provide detailed insights into bonus distribution patterns and potential financial impacts. HRIS platforms can also generate comprehensive reports that assist in budgeting, forecasting, and compliance monitoring. These analytics are vital for making informed decisions. Additionally, it ensures that bonuses align with company performance and financial goals.

5. Improved Employee Satisfaction

Accurate and timely employee payments directly impact on employee satisfaction. An HRIS ensures that bonuses are distributed on schedule, which certainly reduces the risk of delays and inaccuracies that could lead to dissatisfaction or confusion. With a smooth and reliable bonus process, organizations can boost employee morale and reinforce a positive work environment altogether.

6. Scalability and Adaptability

As organizations grow, their bonus structures and policies may become more complex. An HRIS with cloud hosting can easily adapt to changes in bonus criteria, eligibility, and distribution methods. Thus, they can accommodate organizational growth without compromising efficiency or accuracy. This scalability ensures that the bonus process remains effective and manageable, regardless of the size of the workforce.

Experience a Better Year-End with Hurey

As the year nears its end, it is crucial to reflect on your accomplishments and set goals for the year ahead. To do this effectively, you need to obviously minimize time-consuming tasks like processing year-end bonuses.

With Hurey, you can streamline the calculation and distribution of bonuses, freeing up valuable time to focus on your strategic objectives. Hurey automates different HR and payroll processes, ensuring that your year-end tasks are handled efficiently and accurately.

Additionally, Hurey allows you to track employee performance and identify areas for improvement, setting a solid foundation for the year ahead.