Opening the Year: Payroll Setup and Contribution Updates

January payroll is never just another cycle. Before the first cutoff closes, someone has to confirm that last year's contribution tables still apply, that the year's holidays are loaded, that cutoffs sit where the remittance deadlines need them, and that leave balances have reset the way the law expects. Get that right in the first week and the remaining eleven months largely run themselves. Get one item wrong and you spend the year issuing adjustments and explaining them.

Confirm which contribution schedules you are carrying into 2026

Start with SSS, because it is the one that changed most recently. The rate that took effect in January 2025 — 15% of the Monthly Salary Credit, split 10% employer and 5% employee, over an MSC range of ₱5,000 to ₱35,000 — was the final tranche of the ladder written into RA 11199 itself. No further statutory step sits behind it, so unless SSS issues a new circular, that is the schedule you carry forward. At the ₱35,000 ceiling the total monthly remittance is ₱5,280.00: ₱3,530.00 from the employer (₱3,500 in SS contributions plus the ₱30 EC premium the employer alone shoulders) and ₱1,750.00 from the employee.

Pag-IBIG has been stable since February 2024, when Circular No. 460 raised the Maximum Fund Salary from ₱5,000 to ₱10,000. The percentages never moved — 1% for members earning ₱1,500 and below, 2% for those earning more, and 2% from every employer — so what doubled was the cap: ₱200 member share and ₱200 employer counterpart, a ₱400 maximum per month. Remember that employers are legally barred from deducting or recovering their own 2% counterpart from the employee's pay.

PhilHealth closed 2025 at 5.00% of monthly income, shared equally between employer and employee, on an income floor of ₱10,000 and a ceiling of ₱100,000 — ₱500.00 to ₱5,000.00 a month.

The computation bases matter as much as the rates

A correct rate applied to the wrong base is still a wrong deduction, and each agency defines its base differently. PhilHealth premiums are computed on Monthly Basic Salary only: sales commission, overtime pay, allowances, thirteenth month pay, bonuses and other gratuity payments are excluded, and so are deductions for undertime, tardiness, leave without pay or absences. Pag-IBIG works from a broader figure — Circular No. 460 defines Fund Salary as basic salary and other allowances. SSS works from neither, using the bracketed Monthly Salary Credit its published table assigns to a range of compensation.

There is one more mechanic worth checking in your configuration. The regular SSS fund is credited only up to an MSC of ₱20,000; whatever is computed on the portion above that is diverted to the provident fund, which SSS rebranded in June 2024 as the Mandatory MySSS Pension Booster. For a higher-paid employee, one deduction on the payslip lands in two funds. If your setup treats it as a single line, the payslip is right but the remittance breakdown will not reconcile.

Load the 2026 holiday calendar before the first cutoff

Proclamation No. 1006, signed 03 September 2025, sets the 2026 calendar: ten regular holidays (1 January, 2 April, 3 April, 9 April, 1 May, 12 June, 31 August, 30 November, 25 December and 30 December), eight special non-working days (17 February, 4 April, 21 August, 1 November, 2 November, 8 December, 24 December and 31 December) and one special working day on 25 February.

Load all nineteen dates now, along with their pay treatment. DOLE Labor Advisory No. 12, series of 2025 restates the rules for the year: a regular holiday not worked pays 100% of the daily wage; worked, it pays 200% for the first eight hours; and if it also falls on the employee's rest day, 200% × 130%. A special non-working day follows "no work, no pay" unless a company policy, practice or agreement is more favorable, pays basic wage × 130% when worked, and basic wage × 150% when worked on a rest day.

Pay attention to the clusters. Early April carries three consecutive declared days, and December has two pairs sitting immediately beside Christmas and New Year. Those are exactly the cutoffs where a rest-day overlap gets missed.

Set cutoffs against the remittance deadlines

Your cutoff dates exist to serve the deadlines, not the other way round. SSS contributions from regular business employers are due by the last day of the month following the applicable month; if that day falls on a Saturday, Sunday or holiday, payment may be made on the next working day. Pag-IBIG's governing law does not fix the date itself — it delegates the mechanism to the Board — but it does impose a penalty of 3% per month on unremitted amounts, and remittance must go through an accredited electronic payment and collection facility.

PhilHealth is now online-only for the formal sector: employer premiums are paid through the Electronic Premium Remittance System using the Statement of Premium Account, and over-the-counter payments from the employed sector stopped being accepted at collecting agents in September 2024.

One item is specific to this year. PhilHealth Circular No. 2026-0001 opens a one-time waiver of interest on missed employer contributions for the applicable months July 2013 through December 2024. Requests are accepted only until 31 December 2026, with a full waiver for immediate settlement within one month. If you inherited a gap in your remittance history, this is the year to clear it.

Close last year while you open this one

January is also a filing month for the year that just ended. Every employee from whom tax was withheld must be furnished BIR Form No. 2316 on or before 31 January, and BIR Form No. 1604-C with its alphalists is due on the same date. The duplicate copies of Form 2316 for employees covered by substituted filing, together with the certified list, follow by 28 February.

Before you can issue any of that, the annualization has to be settled — in particular the ₱90,000 ceiling on 13th month pay and other benefits, above which the excess becomes taxable compensation subject to withholding. The withholding table itself has not changed since 1 January 2023, so if your system is producing different figures than last year for an employee whose pay did not move, the cause is in your data, not the table.

Reset leave balances and re-check the wage floor

Two leave entitlements reset annually and are easy to carry over incorrectly. Service incentive leave — five days a year for employees with at least one year of service — is commutable to its money equivalent if unused at the end of the year, so the balance you are closing has a peso consequence. The seven working days of parental leave for solo parent employees with at least six months of service is forfeitable and non-cumulative, which means it must not roll forward at all.

Then re-check the wage floor against the regional board that covers each of your worksites. In NCR, Wage Order No. NCR-26 has set the daily minimum at ₱695.00 for non-agriculture and ₱658.00 for agriculture, retail and service establishments employing 15 workers or fewer, and manufacturing regularly employing fewer than ten, since 18 July 2025. Minimum wage earners remain exempt from income tax and withholding on their statutory minimum wage, together with their holiday pay, overtime pay, night shift differential and hazard pay — so a wage-order movement changes both the gross and the tax treatment.

Make the January setup hold for the rest of the year

The point of doing this in one deliberate pass is that everything downstream inherits it. In ERPat, the Compensation module carries the earnings, deductions, allowances and payslips off attendance data, so a table configured once in January applies consistently through every subsequent cutoff, and the Compliance module keeps the policy record and audit trail that explains why a given rate, base or cutoff was set the way it was. That documentation is the part most teams skip and the part an auditor asks for first. Write down what you configured and the issuance you relied on, and the next person to open this system in January will not have to reconstruct your reasoning.