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Payroll is the sum of all financial records of salaries, wages, bonuses

and deductions. In accounting, payroll refers to the amount paid to
employees for services they provided during a certain period of time. Often
payrolled workers are known to the client from previous engagements or as
former employees. Because the costs of recruiting workers in to contract
positions are eliminated the payrollees are often processed at reduced mark
up rates.In the last several years, some dedicated payrolling companies have
emerged in the staffing industry to provide payrolling services. In the US
they are known as Professional Employee Organizations or PEO's. They
charge the cost of the employee payroll and add a surchage for their

Philippine Labor Law and Jurisprudence


1. THE CONCEPT OF LABOR. In its broadest sense, labor includes every

possible human exertion, mental or physical, and even spiritual. In a more
limited sense, it refers to any bodily or intellectual exertion done wholly or
partly for a purpose other than the pleasure derived from its performance
(51 C.J.S. 470-7 1).

In Philippine law, labor is sometimes used to embrace all work without

pretence to whether it is done by an employee for an employer or not. In this
sense, the work of agricultural tenants has been included within the general
term. This is because they physically toil for their livelihood, and work to
some extent for their landowners. Thus, the old labor law, Comm. Act. 103,
which provided for labor organizations, lumped together laborers, employees
and tenants. This same law referred also to agricultural workers and tenants,
and even impliedly recognized their rights to strike.

In general, as used in Philippine law, the concept of labor includes in its

broad sense physical and mental work performed by an employee, and
physical work performed by anyone, whether employed by another or not.
The present Labor Code, PD 442, carries in its Preliminary "flue a Chapter (II)
on Emancipation of Tenants, and identifies tenant- farmers as "a vital part of
the labor force" (Art. 8, LC). This is an application of the general concept of
this term.

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2. LABOR LAW DEFINED. The evolution of Philippine labor law has
substantially changed the original definition of the term, particularly as to
the elements that comprise the law. In light of this development, a new
definition of labor law may be framed as follows:

"Labor law is that body of statutes, rules and doctrines that defines
State policies on labor and employment, and governs the rights and duties of
workers and employers respecting terms and conditions of employment by
prescribing certain standards therefore, or by establishing a legal framework
within which better terms and conditions of work could be obtained though
collective bargaining or other concerted activity."

This analytical definition reflects the updated concept of labor law

within the purview of the Philippine Constitution and the Labor Code. Since it
also embodies the definitions of the elements of labor law -- as explained
below --it also assumes a utilitarian character.

3. ELEMENTS OF LABOR LAW. Based on the definitions given, the

elements comprising labor law are apparent, namely: a) labor policies; b)
labor standards law; and c) labor relations law. These are explained seriatim,
in this way.

a) Labor Policies. These are principles or guidelines that define State policies
regarding labor and employment. Although these policies do not govern the
relations per se between workers and employers, they represent a new
dimension that is an integral part of labor law. Labor policies may be
classified into Constitutional policies (e.g. Au XIII, Sec. 3, Constitution), and
statutory policies (e.g. Books I and II, Labor Code).

b) Labor Standards Law. From the definition of labor law, as given, one may
cull a definition of labor standards law, to wit; "It is that body of statutes,
rules and doctrines that governs the rights and duties of workers and
employers respecting terms and conditions of employment by prescribing
certain standards therefore," These standards, whether maximum or
minimum, serve as bases of the rights and duties of workers and employers.
Examples of labor standards laws are Book III- Conditions of Employment,
Labor Code, as well as the decrees on Cost of Living Allowance (PD 525) and
on 13th Month Pay (PD 851).

c) Labor Relations Law. Our given definition of labor law also contains a
working definition of labor relations law. This can be collated from these
words, "It is that body of statutes, rules, principles and doctrines that
governs the rights and duties of workers and employers by establishing a
legal framework within which better terms and conditions of work could be
obtained through collective bargaining or other concerted activity."This
element of labor law sets the legal parameters whereby workers may

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undertake concerted activities to secure better conditions of employment
than those prescribed by labor standards law. The prime example of this
element of labor law is found in Book V-Labor Relations, Labor Code, and its
amendatory laws.

4. RELATIONSHIPS AND DISTINCTIONS. These elements of labor law are

interrelated in that each is complementary to the others. All together, they
present the legal limits within which labor and employment acts may be
justified.Labor Policies set the guidelines to be implemented by the other

Labor Standards laws prescribe the demarcations in terms and

conditions of employment, and are essentially substantive. Their purpose is
either protective (e.g. law on hours of work, law on weekly rest periods) or
ameliorative (e.g. minimum wage laws, law on holiday pay).

