Night Shift Differential Pay

1. Concept

Night shift differential pay – is an additional pay of 10% of the regular hourly rate given to: (a) Government employees who work at any time from 6:00pm to 6:00am the following day; or (b) (a) private sector employees who work at any time from 10:00pm to 6:00am the following day. (P.D. 442, Labor Code, Article 86; Omnibus Rules Implementing the Labor Code or “Omnibus Rules”, Section 3, Rule IV, Book Three; 2024 DOLE-BWC Handbook on Workers’ Statutory Monetary Benefits or “DOLE-BWC Handbook”, p. 23; R.A. 11701, Section 1)

NB: As to what constitutes the night shift depends on whether the employee is in the private sector or in the public sector.

a. Legal basis

The following is the legal bases:

Legal BasisProvisions
1) P.D. 442, Labor CodeArticle 86
2) Omnibus RulesSection 3, Rule IV, Book Three
3) Republic Act No. 11701Section 1

b. Rationale and purpose

The rationale and purpose for night shift differential pay is that the law recognizes the possibility effects on one’s health when working during a night shift. Thus, the night shift differential pay is primarily to aid and help employees with any medical-related costs and expenses for doing such work on a graveyard shift.

Hence, night shift differential pay is unlike bonuses or incentives which are paid as a form of reward for hitting targets/quotas or for good work performance. Instead, night shift differential pay is paid to an employee as a form indemnity.

c. Daily- or monthly-paid, irrelevant

Whether employees are daily- or monthly-paid is not relevant.

Both daily-paid and monthly-paid are entitled to night shift differential pay.

Otherwise stated, the rules on night shift differential pay apply to both daily-paid and monthly-paid employees. There should be no distinction between the two.

d. Employee status, irrelevant

The employee’s status is not relevant.

Simply, so long as they are employees, they are entitled to night shift differential pay. Thus, it does not matter whether they are regular, probationary, casual, project, seasonal, or fixed-term.

2. Covered and excluded employees

The benefit applies to all employees (called the “covered employees”), except these “exempt employees”:

1) Government employees whose schedule of offices hours fall between 6:00 in the morning to 6:00 in the evening;

2) Government employees whose services are required, or are on call, twenty-four (24) hours a day;

3) Those of retail and service establishments regularly employing not more than five (5) workers;

4) Kasambahay and persons in the personal service of another (Ibid.);

5) Managerial employees, if they meet all of the following conditions:

6) Officers or members of a managerial staff, if they perform the following duties and responsibilities:

7) Field personnel and those whose time and performance are unsupervised by the employer. (Labor Code, Article 86; Omnibus Rules, Section 3, Rule IV, Book Three; DOLE-BWC Handbook, pp.23-24)

a. Certain Government Employees

The following employees are not entitled to night shift differential pay:

1) Government employees whose schedule of offices hours fall between 6:00 in the morning to 6:00 in the evening. (R.A. 11701, Section 2[a])

NB: Services rendered beyond the regular eight (8)-hour work schedules are paid overtime pay in accordance with existing laws, rules and regulations. (R.A. 11701, Section 2[a])

2) Government employees whose services are required, or are on call, twenty-four (24) hours a day such as uniformed personnel of the Armed Forces of the Philippines (AFP), the Philippine National Police (PNP), the Bureau of Jail and Management and Penology (BJMP), the Bureau of Fire Protection (BFP), and others similarly situated, as may be determined by the Civil Service Commission (CSC) and the Department of Budget and Management (DBM). (R.A. 11701, Section 2[b])

b. Certain Retail and Service Establishments

The following employees are not entitled to night shift differential pay:

• Those of retail and service establishments regularly employing not more than five (5) workers. (Omnibus Rules, Section 1, Rule II, Book Three; DOLE-BWC Handbook, pp.23)

c. Kasambahay and persons in the personal service of another

The following employees are not entitled to night shift differential pay:

•  Kasambahay and persons in the personal service of another. (Omnibus Rules, Section 1, Rule II, Book Three; DOLE-BWC Handbook, pp.23)

d. Managerial employees

The following are not entitled to overtime pay:

