Night Shift Differential
Night Shift Differential is a 10% premium add to a private sector employee’s regular wage when he works from 10pm to 6am.
Night Shift Differentials are provided for in Art 86 of the Labor Code of the Philippines.
Night Shift Differential:
- is 10% additional pay for work from 10:00pm to 6:00am the following day
- covers most employees with exceptions
- is calculated from the hourly rate (this can get tricky)
- does not include Cost of Living Allowance COLA
If you know your hourly rate you know what types of pay apply to a period, then it is easy to calculate the Night Shift Differential.
However, people are often not able to determine the correct hourly rate and do not know which other types of pay (Special day, Double Holiday) apply.
I’ll explain absolutely everything below including sample Night Shift Differential calculations and who is eligible.
Who are Entitled to Night Shift Differential in the Philippines?
Not all employees are eligible for the Night Shift Differential premium in the Philippines and there are differences as to when it can be applied, depending on the type of employee.
For example, whether the employee is from the private sector or from the government matters:
- Government Employee Night Shift Differential is applicable from 6pm to 6am.
- Private Employee Night Shift Differential is applicable from 10pm to 6am.
So, if you are a Private Sector employee you will start to be paid a Night Shift Differential only when it is 10:00pm.
Now, let’s discuss the list of excluded employees.
- Retail and Service establishments with not more than 5 workers
- Kasambahay and those in the personal service of another
- Managerial employees is their primary duty is to manage 2 or more employees and who have hiring or firing power
- Managerial staff if their work is 80% is categorized by working with management policies, if they exercise independent judgement, regularly assist management in managing the company or work in very specialized or technical lines.
- Field personnel who are unsupervised by the employer.
So, there are exceptions to those who receive Night Shift Differential.
You might need to check with your HR if you have questions, or to consult with a Philippine Labor Lawyer in extreme situations.
Night Shift Differential Calculations
To calculate your pay when Night Shift applies, you need to know know the type of day, which premiums apply and then apply the Night Shift Differential of 110%.
Let’s start with a list of common Night Shift Calculations.
- Ordinary day with Night Shift: 110%
- Ordinary day with Overtime & Nightshift: 125%*110%= 137.5%
- Rest day with Night Shift: 130%*110%: 143%
- Rest day with Overtime with Nightshift: 130%*130%*110%= 185.9%
- Special day with Night Shift: 130%*110% = 143%
- Special day on Rest Day with Night Shift: 150%*110% = 165%
- Regular Holiday with Night Shift: 200%*110%= 220%
- Regular Holiday on Rest Day with Night Shift: 260%*110%=286%
- Double Holiday with Night Shift: 300%*110%= 330%
- Double Holiday on Rest Day with Night Shift: 390%*110%= 429%
So, the way that you would use the list of calculations I’ve given you up above is to first figure out the following things:
- what type of day it is: Ordinary, Special Day, Holiday or Double Holiday
- whether it falls on a rest day
- whether overtime applies
- whether it falls during night shift
Let me define a few things first, and then I’ll go through sample calculations.
Philippine Salary Computations: Types of Days
In calculating your Philippine Salary and the correct Night Shift Differential, you need to first determine the type of day.
There are 4 Types of Days:
- Ordinary Day
- Special Day
- Double Holiday
Most people understand that regular days are Ordinary Days and Holidays are those announced every year.
However, people don’t often understand Special Days or Double Holidays.
Let’s start with Special Days.
Special Days are days Congress or the President designates, that might be as a result of a special event – say for example, the ASEAN games, etc.
Aside from being in response to an event, a Special Day vs a Regular Holiday has more flexible dates.
There are 2 types of Special Days:
- Special Non-Working Days: If worked, an employee is paid 130% for the first 8 hours of work. If unworked, it falls under no work no pay.
- Special Working Day: There is no premium and an employee is paid as if it was an Ordinary Day.
Now, what about a Double Holiday?
A Double Holiday is when 2 holidays fall on the same day.
Although rare, this can happen due to Holidays that have flexible dates.
For example Maudy Thursday and Good Friday fall on different days of the year.
In some years, Maudy Thursday or Good Friday might fall on Araw ng Kagitingan, which is when a Double Holiday occurs.
