Night Shift Differential Pay

Summary

▪ Night shift differential pay is an additional pay for work between 10:00 p.m. and 6:00 a.m. the following day.

▪ 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 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.

2. Covered and excluded employees

The benefit applies to all employees except:

1. Government employees, whether employed by the National Government or any of its political subdivisions, including those employed in government-owned and/or controlled corporations with original charters or created under special laws;

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

3. Kasambahay and persons in the personal service of another;

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

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

4.2. They customarily and regularly direct the work of two or more employees therein; and,

4.3. 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.

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

5.1. Primarily perform work directly related to management policies of their employer;

5.2. Customarily and regularly exercise discretion and independent judgment

5.3. (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,

5.4. 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;

6. Field personnel and those whose time and performance are unsupervised by the employer.

3. Computation

These are the steps on how to compute for the night shift differential pay.

1) Determine the employee’s hourly rate.

Formula:

daily rate ÷ 8 hours = hourly rate

Sample computation:

Php800.00 ÷ 8 hours = Php100.00/hour

2) To get the night shift hourly rate, compute for 10% of the hourly rate or a total of 110%.

Formula:

hourly rate x 110% = night shift hourly rate

Sample computation:

Php100.000/hour x 110% = Php110.00/hour

3) Multiply the night shift hourly rate against the hours worked (e.g. 2 hours).

Formula:

night shift hourly rate x 2 hours of work = pay with night shift differential

Sample computation:

Php110.00/hour x 2 hours = Php240.00

4) Add pay with night shift differential to pay for ordinary hours rendered (e.g. 6 hours).

Formula:

pay with night shift differential + pay for ordinary hours = day’s wage

Sample computation:

Php240.00 + Php600.00 = Php840.00

a. COLA, excluded

Cost of living allowance is not included in the computation.

4. Employment contract, company policies, CBA

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.

..

References

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

Book IIII, Omnibus Rules Implementing the Labor Code

2020 DOLE-BWC Handbook on Workers’ Statutory Monetary Benefits

▪ Jurisprudence or Supreme Court Decisions

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