FAQ: Premium pay

Answers to frequently asked questions on premium pay in the Philippines.

What is a premium pay?

A premium pay is an additional pay granted to an employee who render work on a rest day or a special non-working day.

What are the conditions for an employee to be entitled to premium pay?

These are the conditions for an employee to be entitled to premium pay:

1) The employee is a covered employee;

2) There is work done on a rest day or a special non-working day.

Are all employees entitled to premium pay?

No, only covered employees are entitled to premium pay. On the other hand, there are employees who are excluded from the coverage of the benefit. For instance, Government employees, kasambahay or domestic workers, managerial employees are not entitled to premium pay.

For a complete list, see: Premium pay

When should premium pay be paid to the employee?

The premium pay should be paid to the employee on the next pay cycle. The additional pay should be included in the employee’s compensation.

What if a wok is required on a regular holiday which falls on a rest day or special non-working day?

If there is work performed on a regular holiday which is also a rest day or a special non-working day, a covered employee is entitled to a premium pay of 30% of the regular holiday rate of 200% based on his/her daily basic wage or a total of 260%.

See: Computation of premium pay

May an employee refuse to work on a rest day or a special non-working day?

No, the employee may not refuse to work on a rest day or a special non-working day. If there is work, and the employee refuses to work without lawful and valid justification, the employee may be subject to disciplinary action for willful disobedience, neglect of duty, and other violations as may be provided in the company policies.

May the premium pay be increased?

The premium pay may be increased from 100% of daily salary to whatever may be stipulated in an employment contract, company policy, collective bargaining agreement (CBA), or other employment agreements.

May the employer subsequently withdraw or decrease the previous increase of premium pay?

No, the employer may not subsequently withdraw or decrease the previous increase of premium pay as this will violate the principle on non-diminution of benefits. Once the employer gives a benefit or increase the one provided for by law, it cannot anymore be withdrawn or decreased.

May the employer provide for premium pay lower than that provided for by law?

No, the employer may not provide for premium pay which is lower than that provided for by law as it will be contrary to law. This will result in a violation of the employee’s rights.

NB: What the employer may do is to provide higher than that provided for by law as any benefit more favorable to an employee is generally valid and binding, with the exception of the Government.

What if an employee starts working on a regular day and then work crosses over a rest day or a special non-working day?

The employee shall be entitled to pro rata of the hours worked which crossed over a rest day or a special non-working day.

This follows the principle of full protection to labor under the 1987 Constitution, as well as the principle that all doubts on the interpretation of laws and contracts shall be in favor of labor or the employees.

Is an employee who failed to follow company policy or procedure for premium pay entitled to the benefit?

Yes, so long as the employee is able to prove via substantial evidence (e.g. CCTV, testimony of coworkers, log-time, etc.) the work rendered during rest day or a special non-working day, then premium pay is due. Notwithstanding, the employee may be held liable for violating the company policy or procedure for premium pay. However, the penalty should not result in the forfeiture or non-payment of the employee’s premium pay as it is a different matter.

To be clear, an employee who completed the conditions or requirements for entitlement of premium pay as duly proven by substantial evidence, and even if the same is not in compliance with company policy or procedure, the employee nonetheless would be entitled to premium pay. The reason is that the employee did in fact render such work, only that the company policy or procedure was not complied. Thus, the non-compliance is treated separately and may be the basis for administrative investigation and/or penalty against the employee.

Are casual employees or part-time employees entitled to premium pay?

Yes, casual employees/workers are entitled to premium pay – because they are employees. The Labor Code does not distinguish as to the status of an employee (e.g. regular, probationary, casual, project, seasonal, fixed-term). For purposes of premium pay, so long as they are employed and thus an “employee,” workers are entitled to premium pay.

Part-time employment is not an employment status (e.g. regular, probationary, casual, project, seasonal, fixed-term). In the private sector, a part-time employee is simply one who renders work for less than the prescribed 48-hour workweek under the Labor Code (e.g. 24-hr/week, 36-hr/week, etc.).

Thus, a part-time employee has to have a status. For example: part-time regular employee, part-time probationary employee, part-time casual employee, part-time project employee, part-time seasonal employee, and part-time fixed-term employee.

What is the liability of an employer who refuses to pay the premium pay?

For private sector employers, they may be liable for monetary claims which an employee may pursue via a SEnA request for assistance or a formal labor complaint.

References

⦁ Presidential Decree No. 442, a.k.a. Labor Code of the Philippines

⦁ Book IIII, Omnibus Rules Implementing the Labor Code

⦁ 2022 DOLE-BWC Handbook on Workers’ Statutory Monetary Benefits

⦁ Cited Labor Law Jurisprudence (a.k.a. Supreme Court Decisions)

Related

⦁ Premium pay

⦁ Computation of premium pay

⦁ FAQ: Premium pay

⦁ Cases on: Premium pay

Additional Resources

⦁ Law Mentoring Center

⦁ Department of Labor and Employment (DOLE)

⦁ DOLE – Bureau of Working Conditions

⦁ Official Gazette of the Republic of the Philippines