1) What “salary differential” means—and why it exists

In the private sector, a qualified female worker’s maternity leave pay typically has two components:

SSS maternity benefit (a cash benefit computed from the employee’s SSS salary credits), administered by the Social Security System; and
Salary differential (the amount the employer must add so that the employee receives “full pay” for the maternity leave period, subject to specific exemptions and rules).

In simple terms:

Salary Differential = Full Pay (for the maternity leave period) − SSS Maternity Benefit

The legal framework expanded maternity leave to 105 days (with options and add-ons) and, for most private employers, imposed the obligation to “top up” the SSS maternity benefit so the employee receives full pay during leave.

2) Who is covered (and when it applies)

A. Covered employees (private sector)

Generally covered are female employees in the private sector who are SSS members and who satisfy the qualifying contributions for SSS maternity benefit. Coverage commonly includes regular, probationary, project, seasonal, and fixed-term employees—so long as an employer–employee relationship exists at the relevant time and other eligibility rules are met.

B. Benefit periods commonly encountered

Typical maternity leave benefit durations are:

105 days maternity leave with full pay (live childbirth), with an option to allocate up to 7 days to the child’s father or an alternate caregiver (subject to rules).
Additional 15 days with full pay if the female worker qualifies as a solo parent (documentary requirements apply).
60 days with full pay for miscarriage or emergency termination of pregnancy.
Optional extension of 30 days without pay (employee option; rules and notice requirements apply).

The salary differential obligation tracks the paid portion.

3) The employer’s core obligations

A. Grant maternity leave and ensure “full pay”

For covered cases, the employer must:

Approve and allow the employee to go on maternity leave for the applicable duration; and
Pay the employee her full pay during maternity leave, consisting of:
- the SSS maternity benefit amount; plus
- the employer-paid salary differential (if any).

B. Advance payment and timeliness (practical payroll duty)

As a matter of implementation in most workplaces, employers typically advance the SSS maternity benefit to the employee (then seek reimbursement/credit through SSS processes), and simultaneously pay the salary differential that is not covered by SSS.

C. Maintain employment-related rights

Maternity leave is a protected leave. Employers must observe standard labor protections such as:

Non-diminution and non-discrimination related to maternity leave use;
Security of tenure principles (no adverse action because of pregnancy/leave);
Observance of internal policy/CBAs that are more favorable (if any).

D. Administrative compliance

Employers have compliance steps tied to SSS maternity benefit processing, typically involving:

receiving employee notice and supporting documents,
employer notification/reporting to SSS within required timelines, and
preparing reimbursement/verification documents.

Failure to follow required notice/reporting processes can lead to employer liability, including paying amounts that might otherwise have been covered.

4) What counts as “full pay” for salary differential purposes

“Full pay” is not just a slogan—computation depends on what components of compensation are included.

A. Common components included

As a working rule in maternity leave administration, “full pay” generally includes:

Basic salary/wage, and
Mandatory or regularly paid allowances and benefits that are considered part of the employee’s regular compensation (e.g., fixed monthly allowances, COLA where applicable, and similar regularly-paid items), based on governing rules and the employer’s established payroll practice.

B. Common components often excluded (fact-specific)

Items that are contingent, performance-based, reimbursable, or non-regular are often treated differently, such as:

purely discretionary bonuses,
one-time incentives,
expense reimbursements,
benefits that are not part of regular wage/allowance structure.

Important: Whether something is “regular” can be a fact question (policy, payroll history, employment contract, and practice matter).

5) SSS maternity benefit computation (the portion funded by SSS)

The salary differential computation starts by correctly computing the SSS maternity benefit.

A. Eligibility snapshot (SSS maternity benefit)

A common baseline rule is that the member must have at least three (3) monthly SSS contributions within the 12-month period immediately before the semester of contingency (the semester is a 6-month block; “contingency” is childbirth/miscarriage). For employees, timely remittance is typically the employer’s responsibility.

B. Key SSS formula (standard approach)

SSS maternity benefit is usually based on the Average Daily Salary Credit (ADSC):

Identify the 12-month period immediately before the semester of contingency.
Select the six (6) highest Monthly Salary Credits (MSCs) within that 12-month period.
Compute:

ADSC = (Sum of the 6 highest MSCs) ÷ 180
Daily maternity benefit = ADSC
Total SSS maternity benefit = Daily maternity benefit × number of benefit days

Benefit days commonly are:

105 days (live childbirth),
120 days (solo parent: 105 + 15),
60 days (miscarriage/emergency termination).

(SSS rules may have particular validations and documentary requirements; employers should follow the current SSS process flow used for filing and reimbursement.)

6) Salary differential computation (employer “top up”)

Once you have the SSS benefit, compute the employer’s salary differential.

Step-by-step

Step 1: Compute the employee’s “full pay” for the maternity leave period. This means the amount the employee would have received as basic pay (plus regular allowances included in “full pay”) for the covered leave days.