⦁ Managerial employees, if they meet all of the following conditions:

1) Their primary duty is to manage the establishment in which they are employed or of a department or subdivision thereof;

2) They customarily and regularly direct the work of two or more employees therein; and

3) They have the authority to hire or fire other employees of lower rank; or their suggestions and recommendations as to hiring, firing, and promotion, or any other change of status of other employees are given particular weight. (Section 2, Rule I, Book III, Omnibus Rules; DOLE Handbook)

Thus, to be excluded from overtime pay, the manager should meet all three (3) conditions in the immediately preceding paragraph.

Related: Managerial employees

1) Managers in name only

Under Labor Law, and to be exempt from overtime pay, managerial employees need to meet the three (3) conditions mentioned earlier.

Thus, the designation or title given to an employee is not determinative of whether or not the employee is indeed a manager – under Labor Law and for purposes of overtime pay.

Otherwise stated, giving an employee the title of a manager does not necessarily make them managers under Labor Law. To be managers who are exempt from overtime pay, the employees have to meet the three (3) conditions mentioned earlier.

For example, social media managers who only manages social media – and does not satisfy the three (3) conditions – is not a manager under Labor Law and thus they are entitled to overtime pay. They are only “managers” in name only.

Similarly, talent managers who go around assisting/helping talents/celebrities with various routines – and does not satisfy the three (3) conditions – will be entitled to overtime pay as the title “manager” in their role is descriptive of what they do, i.e., manage the routines of their talents/celebrities.

NB: Many employers have been held liable for night shift differential pay after a finding that the employee with the title of a “manager” was, in truth and in fact, not a manager under Labor Law as the conditions have not been met.

e. Managerial staff

The following are not entitled to overtime pay:

⦁ Officers or members of a managerial staff, if they perform the following duties and responsibilities:

1) Primarily perform work directly related to management policies of their employer;

2) Customarily and regularly exercise discretion and independent judgment

3) (a) Regularly and directly assist a proprietor or managerial employee in the management of the establishment or subdivision thereof in which he or she is employed; or

3) (b) execute, under general supervision, work along specialized or technical lines requiring special training, experience, or knowledge; or (c) execute, under general supervision, special assignments and tasks; and,

4) Do not devote more than twenty percent (20%) of their hours worked in a workweek to activities which are not directly and closely related to the performance of the work described in paragraphs 5.1, 5.2, and 5.3 above. (DOLE Handbook; Rule IV, Book III, Omnibus Rules Implementing the Labor Code)

Related: Managerial staff

1) Managerial staff in name only

Under Labor Law, and to be exempt from overtime pay, managerial staff employees need to meet the four (4) conditions mentioned earlier.

Thus, the designation or title given to an employee is not determinative of whether or not the employee is indeed a manager staff – under Labor Law and for purposes of overtime pay.

Otherwise stated, giving an employee the title of a manager staff does not necessarily make them managerial staff under Labor Law. To be managerial staff who are exempt from overtime pay, the employees have to meet the four (4) conditions mentioned earlier.

NB: Many employers have been held liable for night shift differential pay after a finding that the employee with the title of a “managerial staff” was, in truth and in fact, not a managerial staff under Labor Law as the conditions have not been met.

f. Field personnel

The following are not entitled to overtime pay:

⦁ Field personnel and other employees whose time and performance is unsupervised by the employer, including those who are engaged on task or contract basis, purely commission basis or those who are paid a fixed amount for performing work irrespective of the time consumed in the performance thereof. (Section 2, Rule I, Book III, Omnibus Rules; DOLE Handbook)

1) Field personnel

Field personnel – refers to ‘non-agricultural employees who regularly perform their duties away from the principal place of business or branch office of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty.’ (Paragraph 3, Article 82, P.D.442, Labor Code; See also Section 1[e], Rule II, Book III, Omnibus Rules Implementing the Labor Code)

