How To Compute Night Differential in the Philippines (With Free Calculator)

Most of the BPO (Business Process Outsourcing) and Call Center companies in the Philippines operate on a shifting schedule. Some industries, like manufacturing and health care, have the same set-up to have real-time communication with clients, investors, and customers. 

While it’s good for business, working a night shift may take a toll on your health since you’ll sacrifice a sound sleep at night. A night differential pay should be given to compensate employees reporting to work from 10 PM to 6 AM. This should not be less than 10% of your hourly rate as mandated by the Department of Labor and Employment. 

This article will teach you about night differential pay and how much you’re entitled to get. 

Table of Contents

Free Download: Night Differential Pay Calculator in Excel

how to compute night differential 1

Do you want a quick way to compute your night differential pay? Simply download our free night differential pay calculator in Excel, read the instructions, and enter the requested information. Continue reading the article below to learn more about night differential pay and the formula/s used to compute it. 

What Is Night Differential?

Night differential is the premium pay given to employees who work from 10 PM to 6 AM. It should not be less than 10% of your hourly wage as per DOLE regulations. Some companies offer up to 20% night differential pay to attract more applicants and retain employees. 

Employers are mandated to provide night differential pay as per Article 86 of Book III – Conditions of Employment of the Labor Code of the Philippines1, which was enacted by President Ferdinand Marcos in 1974. Meanwhile, Republic Act 117012 was signed by President Rodrigo Duterte into law in April 2022, granting night differential pay to government employees (permanent, contractual, temporary, and casual staff). 

Who Is Eligible for Night Differential Pay?

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The night differential pay is applicable to all employees with the following exclusions: 

  • Government employees not covered by RA 11701
  • Employees of retail and service establishments with less than five workers 
  • Domestic helpers or kasambahays
  • Managerial employees 
  • Field employees who are unsupervised upon execution of their work duties outside the office 
  • Employees of companies duly registered as Barangay Micro Business Enterprise (BMBEs)

It is important to note that your employment agreement or contract shall specify your compensation package which includes your basic salary, overtime, night differential pay, holiday pay, and other allowances. 

If you are unsure of your job grade or level, you may clarify your eligibility to your HR as compensation packages differ from one company to another. 

Expanding on the first item on the list of exclusions above, RA 11701 specifies the exclusions in the government sector, as follows:

  • Government employees whose services are needed 24 hours per day
  • Uniformed personnel of the Armed Forces of the Philippines and Philippine National Police
  • Employees determined by the Civil Service Commission (CSC) and the Department of Budget and Management (DBM) are excluded from this benefit.

How To Compute Night Differential Pay

1. What Is the Formula for Night Differential Pay?

Night Differential Pay = (Hourly Rate x Night Differential Rate per Hour x Number of Hours)

Note that the government-mandated night differential rate is at a 10% minimum, but private organizations may offer a higher rate. Check your employment contract first to know your night differential rate. 

Meanwhile, “Number of Hours” refers to the hours rendered between 10 PM to 6 AM. 

2. How To Get the Daily Rate and Hourly Rate?

Daily Rate = (Monthly Basic Pay x 12 months) ÷ Total working days in a year  

See samples below:

a. (₱20,000 x 12 months) ÷ 313 (if working 6x/week)  

Daily rate: ₱766.78

b. (₱20,000 x 12 months) ÷ 216 (if working 5x/week) 

Daily rate: ₱1,111.11

To get the hourly rate, you need to divide the daily rate by 8 hours. 

a. Daily rate: ₱766.78 ÷ 8 hours

Hourly rate: ₱95.85

b. Daily rate: ₱1,111.11 ÷ 8 hours

Hourly rate: ₱138.89

3. Sample Night Differential Computation

For the scenarios below, we will use the following information:

Monthly salary₱20,000
Work Schedule5 times/week; 10 PM – 6 AM shift
Night differential hours 8 hours
Night differential rate10%
Daily rate₱1,111.11
Hourly rate₱138.89

a. Night Differential on a Regular Work Day

Night Differential Pay = (Hourly Rate x Night Differential Rate per Hour x Number of Hours)

₱138.89 X .10 X 8 hours = ₱111.11 night differential pay/shift 

b. Night Differential on a Rest Day

Rest Day Night Differential Pay = (Hourly Rate x 130%  x Night Differential Rate per Hour x Number of Hours)

₱138.89 X 1.30 X .10 X 8 hours = ₱144.44 rest day night differential pay

Note that 130% is being used to cover the 30% premium or additional pay on a rest day work as mandated by DOLE under Article 93 of Conditions of Employment. 