Step 2: Compute the SSS maternity benefit for the same covered period.

Step 3: Subtract.

Salary Differential = Full Pay − SSS Maternity Benefit

Outcomes

If the result is positive, employer pays that amount as salary differential.
If the result is zero, there is no top-up due.
If the SSS benefit is greater than the computed full pay (uncommon but possible depending on pay structure), the employer generally does not collect the excess from the employee as “negative differential” (the practical approach is “no differential due”), though edge cases should be reviewed carefully.

7) Worked examples (illustrative)

Example 1: Monthly-paid employee; 105-day maternity leave

Assumptions (illustration only):

Basic monthly pay: ₱30,000
Regular monthly allowance included in “full pay”: ₱3,000
“Full pay” monthly total: ₱33,000
Employer computes equivalent daily full pay using its standard daily conversion method (this varies by pay scheme; many use an internally consistent divisor aligned with payroll practice and labor standards).
Employee’s computed SSS maternity benefit for 105 days: ₱90,000 (from ADSC × 105)

If employer’s computed full pay for 105 days equals ₱115,500, then:

Salary Differential = ₱115,500 − ₱90,000 = ₱25,500

Employer pays:

SSS maternity benefit portion (often advanced then reimbursed): ₱90,000
Salary differential: ₱25,500 Total received during leave: ₱115,500 (full pay)

Example 2: Miscarriage/ETP; 60 days

If full pay for 60 days is ₱60,000 and SSS benefit is ₱48,000:

Salary Differential = ₱12,000

8) Employer exemptions from paying salary differential (private sector)

Not all private employers are automatically required to pay the salary differential. Certain employers may be exempt under rules that commonly cover categories such as:

Distressed establishments (with defined financial criteria),
Retail/service establishments with a small number of workers (subject to thresholds),
Micro businesses meeting qualification rules (including those registered as BMBEs, where applicable),
Employers already providing equal or better maternity benefit under company policy/CBA (in which case “differential” may be moot because the employer is already paying full pay).

Critical point: Exemption is typically not assumed; it usually requires meeting the conditions and observing required documentation/registration/notice rules (often involving the Department of Labor and Employment).

9) Allocation of up to 7 days to the father/alternate caregiver (what employers should know)

The law allows the mother to allocate up to seven (7) days of her maternity leave to:

the child’s father (married or not, subject to rules), or
an alternate caregiver in certain circumstances.

Key employment-side implications:

The allocating mother’s employer must respect the allocation request if properly made.
The receiving employee’s employer (if different) may have documentation and payroll coordination duties.
The allocation is not “extra days”—it is taken from the mother’s maternity leave days.

Because payroll mechanics can vary (particularly as to who disburses what portion and how SSS recognizes the allocation in documentation), employers should treat this as a document-driven process and align with the current filing protocol.

10) Tax and payroll treatment (practical notes)

The SSS maternity benefit is generally treated as a social insurance benefit rather than ordinary wages.
The salary differential, however, is typically treated as employer-paid compensation for payroll purposes (and therefore may be subject to the usual withholding and reporting rules), unless a specific exclusion applies under tax regulations.

Employers should ensure their payroll practice is internally consistent and properly documented.

11) Common compliance risks and how employers get exposed

Late or missing employee notice / employer notification to SSS This can delay or jeopardize benefit processing and may shift burdens to the employer.
Wrong “full pay” base Under-including regular allowances or misclassifying pay items leads to underpayment.
Miscomputing the SSS portion Errors in the 12-month window, the semester of contingency, or selection of the highest 6 MSCs can materially change the benefit.
Improper exemption assumption Treating the company as exempt without meeting conditions/documentation can lead to violations and back payments.

12) Enforcement and liability (high level)

Noncompliance can trigger:

Labor standards complaints (money claims),
Administrative orders to pay back wages/differentials,
Potential civil and (in appropriate cases) penal consequences under applicable social legislation and labor laws, depending on the violation.

13) Practical checklist for employers (implementation-ready)

Confirm eligibility (SSS contributions; correct semester of contingency).
Compute SSS maternity benefit (6 highest MSCs in the 12-month window; ADSC; multiply by days).
Compute “full pay” for the maternity leave period (basic + included regular allowances).
Pay full pay = SSS portion + salary differential.
Process SSS documentation for reimbursement/credit per applicable SSS procedures.
Check exemption status only with proper basis and documentation (if applicable).
Document allocation requests (if any) and coordinate across employers when needed.

14) Key takeaways

The salary differential is the employer’s top-up so the employee receives full pay during maternity leave, after accounting for the SSS maternity benefit.
Correct computation depends on two pillars: (1) accurate SSS benefit calculation and (2) correct definition of “full pay” under the rules and regular compensation practice.
Exemptions exist but are rule-bound and documentation-heavy—they should not be assumed.