Labor Relations laws provide the procedures that govern the methods
by which terms and conditions of work over and above the and marcations
as set by labor standards laws may be obtained, hence they are largely
procedural in character (e.g. law on labor organizations, law on collective

Labor standards, being fixed by law, may be found in the law itself
whereas terms and conditions of work beyond these standards obtained
under labor relations laws are not found in the law itself, but in collective
bargaining agreements, arbitration awards and decisions.

5. SOCIAL LAW. Social law may be defined as "that body of rules and
statutes aimed at promoting the general welfare of all the people, with
special reference to labor."

The labor orientation of social laws has a two-fold justification. Firstly

because labor constitutes the great majority (about 85 percent) of the
population, hence any effort to achieve the well-being of all the people, or at
least the greatest good for the greatest number should be directed toward
this sector. This is the quantitative reason. Secondly, since the aim is to
promote the welfare of society, any attempt to strengthen society should be
addressed toward its weakest link, which is labor This is the qualitative
reason. Hence, while social laws --like the SSS law, GSIS law, Medicare Act---
have workers as their direct beneficiaries, their ultimate end is the well-being
of society in general.

6. LABOR LAW AND SOCIAL LAW COMPARED. Both labor law and social
law share the same objective, which is the promotion of social justice. Social
law is the broader concept, for while labor law seeks to improve the well-
being of the lower classes of society, i.e. labor, social law tries to ensure the

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welfare and economic security of all the people, or if this is not possible, to
bring about "the greatest good to the greatest number."1 In this context, it
may be said that labor law is a part of social law, and it is by nature a social

There are, however, differences between the two, namely:

a) As to object--Labor law seeks to improve the well-being of labor in

particular, social law aims to promote the welfare of society in general.

b) As to subject matter--Labor law deals on subjects of proximate and direct

interest to workers (e.g. wages, hours of work, etc.); social law treats of
matters of remote or indirect interest to workers (e.g. employee
compensation, social security etc.)

c) As to application--Labor law provides benefits to workers actively

employed; social law is concerned the those whose employment is
interrupted by sickness, disability, death, retirement, or other causes.


The State's power to enact labor laws springs from two basic sources;
the Constitution and Police Power. The Constitution lays down as a State
policy that "The State arms labor as a primary social economic force. It shall
protect the rights of workers and promote their welfare." (Art. II, Sec. 18).

In its Protection to Labor clause (Art. XIII. Sec. 3), the Constitution also
provides, inter alia "The State shal1 afford full protection to labor, local and
overseas, organized or unorganized, and promote full employment and
equality of employment opportunities for all.

"The State shall regulate the relations between woricers and

employers." From these passages atone, it is evident that the Constitution
grants to the State the power to enact laws that will carry out these policies.

The other source is the inherent power of the State known as Police
Power. This may be defined as "The power of the State to enact laws and
prescribe regulations that will promote the health, morals, education, good
order, safety, and general welfare of the people."(Primicias vs. Fugoso, 80
Phil. 71).

Recent jurisprudence has formulated a newer definition of Police Power

as "The inherent power of the State to enact legislation that may interfere
with personal liberty and property in order to promote the general welfare."
(PASEI vs. Drilon, 163 SCRA 386).

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Even if there were no provisions in the Constitution concerning labor,
the State would still have the power to enact labor laws by virtue of its Police
Power which underlies the Constitution, and is as enduring as the State itself.

8. THE RATIONALE OF LABOR LAWS. Although the rights and duties

arising from labor relationships are basically contractual in nature, these are
not governed by the general law on obligations and contracts (Book IV, Civil
Code). The reason for this is enunciated by the Civil Code itself, thusly: "The
relations between capital and labor are not merely contractual. They are so
impressed with public interest that labor contracts must yield to the common
good. Therefore, such contracts are subject to the special laws on labor
unions, collective braining, strikes and lockouts, closed shop, wages, working
conditions, hours of labor and similar subjects."(Art. 1700, Civil Code)

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Payroll plays a major role in a company for several reasons. From an

accounting point of view, Payroll is crucial because payroll and payroll taxes
considerably affect the net income of most companies and they are subject
to laws and regulations. From ethics in business viewpoint payroll is a critical
department as employees are responsive to payroll errors and irregularities:
good employee morale requires payroll to be paid timely and accurately. The
primary mission of the payroll department is to ensure that all employees
are paid accurately and timely with the correct withholdings and deductions,
and to ensure the withholdings and deductions are remitted in a timely
manner. This includes salary payments, tax withholdings, and deductions
from a paycheck.Payroll Systems offers tailored payroll solutions for
businesses of all sizes. From basic payroll processing, to integrated solutions
incorporating payroll processing, human resources, time & attendance, and
employee benefits.

