Nicolas and De Vega Law Offices Article COMPUTING EMPLOYEE PREMIUM PAY IN THE PHILIPPINES

Applicability of Labor Code Provisions on Employees on Premium Pay

The provisions on Hours of Work, Weekly Rest Periods and Holidays, Service Incentive Leaves and Service Charges of the Labor Code of the Philippines apply to employees in all establishments and undertakings whether for profit or not, but not to: government employees, managerial employees, field personnel, members of the family of the employer who are dependent on him for support, domestic helpers, persons in the personal service of another, and workers who are paid by results as determined by the Secretary of Labor in appropriate regulations.

Regular Hours of Work and Compensable Hours Worked

The normal hours of work of any employee shall not exceed eight (8) hours a day.  The compensation therefore and considered hours worked shall include all the time during which an employee is required to be on duty or to be at a prescribed workplace and all the time during which an employee is suffered or permitted to work.

Rest periods of short durations during working hours shall be counted as hours worked.

How to Compute Premium Pay for Night Shift Diffential

A night shift differential is paid of not less than 10% of the regular wage when an employee is suffered or permitted to work between 10:00 PM to 6:00 AM. This is regardless if such period is the employee’s regular shift. 

If the work done during the period of 10:00 PM to 6:00 AM is overtime work, 10% night shift differential is based on the employee’s overtime rate.

Formula:

Daily Basic Pay x1.10=Hourly Rate
8 hours     

Note that premium pay for Night Shit Differential does not cover retail and service establishments employing not more than five (5) workers.

How to Compute Premium Pay for Overtime Work

An employee who performs work exceeding eight (8) hours is entitled to an additional compensation equivalent to his regular wage plus at least 25% thereof. 

General Formula for Computing Overtime Pay: 

Daily Basic Pay x1.25=Overtime Hourly Rate
8 hours     

Should the employee performed work on a holiday or rest day, he shall be paid an additional compensation equivalent to the rate of the first eight hours on a holiday or rest day plus at least 30% thereof.

Formula for Computing Overtime Pay on a rest day or special holiday, which is not a scheduled rest day:

Daily Basic Pay x1.30  =Holiday Hourly Rate
8 hours       
Holiday Hourly Rate x8 hours  =Holiday Premium
Holiday Hourly Rate xno. of hours exceeding 8 hoursx1.30=Overtime Premium
Holiday Premium +Overtime Premium  =Total Compensation

Formula for Computing Overtime Pay on a special holiday, which is also a scheduled rest day:

Daily Basic Pay x1.50  =Holiday Hourly Rate
8 hours       
Holiday Hourly Rate x8 hours  =Holiday Premium
Holiday Hourly Rate xno. of hours exceeding 8 hoursx1.30=Overtime Premium
Holiday Premium +Overtime Premium  =Total Compensation

Formula for Computing Overtime Pay on a regular holiday, which is not a scheduled rest day:

Daily Basic Pay x2.00  =Holiday Hourly Rate
8 hours       
Holiday Hourly Rate x8 hours  =Holiday Premium
Holiday Hourly Rate xno. of hours exceeding 8 hoursx1.30=Overtime Premium
Holiday Premium +Overtime Premium  =Total Compensation

Formula for Computing Overtime Pay on a regular holiday, which is also a scheduled rest day:

Daily Basic Pay x2.60  =Holiday Hourly Rate
8 hours       
Holiday Hourly Rate x8 hours  =Holiday Premium
Holiday Hourly Rate xno. of hours exceeding 8 hoursx1.30=Overtime Premium
Holiday Premium +Overtime Premium  =Total Compensation

Note that undertime work on any particular day shall not be offset by overtime work on any other day.

How to Compute Premium Pay for Work Done during Weekly Rest Period

An employee is entitled to a weekly rest period of not less than twenty-four (24) consecutive hours after every six (6) consecutive normal workdays.

If an employee is suffered or permitted to work on his established rest day, he is entitled to additional compensation of at least 30% of his regular wage.

Formula: 

Daily Basic Pay x1.30=Hourly Rate
8 hours     

If an employee is suffered or permitted to work on a special holiday, he is entitled to an additional compensation of at least 30% of his regular wage.

Formula:       

Daily Basic Pay x1.30=Hourly Rate
8 hours     

If an employee is suffered or permitted to work on a special holiday, which is also his scheduled rest day, he is entitled to additional compensation of at least 50% of his regular wage.

Formula:

Daily Basic Pay x1.50=Hourly Rate
8 hours     

An employee, who is suffered or permitted to work on a regular holiday, shall be paid at least 200% of his regular daily wage.  If the holiday work falls on the scheduled rest day of the employee, he shall be entitled to at least 30% of his regular holiday rate of 200% based on his regular wage rate.

Formula on a regular holiday, not his scheduled rest day:

Daily Basic Pay x2.00=Hourly Rate
8 hours     

Formula on a regular holiday, which is also his scheduled rest day:

Daily Basic Pay x2.60=Hourly Rate
8 hours     

About Nicolas and De Vega Law Offices

If you need assistance in labor-related issues, compliance with DOLE issuances, and company employment policies,  or business-related concerns, we can help you find solutions. Nicolas and de Vega Law Offices is a full-service law firm in the Philippines.  You may visit us at the 16th Flr., Suite 1607 AIC Burgundy Empire Tower, ADB Ave., Ortigas Center, 1605 Pasig City, Metro Manila, Philippines.  You may also call us at +632 84706126, +632 84706130, +632 84016392 or e-mail us at info@ndvlaw.com. Visit our website www.ndvlaw.com.

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