Premium Pay

1. Concept

Premium pay – refers to an additional pay of 30% of the day’s wage of a covered employee for work done on a non-working day, rest day, or a special non-working day. (P.D. 442, Labor Code, Article 93; Omnibus Rules Implementing the Labor Code or “Omnibus Rules”, Section 9, Rule I, Book Three; 2024 DOLE-BWC Handbook on Workers’ Statutory Monetary Benefits or “DOLE-BWC Handbook”, p. 18)

NB: In corporate/business parlance, premium pay is also referred to as “rest day premium pay”. This is not entirely accurate as premium pay also applies to work on special non-working days, and not just to work on rest days.

a. Legal basis

The following is the legal bases:

Legal BasisProvisions
1) P.D. 442, Labor CodeArticle 93
2) Omnibus RulesSection 9, Rule I, Book Three

b. Daily- or monthly-paid, irrelevant

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

Both daily-paid and monthly-paid are entitled to premium pay.

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

Related: Daily-paid v. Monthly-paid

c. Employee status, irrelevant

The employee’s status is not relevant.

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

2. Covered employees

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

1) Government employees;

2) Managerial employees;

3) Officers or members of a managerial staff;

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

5) Workers who are paid by results; and

6) Field personnel.

a. Government employees

The following are not entitled to premium pay:

⦁ 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. (Section 2, Rule I, Book III, Omnibus Rules; DOLE-BWC Handbook, pp. 14-15)

Thus, government employees do not have premium pay.

Related: Government employees

b. Managerial employees

The following are not entitled to premium 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-BWC Handbook, pp. 14-15)

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

Related: Managerial employees

Grand Asian Shipping Lines, Inc. v. Galvez, G.R. No. 178184, 29 January 2014, Per Del Castillo, J.:

⦁ Galvez and Gruta, as managerial employees, are not entitled to their claims for holiday pay, service incentive leave pay and premium pay for holiday and restday. Article 82 of the Labor Code specifically excludes managerial employees from the coverage of the law regarding conditions of employment which include hours of work, weekly rest periods, holidays, service incentive leaves and service charges.

1) Managers in name only

Under Labor Law, and to be exempt from holiday 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 holiday 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 holiday 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 holiday 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 holiday 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 holiday 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.

c. Managerial staff

The following are not entitled to premium 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 [1, 2, and 3] above. (Section 2, Rule I, Book III, Omnibus Rules; DOLE-BWC Handbook, pp. 14-15)

Related: Managerial staff

1) Managerial staff in name only

Under Labor Law, and to be exempt from holiday 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 holiday 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 holiday pay, the employees have to meet the four (4) conditions mentioned earlier.

NB: Many employers have been held liable for holiday 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.

d. Kasambahay and persons in the personal service of another

The following are not entitled to premium pay:

Kasambahay and persons in the personal service of another. (Section 2, Rule I, Book III, Omnibus Rules; DOLE-BWC Handbook, pp. 14-15)

1) Kasambahay

Domestic worker or Kasambahay – refers to ‘any person engaged in domestic work within an employment relationship such as, but not limited to, the following: general househelp, nursemaid or “yaya”, cook, gardener, or laundry person, but shall exclude any person who performs domestic work only occasionally or sporadically and not on an occupational basis.’ (R.A. 10361, Domestic Workers Act or Batas Kasambahay. Section 4 [d])

Related: Kasambahay or Domestic Worker, Guide: Batas Kasambahay or Domestic Workers Act

2) Persons in the personal service of another

Persons in the personal service of another – refers to individuals who regularly provide service to another individual, a family, or a household, without being a kasambahay or a domestic worker.

Related: Persons in the Personal Service of Another

e. Workers who are paid by results

The following are not entitled to premium pay:

⦁Workers who are paid by results; and

Workers paid by results – refer to ‘those whose pay is calculated in terms of the quantity or quality of their work output which includes “pakyaw” work and other non-time work.’ (David v. Macasio, G.R. No. 195466, 02 July 2014, Per Brion, J.)

