USING A FACTOR TO CONVERT MONTHLY PAY TO DAILY EQUIVALENT (Part 1)
Based on this new NCR daily minimum wage of P491.00, how is the monthly equivalent computed? Some employers refer to either 22 days or 26 days, depending on whether they require work on a Saturday or not.
The proper way to determine is to use the factor or divisor. Thus, the equivalent monthly minimum wage shall depend upon the number of days considered as days worked in a year.
This is known as the factor. Thus, factors like 313 days, 365 days, etc. may be used depending upon the practice and reasonable implementation of the employer.
The term factor is used when the number of days considered paid in a year is needed to multiply the daily wage of the employee to arrive at the monthly equivalent. Why is it necessary to determine the monthly equivalent?
There are benefits under the labor laws that need to be given based on monthly pay computation. If the employee is daily paid, how can the employer accurately arrive at the proper computation?
For instance, separation pay is computed on a monthly basis although it covers even those receiving daily wage. Separation pay is given to employees who were declared redundant, retrenched or terminated due to closure of establishment.
The rate is one month or one-half month for every year of service, as the case may be. Without using the factor it would be difficult to arrive at the proper and defensible figure for purposes of separation pay.
Being so, what are the considerations in adopting a particular factor? Companies may consider work on Saturdays, Sundays, and Holidays.
(See Discussion in the book Solutions and Remedies on Wage Order and Minimum Wage, pp. 14-15)
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