How to set up and pay employee allowances in Timekeep

Most small businesses in the Philippines give their staff some form of allowance. Meal allowance, rice allowance, transportation, uniform. These aren't negotiable extras in a lot of industries. They're part of the package your team expects, and they belong on the payslip.

The manual version looks like this: you have a note in your spreadsheet that Maria gets ₱100 meal allowance per day she works and Jose gets a fixed ₱500 rice allowance per month. You compute the days Maria worked, multiply, add to her payslip. You add ₱250 to Jose's payslip for the half-month cutoff. You do this for everyone who gets an allowance, every payroll.

In Timekeep, you set up the allowance once per employee. It's added to the payslip automatically every time you run payroll.

How allowances work in Timekeep

An allowance in Timekeep is a named benefit with an amount and a payment rule. The payment rule determines when and how much the employee receives each cutoff.

There are three payment modes:

Fixed per cutoff. The employee receives a set amount every cutoff, regardless of how many days they worked. For a monthly allowance like rice, you'd set half the monthly amount per cutoff for semi-monthly payroll.

Per day worked. The allowance is multiplied by the number of days the employee actually clocked in during the cutoff. If the employee was absent for 2 days in a 12-day cutoff, the allowance covers 10 days. Common for meal allowance where the benefit is tied to showing up.

Per hour worked. Similar to per day, but computed based on actual hours clocked in. Less common but useful for part-time staff.

Setting up an allowance for an employee

Go to an employee's profile in Timekeep. Under the allowances section, add a new allowance. Give it a name (Meal Allowance, Rice Allowance, Transportation), enter the amount, and choose the payment mode.

If the allowance is a daily meal allowance of ₱100, set it to per day worked at ₱100. If it's a fixed monthly rice allowance of ₱600, set it to fixed per cutoff at ₱300 for semi-monthly payroll.

You can add multiple allowances to one employee. A staff member might get both a meal allowance and a rice allowance. Each shows as a separate line.

How allowances appear on the payslip

When you run payroll, each allowance is computed and added to the employee's gross pay. The payslip shows each allowance on its own line under earnings.

Your team can see exactly which allowances they received and how much. There's no ambiguity about whether the allowance was included or how it was calculated.

Allowances and days worked

For per-day allowances, Timekeep counts the days the employee clocked in during the cutoff period. Days with no clock-in record are not counted. Days on approved leave are counted because the employee is considered to have worked those days for payroll purposes.

This means you don't need to manually compute how many days someone came in. Timekeep knows from the attendance records.

Tax treatment of allowances

When you create an allowance, you choose whether it's taxable or exempt. Some allowances qualify as de minimis benefits under Philippine tax rules — meal allowances up to ₱2,000 per month and rice allowances up to ₱2,000 per month are common examples.

Mark those as exempt when setting them up. Exempt allowances are excluded from taxable income and added to the payslip after tax. Taxable allowances are included in gross pay and subject to withholding tax.

Consistent allowances, every cutoff

Allowances are part of what your team expects in their pay. When they're computed manually, there's a chance they get missed. A cutoff where someone was rushed, a formula that was accidentally deleted.

When the allowance is set up in Timekeep, it's included automatically in every payroll. You don't have to remember it. It's part of the employee's record, and it shows up every time.

Try it free for 30 days at timekeep.ph.