It is the employer’s obligation to top up the government benefit (usually from SSS) so that the employee receives her full salary for the leave period, subject to the rules and exemptions under Philippine law.

Below is a detailed legal-style discussion in the Philippine context.

I. Key Concepts: “Full Pay” and “Salary Differential”

1. “Full Pay”

In Philippine labor and civil service practice, “full pay” generally means:

The employee’s salary rate for the period (e.g., daily or monthly rate), and
Often includes regular allowances and monetary benefits that are part of the employee’s usual compensation package.

Depending on the specific law or implementing rules involved, full pay may be:

Basic pay only, or
Basic pay plus regular allowances, such as:
- Cost of Living Allowance (COLA)
- Fixed transportation or meal allowance
- Other regular monthly allowances that are guaranteed under contract, company policy, or CBA

Full pay typically does not include:

Overtime pay
Night shift differential
Holiday premiums
Discretionary bonuses, profit-sharing, or performance incentives
Other non-regular, contingent pay items

The exact scope depends on the text of the law, the implementing rules, and any applicable company/CBA definitions.

2. “Salary Differential”

Salary differential is the difference between:

(A) The employee’s full pay for the covered leave period minus (B) The monetary benefit paid by a government agency (commonly SSS) for that same period

In practice, this concept is most prominent under the Expanded Maternity Leave Law (EMLL) for private-sector workers. The SSS pays a maternity benefit; the employer, if covered by the law and not exempt, pays the salary differential so that the employee effectively gets her full pay while on maternity leave.

3. Putting It Together: “Full Pay on Salary Differential”

When a policy or advisory says an employee is entitled to “full pay on salary differential,” it typically means:

The law (or policy) first ensures the employee receives full pay for a leave period.
Part of that comes from a government benefit (e.g., SSS maternity benefit).
The shortfall between that government benefit and the employee’s full pay must be covered by the employer, in the form of salary differential.

So “full pay on salary differential” refers to the legal and payroll arrangement by which an employee receives her full salary for certain leave periods, with the employer required to shoulder the difference not covered by government benefits.

II. Main Legal Basis: Expanded Maternity Leave Law (RA 11210)

Although “salary differential” may be used in other HR contexts, its primary legal anchor in current Philippine labor practice is Republic Act No. 11210, the Expanded Maternity Leave Law (EMLL) and its Implementing Rules and Regulations (IRR).

1. Basic Features of RA 11210 (Private Sector Focus)

For female workers in the private sector who are covered by SSS, RA 11210 generally provides:

105 days maternity leave with pay for live childbirth, regardless of mode of delivery
Additional 15 days (total of 120 days) for solo parents (under the Solo Parents’ Welfare Law, as amended)
60 days maternity leave with pay for miscarriage or emergency termination of pregnancy

SSS pays a maternity benefit based on the employee’s average daily salary credit (ADSC) multiplied by the number of compensable days. However, this SSS benefit typically does not equal the employee’s full pay (especially when she has allowances or a higher salary than the SSS maximum salary credit).

That is where the salary differential comes in.

2. How RA 11210 Uses “Salary Differential”

Under the EMLL:

The SSS maternity benefit forms the base amount received by the employee.
Employers in the private sector (with certain exemptions) must pay the salary differential, defined as the difference between the employee’s full pay and the SSS maternity benefit for the duration of the leave.

In other words:

Total Maternity Leave Pay = SSS Maternity Benefit + Salary Differential from Employer

Where:

Salary Differential = Full Pay for the Leave Period − SSS Maternity Benefit

This is the most commonly encountered situation where an employee hears: “You’re entitled to full pay via salary differential.”

III. Other Laws Using “Full Pay” in Similar Ways

Although not always called “salary differential,” the concept of “full pay” during leave also appears in other laws:

1. Magna Carta of Women (RA 9710) – Special Leave Benefit

The Magna Carta of Women grants women a special leave benefit of up to two months with full pay in case of surgery caused by gynecological disorders, subject to the qualifications and conditions in the law and its IRR.

“Full pay” is typically defined as gross monthly compensation or basic pay plus mandatory allowances, depending on the implementing rules.
In the public sector, this is implemented via Civil Service Commission (CSC) rules.
In the private sector, DOLE rules and company practice apply.

While the term “salary differential” is not always used here, the logic is similar: if there is any government benefit involved that does not equal full pay, the question arises whether the employer must top up to full pay.

