Purpose
Service Charges is where you record money that is shared out to staff and have it appear on their payslips. Use it every time you distribute collected service charges, and whenever management funds an incentive you want paid through payroll.
Choose the right kind first
The very first field you pick — the ledger type — decides which rules apply. It cannot be changed later, so get it right.
| Choose | When | What the system then insists on |
|---|---|---|
| Statutory Service Charge | The money was added to customer bills and collected | The whole pool is shared out by actual hours or days; nothing is left over; every eligible worker in the establishment is included; managerial employees are excluded |
| Service Incentive | The company is funding a reward itself | Nothing — you choose the formula, the departments and whether attendance affects it |
The most common mistake is putting a sales-driven bonus into the statutory ledger. Gross sales is not the same thing as service charges collected, and a fixed peso amount is not the equal hours-based share the law requires. If you are paying a bonus because sales were good, that is a Service Incentive, even if the money loosely relates to service.
Before you start
- You need the Service Charges permission. Approving is a separate permission, so your organisation may have given that to someone else on purpose.
- Know the pay date the money should be paid on. The payroll itself does not have to exist yet — but when it is created, its payment date has to be that same date.
- For a statutory batch, have your collection figure reconciled — the amount actually collected, and any refunds or voids.
- For an attendance-prorated incentive, attendance for the period must be approved. Employees with no approved attendance will show an amount of zero.
Create the batch
- Open Compensation → Service Charges and choose Add Service Charge Batch.
- Pick the ledger type.
- Give it a title. This is what employees will see on their payslip, so write it the way you want it read — "May Sales Service Incentive", not "batch 3". Titles containing a loan name (for example "Company Loan") are refused, because payroll matches loan totals by name.
- Set the pay date — the day the money should be paid to staff. You are not choosing a payroll run here, and the run does not have to exist yet: you can prepare a batch well ahead of the payroll that will carry it. The date must match the payroll's payment date exactly; a batch dated the 14th will not be picked up by a payroll paying on the 15th.
- Set the source period — the period the money relates to. Attendance is measured over this range, and salary is taken as it stood on the end date.
- Fill in the part that matches your ledger type:
- Service Incentive — the calculation method, its amount or percentage, and optionally a sales figure for context.
- Statutory — the amount collected, any refunds, and whether the share is by hours or by days.
- Save. You are taken straight to the batch page.
The four incentive formulas
| Method | What each person gets | Example |
|---|---|---|
| Fixed amount | The same amount for everyone eligible | ₱1,500 |
| Fixed, prorated by attendance | The amount scaled by how much they worked | ₱1,500 at 40 of 80 hours → ₱750 |
| Percentage of salary | A share of their own monthly salary | 20% of ₱30,000 → ₱6,000 |
| Percentage of salary, prorated | Both together | 20% of ₱30,000 at half attendance → ₱3,000 |
Leave attendance target hours blank to measure each person against their own schedule. Set it if you want everyone measured against the same number instead.
Calculate and review
Choose Calculate. The system works through the employees in batches and shows its progress; on a large organisation this takes a moment.
Then read the roster. Every employee the coverage selected appears — nobody is quietly dropped. Each row is one of three things:
- Included — they will be paid this amount.
- Excluded — someone decided they should not be, and the reason is shown.
- Blocked — something needed to calculate their amount is missing.
A blocked row stops approval, on purpose. The two common causes are:
- No approved salary record for the period — the employee has no approved salary history entry as of your source end date. Add one, or exclude them with a reason.
- No scheduled or worked hours — there is nothing to prorate against. Check the schedule, or exclude them.
Use the row's edit action to include or exclude someone. Excluding always requires a reason, and your decision survives a recalculation.
The Readiness panel above the roster lists anything that would block approval, and anything merely worth a look. Two of the warnings are about the pay date rather than the people:
- No payroll is scheduled for this pay date yet — informational only, and perfectly normal if you are preparing the batch in advance. Whichever payroll is later created for that date will pick it up. It is also your cue to check the date is not simply a typo.
- The pay date has already passed — take this one seriously. Read the warning below about approving too late.