c. Night Differential During Regular Holiday

Regular Holiday Night Differential Pay = (Hourly Rate x 200% x Night Differential Rate per Hour x Number of Hours)

₱138.89 X 2 X .10 X 8 hours = ₱222.22 regular holiday night differential pay

Note that 200% is being used to cover the 100% premium or additional pay on a  regular holiday work as mandated by DOLE under Article 93 of Conditions of Employment. 

d. Night Differential During Special Holiday

Special Holiday Night Differential Pay = (Hourly Rate x 130% x Night Differential Rate per Hour x Number of Hours)

₱138.89 X 1.30 X .10 X 8 hours = ₱144.45 special holiday night differential pay

Note that 130% is being used to cover the 30% premium or additional pay on a special holiday work as mandated by DOLE under Article 93 of Conditions of Employment. 

e. Night Differential During Regular Holiday on a Rest Day

Regular Holiday Rest Day Night Differential Pay = (Hourly Rate x 260% x Night Differential Rate per Hour x Number of Hours)

₱138.89 X 2.60 X .10 X 8 hours = ₱288.89 special holiday rest day night differential pay

Note that 260% is being used to cover the 160% premium or additional pay on a regular holiday rest day work as mandated by DOLE under Article 93 of Conditions of Employment. 

f. Night Differential With Overtime

In this section, you will see the multipliers for every type of night differential pay with overtime. 

Type of Work DayNight Differential with Overtime
Regular Work Day1.375
Rest Day1.859
Special Holiday1.859
Regular Holiday2.86
Special Holiday Rest Day2.145
Regular Holiday Rest Day3.718
Double Holiday4.29
Double Holiday Rest Day5.577

Say, for example, the regular working hours of an employee are 7 PM to 4 AM. He is entitled to the night differential pay for his regular shift from 10 PM to 4 AM. However, if he rendered overtime from 4 AM to 6 AM, the night differential with overtime on a regular workday will apply. 

To illustrate, ₱138.89 X 1.375 X 2 hours = ₱381.95 night differential overtime pay 

You can use the multipliers above according to the type of workday rendered. 

Tips and Warnings

  • Make it a habit to check your employment contracts before signing to validate your eligibility for night differential pay and other benefits.
  • Always check your payslip to know if you are getting paid correctly and immediately file for disputes. Some companies have rulings on filing payroll disputes within a specific timeframe. If you fail to follow, your complaints may not be honored, or pay adjustment requests might be rejected. 
  • Read corporate announcements regarding upcoming holidays and stay informed. 

Frequently Asked Questions

1. Is night differential pay mandatory in the Philippines?

As per Article 86 of the Labor Code of the Philippines, employees rendering night work duty shall be paid the night differential pay at a 10% minimum. 

2. Is night differential pay taxable?

Yes, night differential pay is categorized as taxable income. Thus, it will be added to your net taxable income for the year. 

3. Is there a minimum number of hours to be qualified for night differential pay?

There’s no minimum number of hours, but please note that this is being paid on an hourly basis, and the company will not pay for half an hour night differential pay. 

4. How can I get my night differential pay?

You are entitled to the night differential pay for every shift rendered. Thus, you shall receive the corresponding night differential pay for every payout along with your basic salary and other allowances. 

5. Can my employer remove my night differential pay as a benefit?

Your employer may remove your night differential pay in case of a promotion to a managerial role. You can clarify this during the discussion of your promotion and compensation offer. 

References

  1. Department of Labor and Employment (DOLE). Book III: Conditions of Employment, Title I: Working Conditions and Rest Periods, Chapter I: Hours of Works. Retrieved from https://blr.dole.gov.ph/2014/12/11/book-iii-conditions-of-employment/
  2. Tilo, D. (2022). Philippines grants night shift workers differential pay. Retrieved 7 June 2022, from https://www.hcamag.com/asia/specialisation/employment-law/philippines-grants-night-shift-workers-differential-pay/406370

Elaine Joy Balajadia

Elaine Joy "EJ" Balajadia is an HR professional with almost 12 years of work experience in different HR facets such as labor and employee relations, compensation and benefits, culture and engagement, talent management, and organizational development. She is a registered nurse in the Philippines but her heart leads her to HR where she can help both the employees and the company she is working for. She is currently the HR Deputy Manager for a global IT-BPO company. For inquiries, you may reach her via Facebook Messenger (https://m.me/bulletbalajadia) or email ([email protected]).

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