When you work a regular 8 hour day on a Double Holiday, you receive 300% of your regular rate.
Philippine Salary Computations: Hourly Rate
In Philippine Salary Computations, the most common mistake that people make is in determining their hourly rate.
Let’s discuss both Daily Paid and Monthly Paid workers.
Daily Paid Workers hourly rate calculations are very easy.
Daily Rate / Standard Work Hours per Day
If you are paid minimum wage at 570 per day and work an 8 hour day, then your hourly rate is 570/8 or 71.25 per hour.
Monthly Paid Workers hourly rate calculations are harder.
The HR Department will usually determine the average number of days per year.
(Please note that HR Departments differ slightly in how they calculate things. Some choose different divisors, some might annualize while others do not.)
They may decide that all days are paid, so all 365.25 (Leap years happen every 4 years, so some HRs will say that a year is 365.25 days) days are paid.
They may decide that a regular working week is 5 days from Monday to Friday and that Saturday and Sunday are unpaid. This is 365.26 – (52 weeks *2 Rest days per week) = or 261.25
These are samples of the divisors that HRs might use.
Then, some would annualize the salary to make the monthly rate annual.
For example, if you are paid Php 20,000 a year, then your annual salary is Php 240,000 a year.
If the divisor is 365, then you daily rate is 657.53.
And when you work a regular 8 hour day, your hourly rate is 82.19 which is 657.53 / 8 hours.
HRs may differ in the divisor they choose.
They may also differ in whether they annualize and in slight ways they do the calculation.
So, it often takes some discussion with your HR to see what your daily rate is since there are differences in calculation.
Night Shift Differential Sample Calculations
Let’s do a few examples so that the Night Shift Differential list of Calculations is clear.
You must know:
- Type of Day
- Your Hourly Rate
- Other premiums that are applicable as well such as overtime, restday etc.
First, let’s assume that you know what your hourly rate is.
(This is a big assumption. Most people do not know what their hourly rate is. See my brief discussion on hourly rates up top.)
Let’s tackle the first calculation – an Ordinary Day with Night Shift.
Ordinary Day with Night Shift Calculation
This would apply to you, if for example you are a call center agent whose regular work day is an 8 hour day from 10pm to 6am.
Hourly rate: Php 100
Night Shift Differential Percentage: 10%
Calculation: Php 100 * 1.10% = Php 110
So, your pay would be 110% of your hourly ordinary date rate if you worked the night shift.
Now, let’s do a second example.
We’ll do a Special day with Night Shift.
I’ve defined a Special Day up top as a day announced by Congress or the president in response to an event – say if we are hosting the SEA Games.
Now, a Special Day Non Working Day with Night Shift Differential Calculation is:
Hourly rate: Php 100
Special Day Premium: 30%
Night Shift Differential Percentage: 10%
Calculation: Php 100 * 130% * 110% = Php 70 * 130% * 110% = Php 143.00
FAQ Night Shift Differential
Is Night Shift Differential taxed?
Yes, Night Shift Differential is taxed so long as you reach the taxable threshold.
Due to the TRAIN law, the taxable threshold is Php 250,000.
Note that minimum wage earners are exempt from tax.
Is Night Shift Differential a mandatory benefit?
Yes, so long as you are eligible for the Night Shift Differential Rate, then you should be paid. Please check the list of those eligible for Night Shift Differential up top.
Should I sue if I was not paid Night Shift Differential?
It is really best if you speak to your HR first, before deciding to sue.
You may believe that you are owed Night Shift Differential but if you are a Managerial employee who falls under the non-eligible employees, then you may not be eligible.
You might also think that the Night Shift Differential is incorrectly calculated – but the HR may be using a different divisor or have other slight deviations in their calculation.
If you really believe that you should sue, check first with a Philippine Labor Lawyer.
You will need to bring proof as well – if you allege that you should have been paid but have no proof, then your case will not prosper.
What are the Night Shift Differential Times?
For private employees, Night Shift Differential is applied from 10pm to 6am.
For private employees, Night Shift Differential is applied from 6pm to 6am.
Note that this can change if there is a Collective Bargaining Agreement (Union)