Approve
Choose Approve. Two things happen that are worth understanding:
- The amounts freeze. From here they are what will be paid.
- The batch can no longer be edited. There is no way back to draft. If something is wrong, cancel it and create a new one. This is deliberate: payroll relies on an approved amount never changing.
If you changed anything after calculating, approval is refused until you recalculate. The figures must be newer than the inputs.
How the money reaches payroll
Approving is the last thing you do by hand. There is no "post" button, and nobody pushes the batch anywhere. Payroll collects it, the same way it collects commissions and adjustments.
Once a batch is approved, any payroll that meets both of these conditions picks it up on its own:
- Its payment date is exactly the batch's pay date, and
- Service Charges is ticked in that payroll's Earnings selection.
The pick-up happens whenever that payroll's payslips are processed — at the Retrieve Service Charges step of the payroll run, or from Batch → Retrieve Service Charges on the payroll page when you want to refresh an existing run without re-running everything. Both do the same thing; use whichever you are already in.
Each recipient receives one earning line on their payslip, named after your batch title. From that point the amount is ordinary pay: your existing payroll rules decide the tax and contributions on it, exactly as they would for any other earning.
Three things you can rely on:
- Re-running is harmless. Processing the payroll again does not pay anyone twice. Each person's line is replaced, not repeated.
- Finalised payslips are left alone. Once a payslip is frozen, nothing is added to or taken off it.
- Two payrolls sharing a pay date will not double-pay. If an employee's amount is already live on one payslip, a second run on the same date leaves them out rather than paying them a second time.
Approve before the pay date. A batch approved after its matching payroll has already been completed will never be applied, because completed payslips are frozen — there is nothing left for payroll to add the line to. The readiness warning the pay date has already passed is your signal that you are running out of time. If the payroll is already done, do not chase it: pay the amount on a later payroll instead, using a batch dated for that run.
Correcting a mistake
What you can do depends on how far the money has travelled.
| Situation | What to do |
|---|---|
| Still a draft | Edit it, or delete it |
| Approved, no payroll has picked it up yet | Cancel it and create a replacement |
| Approved with the wrong pay date | Cancel it and create a replacement dated correctly. An approved batch cannot be edited, and one dated for a day no payroll pays on will simply never be collected |
| Picked up, payslips still draft | Cancel it — the lines are taken back off those payslips automatically |
| Picked up, payslips finalised or paid | Cancel is refused. The money has been signed off, so it is corrected on a later payroll rather than edited in place |
Where to look afterwards
- Employee Overview — what each person has received across every batch this year, split into what has reached a payslip (Posted) and what has not (Not Posted).
- Timeline — who did what and when.
- Summary — yearly totals, split by ledger type and by department.
- History on any batch — the full audit trail for that batch alone.
If something looks wrong
| What you see | What it usually means |
|---|---|
| "No employee in this batch would receive an amount" | Everyone calculated to zero — usually no approved attendance in the source period on a prorated formula |
| Employees marked No approved salary record | Their salary history has no approved entry as of the source end date |
| The Service Charges menu item is missing | Either the permission has not been granted, or your sidebar was customized before this feature existed — use Left Menu Customization → Restore to default |
| The whole batch never appeared on any payslip | Either no payroll pays on that exact date, or Service Charges is not ticked in that payroll's Earnings selection. Fix whichever it is, then process that payroll's payslips again |
| An employee is on the roster but was not paid | They were not part of the payroll that ran for that pay date — or their amount is already live on another payslip for the same date, and the system will not pay it twice |
| A statutory batch will not approve, mentioning the pool | The distributed total does not match the pool exactly. Recalculate the batch |
What the system enforces, and what it does not
It does insist that a statutory pool is fully distributed, that coverage is establishment-wide, that managerial employees are excluded where position levels are recorded, that approved amounts cannot change, and that every mutation is recorded.
It does not give legal or tax advice. Company policy, collective bargaining agreements, agency arrangements and managerial classifications should be reviewed with your own labour and tax advisers. References: Republic Act No. 11360, DOLE Department Order No. 242-24, and BIR Revenue Memorandum Circular No. 50-2018 — all linked from the in-app Compliance Guide.