Premium Pay

Premium pay is an additional pay provided to a covered employee who renders work during non-workdays, such as a rest day or a special non-working day. An employee is entitled to one (1) rest day per week.

1. Concept

Premium pay is an additional pay of 30% of the day’s wage of a covered employee for work done on a rest day or a special non-working day. (Article 93[a], P.D. 442, Labor Code; Section 9, Rule I, Omnibus Rules Implementing the Labor Code; 2022 DOLE-BWC Handbook on Workers’ Statutory Monetary Benefits)

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

2. Covered and excluded employees

GENERAL RULE:The benefit applies to all employees.

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

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

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

2.3. 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;

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

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

3.2. Customarily and regularly exercise discretion and independent judgment;

3.3. (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

3.4. 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;

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

5. Workers who are paid by results, including those who are paid on piece rate, takay, pakyaw, or task basis, and other non-time work, if their output rates are in accordance with the standards prescribed in the regulations, or where such rates have been fixed by the Secretary of Labor and Employment; and

6. Field personnel, if they regularly perform their duties away from the principal or branch office or place of business of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty.

Employees who are not excluded are referred to as “covered employees”.

3. Non-work 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:

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

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. Computation

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

The following are the assumptions:

1) The employee’s daily rate is Php1,000.00.

2) The employee works for 8 hours, including 2 hours covered by night shift pay.

a. Private Sector

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. 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.

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.)

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

Related

⦁ Premium pay

⦁ FAQ: Premium pay

⦁ Cases on: Premium pay

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/Updated: February 12, 2023