Related: Field personnel

3. The Benefit

a. Public sector or Government Service

SECTION 1. Government employees occupying position items from Division Chief and below, or their equivalent, including those in government-owned or -controlled corporations, whether the nature of their employment is permanent, contractual, temporary, or casual shall be paid night shift differential at a rate not exceeding twenty percent (20%) of the hourly basic rate of the employee, as determined by the head of the agency, for each hour of work performed between the hours of 6:00 in the evening and 6:00 in the morning of the following day: Provided, That the night shift differential pay provided under this this Act shall be in addition to and shall not in any way diminish whatever benefits and allowances are presently enjoyed by government employees.
Hourly basic rate refers to basic salary rate per hour derived by dividing the basic monthly rate by twenty-two (22) working days, and dividing the quotient by eight (8) hours. (R.A. 11701)

In the public sector or Government Service, night shift differential pay is an additional pay of twenty percent (20%) for every hour of work done between 6:00 o’clock in the evening to 6:00 o’clock in the morning the following day.

NB: The night shift duration is thus more favorable to Government employees than those working in the private sector. R.A. 11701 pegs night shift for Government employees from 6:00 pm to 6:00 am the following day, whereas the Labor Code pegs night shift for private sector employees from 10:00 pm to 6:00 am the following day.

b. Private sector

ART. 86. Night-Shift Differential. Every employee shall be paid a night shift differential of not less than ten percent (10%) of his regular wage for each hour of work performed between ten o’clock in the evening and six o’clock in the morning. (P.D. 442, Labor Code)

In the private sector, night shift differential pay is an additional pay of ten percent (10%) for every hour of work done between 10:00 o’clock in the evening to 6:00 o’clock in the morning the following day. (Article 86, P.D. 442, Labor Code) (Labor Code, Article 86; Omnibus Rules, Section 3, Rule IV, Book Three; DOLE-BWC Handbook, pp.23-24)

1) 10:00pm to 6:00am the following day

The Labor Code specifically designates and limits night shift as any work from 10:00 o’clock in the evening to 6:00 o’clock in the morning the following day. Thus, any work done from 6:00 pm to 9:59 pm in the evening, is not considered as night shift for purposes of this definition under the Labor Code. Meaning, although an employee may have worked in the evening during this time period (i.e. 6:00 pm to 9:59 pm), the rendered work will not call for the application of night shift differential pay as provided under the Labor Code.

However, it is possible that the concept of night shift differential pay may be modified in favor of the employee through an employment contract, company policy, collective bargaining agreement (CBA), or any other employment agreement.

For instance, the employer and the employee may stipulate in an employment contract that night shift differential pay will be from 6:00 o’clock in the evening to 6:00 o’clock in the morning the following day, instead of the Labor Code’s 10:00 o’clock in the evening to 6:00 o’clock in the morning the following day. If this is the case, then night shift differential pay will be due for any work rendered from this stipulated period – i.e. 6:00 pm to 6:00 am the following day.

Similarly, the same rule will apply if such a stipulation is found in the company policies, collective bargaining agreement (CBA), or any other employment agreement.

2) Computation

See: Computation of Night Shift Differential Pay

3) Favorable employee stipulations

In the private sector, the above discussion may be superseded by any stipulation favorable to the employee via an employment contract, company policies, collective bargaining agreement, or analogous thereto.

4) When in doubt, interpretation favors labor

Art. 1702. In case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and decent living for the laborer. (R.A. 386, Civil Code)
ART. 4. Construction in Favor of Labor. – All doubts in the implementation and interpretation of the provisions of this Code, including its implementing rules and regulations, shall be resolved in favor of labor. (P.D. 442, Labor Code)

Article 4 of the Labor Code provides that all doubts in the implementation and interpretation of its provisions, including its implementing rules and regulations, shall be resolved in favor of labor. For the working man’s welfare should be the primordial and paramount consideration. (Asian Transmission Corporation v. CA, G.R. No. 144664, March 15, 2004, Per Carpio-Morales, J.)

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