Night Shift Differential Pay

Summary

▪ Night shift differential pay is an additional pay for work between 6:00 p.m. and 6:00 a.m. the following day for those in the Government Service, and between 10:00 p.m. and 6:00 a.m. the following day for those in the private sector.

▪ It is a legally mandated benefit.

▪ Covered employees are entitled.

▪ Computation requires determining hourly rate.

▪ COLA is excluded in the computation.

1. Concept

Night shift differential pay is an additional pay given to employees who work during a graveyard shift. As to what constitutes the night shift depends on whether the employee is in the private sector or in the public sector.

a. Night shift

1) 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)

The Labor Code specifically designates and limits night shift as only 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) 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, 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. (Section 1, R.A. 11701)

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. Does this violate the equal protection clause under the 1987 Constitution considering that employees in the Government Service on a better footing in contrast to private sector employees? See below for more information.

Related
⦁ Is equal protection violated for night shift pay between public and private employees?

b. Rationale and purpose

The rationale and purpose for night shift differential pay is that the law recognizes the possibility effects to 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 targes/quotas or for good work performance. Instead, night shift differential pay is paid to an employee as a form indemnity.

2. Covered and excluded employees

a. Private sector

General Rule: The benefit applies to all employees.
Exception: These are the “excluded employees”:
1. Government employees whose schedule of offices hours fall between 6:00 in the morning to 6:00 in the evening;
Services rendered beyond the regular eight (8)-hour work schedules are paid overtime pay in accordance with existing laws, rules and regulations (Section 2[a], R.A. 11701); and
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) (Section 2[b], Ibid.);
3. Those of retail and service establishments regularly employing not more than five (5) workers (Section 1, Rule II, Omnibus Rules Implementing the Labor Code; Chapter 6, Night Shift Differential Pay, p. 21, 2022 DOLE-BWC Workers’ Statutory Monetary Benefits);
4. Kasambahay and persons in the personal service of another (Ibid.);
5. Managerial employees, if they meet all of the following conditions:
5.1. Their primary duty is to manage the establishment in which they are employed or of a department or subdivision thereof;
5.2. They customarily and regularly direct the work of two or more employees therein; and
5.3. 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 (Ibid.);
6. Officers or members of a managerial staff, if they perform the following duties and responsibilities:
6.1. Primarily perform work directly related to management policies of their employer;
6.2. Customarily and regularly exercise discretion and independent judgment;
6.3. (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 (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
6.4. 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 6.1, 6.2, and 6.3 above (Ibid.);
7) Field personnel and those whose time and performance are unsupervised by the employer. (Ibid.)

References

Book III, 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

Republic Act No. 11701

Related

Night shift differential pay

Computation of night shift differential pay

FAQ: Night shift differential

Disclaimer: All information is for educational and general information only. These should not be taken as professional legal advice or opinion. Please consult a competent lawyer to address your specific concerns. Any statements or opinions of the author are solely his own and do not reflect that of any organization he may be connected.

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