They include those who are paid on piecework, takay, pakyaw or task basis. (Paragraph 8, Article 124, Labor Code)

Related: Workers Paid by Results: Piece-rate, Pakyao, Takay, Task basis

f. Field personnel, etc.

The following are not entitled to premium 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-BWC Handbook, pp. 14-15)

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

2) ‘Those who are engaged on task or contract basis’

‘The phrase “those who are engaged on task or contract basis” should be related with “field personnel” applying the rule on ejusdem generis that general and unlimited terms are restrained and limited by the particular terms that they follow.’ (Cebu Institute of Technology v. Ople, G.R. No. L- 58870, December 18, 1987, Per Cortes, J.)

‘The payment of an employee on task or pakyaw basis alone is insufficient to exclude one from the coverage of SIL [service incentive leave] and holiday pay. They are exempted from the coverage of Title I (including the holiday and SIL pay) only if they qualify as “field personnel.” The IRR therefore validly qualifies and limits the general exclusion of “workers paid by results” found in Article 82 from the coverage of holiday and SIL pay.’ (David v. Macasio, G.R. No. 1954466, July 02, 2014, Per Brion, J.)

‘In short, in determining whether workers engaged on “pakyaw” or “task basis” is entitled to holiday and SIL pay, the presence (or absence) of employer supervision as regards the worker’s time and performance is the key: if the worker is simply engaged on pakyaw or task basis, then the general rule is that he is entitled to a holiday pay and SIL pay unless exempted from the exceptions specifically provided under Article 94 (holiday pay) and Article 95 (SIL pay) of the Labor Code. However, if the worker engaged on pakyaw or task basis also falls within the meaning of “field personnel” under the law, then he is not entitled to these monetary benefits.’ (David v. Macasio [2014], supra.)

‘Workers engaged on pakyaw or “task basis” are entitled to holiday and service incentive leave pay (SIL) provided they are not field personnel.’ (A. Nate Casket Maker v. Arango, G.R. No. 192282, October 05, 2016, Per Peralta, J.)

Related: Workers Paid by Results: Piece-rate, Pakyao, Takay, Task Basis

3. Non-working days

a. Rest days

Rank-and-file employees are entitled to one (1) rest day consisting of twenty-four consecutive hours after a six (6) day work schedule.

It shall be the duty of every employer, whether operating for profit or not, to provide each of his employees a rest period of not less than twenty-four (24) consecutive hours after every six (6) consecutive normal work days. (Article 91[a], P.D. 442, Labor Code)

The employer shall determine and schedule the weekly rest day of his employees subject to collective bargaining agreement and to such rules and regulations as the Secretary of Labor and Employment may provide. However, the employer shall respect the preference of employees as to their weekly rest day when such preference is based on religious grounds. (Article 91[b], P.D. 442, Labor Code)

1) Sundays

An employee shall be entitled to such additional compensation for work performed on Sunday only when it is his established rest day. (Ibid.)

2) No regular workdays nor rest days

When the nature of the work of the employee is such that he has no regular workdays and no regular rest days can be scheduled, he shall be paid an additional compensation of at least thirty percent (30%) of his regular wage for work performed on Sundays and special non-working holidays. (Article 93[b], Ibid.)

b. Special non-working days

There following are the special non-working days in the Philippines:

Chinese New YearFebruary 1
EDSA People Power Revolution AnniversaryFebruary 25
Black SaturdayMovable Date
Ninoy Aquino DayAugust 21
All Saint’s DayNovember 1
Feast of Immaculate Conception of MaryDecember 8
Last Day of the YearDecember 31

The above list is not exhaustive as additional special non-working days may be declared in a year by the President, Congress, or a local chief executive (e.g. foundation anniversary, etc.). Conversely, special non-working days may also be reduced.

