A Philippine payroll-law explainer on what employers may deduct, when “proration” is (and isn’t) required, and how to handle first-pay edge cases.

1) The problem this article solves

New hires in the Philippines often receive a partial first pay (because they started mid-cutoff or mid-month) but see full statutory deductions—especially PhilHealth and Pag-IBIG (HDMF)—taken from that first payout. This triggers common questions:

“Why did they deduct a full month when I only worked 10 days?”
“Is that legal, or should it be prorated?”
“Can the employer ‘catch up’ missed contributions in one go?”
“What if I already paid voluntarily before being hired?”
“What if my first pay is too small—can they still deduct?”

To answer those, you need one key idea:

PhilHealth and Pag-IBIG contributions are generally “monthly obligations.” Payroll may split the monthly amount across paydays for convenience, but the legal obligation is not naturally “daily” or “per hour.”

“Proration” is therefore usually a payroll allocation choice, not a strict legal requirement—except in special situations.

2) Philippine legal framework in plain terms

A. Mandatory, statutory deductions are allowed

Philippine labor rules restrict wage deductions, but deductions required by law (like mandatory social contributions) are generally permissible. Employers are expected to withhold the employee share and remit both employer and employee shares to the government agency.

What that means for first pay:

If the deduction is a mandatory contribution required by law/rules, it is not treated like an optional deduction that needs special consent.

B. Contributions are administered by agencies, not DOLE

The detailed mechanics (rates, salary bases, deadlines, coverage rules, penalties) are largely set by:

PhilHealth (national health insurance)
Pag-IBIG Fund / HDMF (housing and savings)

Payroll compliance is therefore shaped by agency rules and employer remittance systems that operate on a monthly reporting cycle.

3) The monthly-vs-pay-period distinction (the source of most confusion)

“Monthly contribution” does not always mean “deduct once a month”

Many Philippine employers pay:

Semi-monthly (kinsenas/katapusan), or
Bi-weekly, or
Weekly

To match monthly reporting, payroll typically does one of these:

Method 1: Split monthly contribution across paydays Example: Deduct half of the employee share on the 15th, half on the 30th.

Method 2: Deduct the full employee share on the first payroll that occurs in the month Common when:

The employee only has one payroll run in that month (e.g., hired late), or
The employer’s payroll configuration uses “full deduction on first cutoff.”

Both methods can be compliant if the correct monthly contribution is withheld and remitted properly.

So, when you start mid-month and only receive one payout for that month, it can be normal to see the full monthly employee share deducted from that one payout.

4) PhilHealth on first pay: what usually applies

A. PhilHealth contributions are generally computed on a monthly basis

For employed members, PhilHealth is typically:

Based on a monthly salary base, within prescribed floors/ceilings (these change over time),
Shared by employer and employee, usually 50/50, and
Remitted by the employer.

B. Is PhilHealth legally “prorated” if you start mid-month?

Most of the time, no proration is required in the “daily” sense. Instead, the practical question is:

For the month you first become employed and receive compensation, does the employer treat you as covered for that month and remit for that month?

Common practice:

If you are hired and paid within the month, employers often include you in that month’s remittance and withhold the employee share accordingly.
If your first payroll is processed in the next month (e.g., your first pay is released next month), the first PhilHealth remittance might also start next month depending on payroll timing and reporting cutoffs.

C. Why it feels “unfair” on a partial first pay

Because PhilHealth is not a daily premium in standard payroll handling. If your first gross pay is small (say 10 days of work), a full monthly contribution can feel disproportionately heavy—but it can still be consistent with monthly coverage/remittance treatment.

D. Practical compliance notes

Employers should compute PhilHealth using the applicable contribution schedule for the period (rates and caps change).
Incorrect bases (e.g., using the wrong salary bracket or failing to apply ceilings) create under/over-withholding issues.

5) Pag-IBIG (HDMF) on first pay: what usually applies

A. Pag-IBIG contributions are also typically monthly

For most employees, Pag-IBIG is:

A monthly contribution shared by employer and employee,
Usually computed as a percentage of compensation up to a cap (exact caps/rates can vary by HDMF policy and time), and
Remitted monthly by the employer.

B. Is Pag-IBIG “prorated” for mid-month hires?

In everyday payroll compliance, Pag-IBIG is not treated as a daily prorated amount. Like PhilHealth, the employer may:

Split the monthly employee share across paydays, or
Deduct it once if there’s only one payroll run.

C. The “first month” question

For a new hire, employers usually start remitting:

Either in the month of hire (if payroll inclusion is within that month’s reporting), or
The following month (if systems or timing push inclusion forward)

Both can happen in practice; what matters is that the employer follows the Fund’s registration/reporting rules and does not create unremitted months while the employee is already on payroll and subject to contributions.

6) When “proration” can matter (special cases)

Even though contributions are monthly, “proration” can show up in limited scenarios:

A. When payroll is designed to allocate monthly contributions across pay periods

This is internal allocation, not a legal requirement. Example: The company policy is “deduct half each cutoff.” If you join on the second cutoff, they might deduct only the second half for that month and then normalize next month.

B. When there are catch-up remittances for prior months

If an employee should have been covered earlier but wasn’t remitted properly, the employer may need to:

Remit arrears (subject to agency rules), and
Collect the employee share for those months

That’s not “proration,” but it creates lump-sum deductions that look like proration/catch-up.