2. Government Sector: Different Mechanism, Similar Concept

For government employees, maternity and special leave benefits are primarily governed by:

The Civil Service Commission (CSC)
The GSIS law for maternity benefits
Special laws like the Magna Carta of Women

The terminology may differ (e.g., “full pay,” “gross monthly compensation”), but the core idea is consistent: some laws guarantee full pay during certain types of leave, and the government, as employer (through GSIS and agency payroll), ensures the employee receives the amount legally required.

IV. Who Is Covered and Who Is Exempt (RA 11210 Salary Differential)

Under RA 11210 and its IRR (for private sector workers), the obligation to pay salary differential does not apply to all employers. Some are exempt, subject to specific criteria and documentary requirements.

1. Employers Generally Covered

In broad terms, the following are ordinarily covered by the salary differential rule:

Private sector employers that:
- Are not classified as micro-business enterprises exempted by law, and
- Are not classified as distressed establishments, and
- Do not fall under the other specific exemptions in the IRR

When covered, the employer must advance the full maternity benefit to the employee, then recover the SSS portion from SSS, and shoulder the salary differential.

2. Common Exemptions

Employers commonly exempt from paying salary differential include (depending on the IRR’s categories and criteria):

Certain micro enterprises or small establishments that meet legal conditions
Distressed establishments as defined by DOLE (e.g., based on financial losses, rehabilitation status, or formal criteria)
Employers already providing a more favorable benefit, through company policy or CBA, than what RA 11210 requires
Other categories specifically listed by the IRR, such as some barangay micro business enterprises (BMBEs)

Exemptions are not automatic; they usually require DOLE evaluation or compliance with documentary requirements. An employer cannot simply claim to be “distressed” without proof.

V. How “Full Pay on Salary Differential” Is Computed

1. Step 1: Determine the Employee’s “Full Pay”

For the maternity leave period, “full pay” is typically computed by:

Taking the employee’s monthly salary rate (e.g., ₱30,000.00).
Converting it to a daily rate, following the standard practice used by the company or DOLE’s wage orders (e.g., monthly salary ÷ 30, or ÷ 26, depending on the policy and the applicable rules).
Multiplying the daily rate by the number of maternity leave days (e.g., 105 days for normal childbirth, 120 days for a solo parent, 60 days for miscarriage).
Adding any regular allowances that form part of full pay (if the law or policy defines full pay to include these).

Note: The exact formula can vary by company policy, CBA, or DOLE interpretations. Some use 30 days as divisor; others use 26. The IRR and wage advisories should be consulted in real-world calculations.

2. Step 2: Determine the SSS Maternity Benefit

The SSS maternity benefit is computed using:

The employee’s average daily salary credit (ADSC) over a prescribed period, and
The number of compensable days (105, 120, or 60, etc.)

SSS pays 100% of the ADSC for each day of maternity leave, up to certain maximum salary credits set by SSS. This means high-earning employees or those with many allowances often receive less than their actual daily pay from SSS.

3. Step 3: Compute the Salary Differential

Once you have:

Full Pay for the Leave Period (based on the employer’s pay structure and applicable law), and
Total SSS Maternity Benefit (for the same period),

you can compute:

Salary Differential = Full Pay − SSS Maternity Benefit

This is the amount payable by the employer, unless exempt.

4. Simple Example (Hypothetical and Simplified)

Employee’s monthly basic pay: ₱30,000.00
Regular monthly allowance (included in full pay under company policy/IRR): ₱2,000.00
Total monthly full pay: ₱32,000.00

Assume:

105 days of maternity leave
Company uses 30 days as divisor for simplicity
SSS maternity benefit (for the same 105 days): ₱80,000.00 (hypothetical)

Full Pay for 105 days:

Daily rate based on full pay = ₱32,000 ÷ 30 ≈ ₱1,066.67
Full pay for 105 days = ₱1,066.67 × 105 ≈ ₱112,000.35

Salary Differential:

Salary differential = ₱112,000.35 − ₱80,000.00 ≈ ₱32,000.35

So:

Employee receives ₱80,000.00 from SSS (through the employer, typically).
Employer pays ₱32,000.35 as salary differential, so that the employee effectively receives full pay during the 105 days.

Actual computations may be more precise and subject to SSS, DOLE, and company rules.

VI. Tax and Payroll Treatment

1. SSS Maternity Benefit

Historically, SSS maternity benefits are treated as non-taxable for income tax purposes, as they are benefits under a social security system and not compensation for services in the usual sense.