4. Authorized work on rest day

General Rule. No employee shall be required against his will to work on his scheduled rest day except under circumstances provided in this Section: Provided, However, that where an employee volunteers to work on his rest day under other circumstances, he shall express such desire in writing, subject to the provisions of Section 7 hereof regarding additional compensation. (Last paragraph, Section 6, Rule III, Omnibus Rules Implementing the Labor Code)

Exceptions. An employer may require any of his employees to work on his scheduled rest day for the duration of the following emergencies and exceptional conditions:

1) In case of actual or impending emergencies caused by serious accident, fire, flood, typhoon, earthquake, epidemic or other disaster or calamity, to prevent loss of life or property, or in cases of force majeure or imminent danger to public safety (Section 6[a], Rule III, Ibid., cf. Article 92[a], Labor Code);

2) In case of urgent work to be performed on machineries, equipment or installations to avoid serious loss which the employer would otherwise suffer (Section 6[b], Rule III, Ibid., cf. Article 92[b], Labor Code);

4) In the event of abnormal pressure of work due to special circumstances, where the employer cannot ordinarily be expected to resort to other measures (Section 6[c], Rule III, Ibid., cf. Article 92[c], Labor Code);

5) To prevent serious loss of perishable goods (Section 6[d], Rule III, Ibid., cf. Article 92[d], Labor Code);

6) Where the nature of the work is such that the employees have to work continuously for seven (7) days in a week or more, as in the case of the crew members of a vessel to complete a voyage and in other similar cases (Section 6[e], Rule III, Ibid., cf. Article 92[e], Labor Code);

7) When the work is necessary to avail of favorable weather or environmental conditions where performance or quality of work is dependent thereon (Section 6[f], Rule III, Ibid.); and

8) Under other circumstances analogous or similar to the foregoing as determined by the Secretary of Labor and Employment (Article 92[f], Labor Code).

5. The Benefit

a. Computation

See: Computation for Premium Pay

6. Favorable stipulation in favor of the employee

a. Private Sector

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

For instance, the employer and the employee may stipulate in an employment contract that rate for night shift differential pay will be 20%, instead of the Labor Code’s 10%. If this is the case, then rate of the night shift differential pay will follow the 20%.

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.

7. Daily-paid v. Monthly-paid

During special non-working days, daily-paid employees are covered by the principle of no work, no pay. Hence, they are not entitled to pay unless they work on that day.

However, monthly-paid employees are entitled to their pay on a special non-working day even if no work was done if and only if the computation of their monthly rate includes special non-working days. (Note that there are many ways to compute for monthly rate.)

In either case, whether daily-paid or monthly-paid, they are entitled to premium pay on top of their day’s wage if they render work.

8. Burden of proof

Premium pays for holidays and rest days, as well as for overtime pay, “the burden is shifted on the employee, as these monetary claims are not incurred in the normal course of business. It is thus incumbent upon the employee to first prove that he actually rendered service in excess of the regular eight working hours a day, and that he in fact worked on holidays and rest days.” (Minsola v. New City Builders, Inc., G.R. No. 207613, 31 January 2018)

MINSOLA v. NEW CITY BUILDERS, INC., G.R. No. 207613, 31 January 2018

⦁ On the other hand, [the employee’s] claims for premium pay for holiday and rest day, as well as night shift differential pay are denied for lack of factual basis, as [the employee] failed to specify the dates when he worked during special days, or rest days, or between 10:00 p.m. and 6:00 a.m.

a. Clearly stated as premium pay

To comply with the substantial evidence rule required in labor cases, the employer has the burden of proving that premium pay is properly paid by presenting the necessary documentary evidence, such as a pay slip or a payroll/register.

Further, premium pay should be clearly indicated or shown via a separate line item, and thus not combined with the compensation and other benefits. (See Marby Food Ventures Corporation v. Dela Cruz, G.R. No. 244629, 28 July 2020, wherein the employer’s records were not given credence after it was shown that premium pay was incorrectly used to refer to overtime pay, otherwise stated, there was incorrect use of the term premium pay.)

9. Favorable employee stipulations

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.

Where the collective bargaining agreement or other applicable employment contract stipulates the payment of a higher premium pay than that prescribed under this Article, the employer shall pay such higher rate. (Article 93[d], Ibid.)

10. 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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