C. When an employee has multiple employers

If you have concurrent employers, monthly contribution ceilings and allocation become complicated:

Employers may each compute based on compensation they pay you
Total contributions may need to respect ceilings
Coordination and documentation become important to prevent over-collection or misreporting

D. When there is a minimum net pay concern

Even if statutory deductions are allowed, employers should implement deductions in a way that:

Avoids unlawful practices, and
Minimizes disputes and hardship In practice, some employers spread deductions if the first pay is too small, but this becomes a policy/HR decision that must still remain compliant with remittance rules.

7) Catch-up deductions on first pay: legality and best practice

A. Can an employer deduct arrears in one payday?

For mandatory statutory contributions, the employer generally has a strong basis to withhold what the employee owes because the deduction is legally mandated. However, lump-sum deductions create friction and can trigger wage-deduction disputes.

Best practice (risk-reducing):

Provide the employee a written breakdown (months covered, bases used, amounts).
Spread catch-up deductions across paydays if feasible.
If the catch-up includes anything not strictly mandated (e.g., advances, loans, damages), obtain clear written authorization and ensure it falls within lawful deduction rules.

B. Employer mistakes: who pays penalties?

As a rule of thumb in compliance culture:

Employer remittance delays can trigger surcharges/interest/penalties under agency rules, which employers typically shoulder.
Employers should avoid shifting penalties to employees unless there is a very clear legal basis and documentation—this is a common source of disputes.

8) Already paying voluntarily before employment: what should happen?

A. PhilHealth

If you were paying as:

Individually paying/voluntary, then became employed

Typically:

Your membership remains the same, but your category shifts to employed.
You should avoid double payment for the same period where employer remittance applies.

Practical steps:

Provide your PhilHealth number (PIN) and any recent proof of payment if overlap exists.
Ask HR/payroll how they handle overlap months (some will coordinate; some will treat voluntary payments as your choice and start employer remittance going forward).

B. Pag-IBIG

Similarly:

Your MID stays with you.
Employment changes who remits (employer collects/remits).

Overlap handling depends on timing. Provide your MID and any recent payment details to minimize duplication.

9) Typical first-pay scenarios and how deductions commonly work

Scenario 1: Hired mid-month, paid once at month-end

You worked 10–15 days.
Payroll runs once for you that month.
Employer deducts full monthly employee shares of PhilHealth and Pag-IBIG on that first pay.

This is commonly seen and can be compliant because the monthly contribution is being collected and remitted for that month.

Scenario 2: Hired mid-month, company splits contributions per cutoff

Company practice: half on 15th, half on 30th.
You only appear on the 30th payroll.
Employer may deduct only the “second half” (policy choice), then correct/normalize next month.

Also commonly compliant, assuming correct remittance treatment.

Scenario 3: First pay is released the next month

You started late in January but first payday is in February.
Payroll may start contributions in February depending on the company’s reporting setup.

This can be fine, but the employer must ensure coverage/remittance rules are followed and that there isn’t an unremitted month if the employee was already treated as compensable/covered for January.

Scenario 4: Payroll missed enrolling you and tries to deduct multiple months at once

You see unusually large PhilHealth/Pag-IBIG deductions later.

This is where documentation is critical:

Which months are being “caught up”?
What salary bases were used?
Were those months actually compensable months for you?
Are penalties being charged to you (red flag)?

10) How to check if your first-pay deductions are correct

Ask for (or compute from) three things:

Your contribution base used by payroll

What monthly salary did they use?
Did they treat allowances as part of the base (depends on agency rules and how compensation is defined)?

Employee share vs employer share

PhilHealth is typically split between employer and employee.
Pag-IBIG has employee and employer shares.

The month being covered

Are they collecting for the month you started?
Are they collecting arrears for prior months?

If the deduction is “full month” but the payroll is actually only collecting your half-month allocation (because the other half would have been deducted on the earlier cutoff you didn’t join), then it may just look big relative to your small first pay.

11) Good payroll practice (what compliant employers usually do)

A well-run payroll team will:

Explain whether contributions are monthly and how they allocate them across cutoffs.
Show itemized deductions with the covered month.
Avoid surprise catch-up deductions without notice.
Ensure membership numbers (PhilHealth PIN, Pag-IBIG MID) are captured early.
Correct errors via adjustments rather than silently over/under-withholding.

12) What employees can do if something looks wrong

If your first pay has surprisingly large deductions:

Request an itemized breakdown (by agency, by month covered).
Verify the base used (your monthly basic + what else they included).
Confirm whether it includes arrears and why.
If penalties or interest appear to be charged to you, ask for the legal basis and escalate to HR.
If the issue persists, you can raise it through internal grievance channels and, if necessary, seek guidance from the relevant agency helpdesk or labor counsel (especially if non-statutory deductions are bundled in).

13) Key takeaways

PhilHealth and Pag-IBIG are generally treated as monthly contributions, not daily prorated amounts.
A “full monthly deduction” taken from a partial first pay is often a result of monthly contribution rules + payroll timing, not automatically unlawful.
“Proration” is usually a payroll allocation method, not a universal legal entitlement.
Catch-up deductions should be transparent and itemized; best practice is to document and, where feasible, spread deductions—while staying compliant with remittance rules.
If you paid voluntarily before employment, coordinate to avoid double payment and mismatched months.

If you want, paste (1) your start date, (2) pay frequency (semi-monthly/bi-weekly), (3) your first payslip lines for PhilHealth and Pag-IBIG (amounts only), and (4) your monthly basic pay. I’ll walk through whether the deductions look internally consistent and what questions to ask payroll.