2. Salary Differential

The salary differential is generally treated as taxable compensation, because:

It is paid by the employer,
It is in consideration of the employment relationship, and
It constitutes a top-up to salary.

Therefore, in most practice:

Salary differential is subject to withholding tax on compensation, and
It may be subject to SSS, PhilHealth, and Pag-IBIG contributions, depending on agency rules on whether such top-ups are included in the “compensation base.”

Specific tax and contribution treatment can be affected by BIR issuances, as well as SSS, PhilHealth, and Pag-IBIG circulars, so actual compliance should always follow the latest regulations.

VII. Practical Effects and Common Issues

1. Payslip Entries

Employees on maternity leave may see payslip entries like:

“SSS Maternity Benefit”
“Salary Differential – Maternity Leave”
“Net Pay”

If the company is covered and compliant, the total of SSS benefit plus salary differential should equal the full pay for the period, subject to applicable taxes and contributions.

2. Timing of Payment

Common practical questions:

When is the salary differential paid? Typically, it is paid in line with regular payroll cycles, often once the SSS benefit is processed. However, employers are generally expected to comply with statutory timelines and cannot unduly delay payment.
What if SSS reimbursement is delayed? The employer’s obligation to pay salary differential under RA 11210 is separate from the timing of SSS reimbursement. The risk of delay in SSS reimbursement typically lies with the employer, not the employee.

3. Employer Claims of Exemption

Some employers claim exemption from paying salary differential because they are:

A micro-business,
A distressed establishment, or
Already granting an equivalent or superior benefit.

In law and practice:

Exemption usually requires proof and, in many cases, DOLE documentation or acknowledgment.
Employees may ask to see the basis of such exemption, especially if the employer is using it to deny the salary differential.

4. Changes in Salary or Allowances Before Leave

If an employee receives:

A recent salary increase or
Changes in allowances

before going on maternity leave, questions arise as to which rate should be used in the full pay computation.

Generally, the applicable rate is the salary/compensation at the time of leave, or as defined by the law/IRR and company policy. However, the exact rule depends on the wording of the implementing rules and how SSS and DOLE interpret “average” or “full” pay. Employers often look at the prescribed reference period (e.g., three months prior, or similar) when defining full pay for the computation.

VIII. Remedies and Enforcement

If an employee believes she is not receiving the correct salary differential or full pay:

She may raise the issue internally through the HR or payroll department.
If unresolved, she may file a complaint with:
- The DOLE Regional/Field Office (for private sector workers), or
- The Civil Service Commission or her agency’s HR (for government workers).

For private sector disputes:

Claims for salary differentials can be pursued as money claims under labor law.
There are prescriptive periods (time limits) for filing such claims (e.g., generally three years for money claims under the Labor Code), so employees are encouraged to act promptly.

IX. “Full Pay on Salary Differential” — What It Means in Plain Terms

Summarizing everything:

“Full pay” is the employee’s regular pay for the period, often including regular allowances.
“Salary differential” is the amount the employer must add on top of a government benefit (like the SSS maternity benefit) so that the employee ends up receiving full pay during the leave, if the employer is legally obliged and not exempt.
In the Philippines, the phrase is most strongly associated with RA 11210 (Expanded Maternity Leave Law), which requires many private employers to pay the salary differential for maternity leave.
Some employers are legally exempt, but they must meet specific criteria and comply with documentary requirements to lawfully avoid the obligation.
In payroll terms, the employee’s take-home pay during qualified maternity leave is a combination of:
- SSS (or GSIS) maternity benefit and
- Employer-paid salary differential, resulting in full pay for the covered period, less applicable taxes and contributions.

X. Practical Takeaways

For employees:

Check your employment status, employer category, and salary structure (including allowances) to understand your full pay.
Ask HR how your SSS maternity benefit and salary differential are computed.
If your employer claims exemption, you may request the basis (e.g., DOLE confirmation or proof of distressed status).

For employers/HR:

Review whether the organization is covered or exempt under the Expanded Maternity Leave Law and its IRR.
Ensure your payroll system correctly computes full pay and salary differential and properly accounts for tax and contribution treatment.
Keep clear documentation for any claimed exemption, and maintain transparent communication with employees.

This is a general legal-information overview, not a substitute for formal legal advice. For specific situations, it’s best to consult a lawyer, DOLE, CSC, SSS, or relevant government agencies and to review the most recent implementing rules and issuances.