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The study of Scopes and Delimitations

• In our payroll system the master file records contains the
employee management which the HR could add, edit or delete
• The employee profile contains the area and department they are
assigned to. Those area and department can only be added by
the admin of the system.

• The admin could also edit and delete the area and department.
In our payroll processing the deductions that are automated are
the SSS, Phil-Health and Pag-ibig and Loan related deductions.

• Benefits will be automated if their DTR is available if not then the

HR would have to encode them manually.


• The HR is limited only to employee manage, using the payroll

processing option, use the loan management system and prints

• The admin can add user logins, view logs of the HR and manage
the area and department. Regular employees could not use the
system or ask the HR about their salary.

• They should go to the computer which the ESS is implemented to

view their salary and how their salary was computed.

• As for the payroll system we are only focusing on the payroll side
and there are no accounting r

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Definition of terms

HR - Human resources is a term used to describe the individuals who

comprise the workforce of an organization, although it is also applied in labor
economics to, for example, business sectors or even whole nations. Human
resources is also the name of the function within an organization charged
with the overall responsibility for implementing strategies and policies
relating to the management of individuals (i.e. the human resources). This
function title is often abbreviated to the initials 'HR'.

Pay Cheque - traditionally a paper document issued by an employer to pay

an employee for services rendered. In recent times, the physical paycheck
has been increasingly replaced by electronic direct deposit to bank accounts.
Such employees may still receive a complete pay slip (see below) package,
but the attached check is noted as non-negotiable.

Pay Slip - A pay stub, paystub, pay slip, pay advice, or sometimes paycheck
stub, is a document an employee receives either as a notice that the direct
deposit transaction has gone through, or as part of their paycheck. It will
typically detail the gross income and all taxes and any otherdeductions such
as retirement plan contributions, insurances, garnishments, or charitable
contributions taken out of the gross amount to arrive at the final net amount
of the pay, also including the year to date totals in some circumstances.
Payroll card - account may be held as a single account in the employer's
name. In that case, the account holds the payroll funds for all employees
using the payroll card system. Some payroll card programs establish a
separate account for each employee

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Chapter 2


Studies rely on information researched by the researchers. In

exploration, these researchers find new techniques, new knowledge, even
develop new processes and procedures.

2.1 Review of related literature

2.1.1 Local literature

Payroll can be one of the most complex tasks facing an organization.

Aside from simply paying employees, companies will need to file taxes,
submit reports and process year-end data for tax-reporting purposes. These
problems are being encountered by several organizations. The manual
payroll system they are currently using calculates the payroll for each pay
period entirely on paper. They will need to calculate taxes, over time, under
time and any other applicable deductions and additions to each employee’s
actual earnings. The problem with the manual payroll system is if ever one
had committed mistakes, whatever input was made from the start will
automatically affect the whole calculations, and it will probably consume.

2.1.2 Foreign literature

Government agencies at various levels require employers to

withhold income taxes from employees' wages.In the United States, "payroll
taxes" are separate from income taxes, although they are levied on
employers in proportion to salary; the programs they fund include Social
Security, and Medicare. U.S. income and payroll taxes collected through
deductions are considered to betrust fund taxes, because the employer holds
the deducted money in trust for later remittance.

2.2 Interview
2.2.1 Local employee

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Chapter 3
3.1 Research Mythology
In order to understand the research project, there are
necessary methods of research and data gathering instruments in
order to organized, documented the set of procedures and
guidelines for one or more phases of the research project such as

3.1.1 Descriptive Research Metod

The Descriptive method was being used to present

quantities descriptions in a manageable form. In a payroll
research we may have lots of measures where in descriptive. A
method reduces lots data into a simpler summary

3.2 Research instrumentation techniques

Internet Research Method

By using internet we help us to gather information in a

simple ways and easy ways. Internet help us to collect
information that help us to develop the payroll system.

Interview Method

The employed employees of Heavens Salon typically,

involves a face-to-face interviewing, ask an individual series of

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