Premium Pay

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  • P.D. 442 is the legal basis for premium pay.
  • Premium pay is an additional pay of 30% of a day’s wage for work done on a rest day or a special non-working day.
  • An employee is entitled to one (1) rest day per week.
  • There are four (4) special non-working days.
  • No work, no pay applies to daily-paid employees during a special non-working day.

Legal basis

The legal basis is Presidential Decree No. 442 (“P.D. 442”), otherwise known as the “Labor Code of the Philippines”.

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.

The day’s wage is subject to his actual hours of work rendered on that day. If he/she only renders work for six (6) hours, then he/she is entitled only to pay for the equivalent of the time worked.

Premium pay is computed with other legally mandated benefits, if applicable, such as holiday pay, overtime pay, and night shift differential pay.

Covered and excluded

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. 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”.

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.

Special non-working days

There are currently 4 special non-working days in the Philippines, namely:

August 21 – Ninoy Aquino Day

November 1 – All Saint’s Day

December 8 – Feast of Immaculate Conception of Mary

December 31 – Last Day of the Year

The above list is not exhaustive as special non-working days may be declared in a year via a law, order, or proclamation.

No work, no pay for daily-paid employees

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.

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.

Computation

These are the steps on how to compute for holiday pay.

1. If there is work performed on a rest day or special non-working day, a covered employee is entitled to a premium pay of 30% of his basic wage or a total of 130%.

day’s wage x 130% = day’s wage with premium pay

Example:

Php1,000.00 x 130% = Php1,300.00

2. If there is work performed on a rest day which is also a special non-working day, a covered employee is entitled to a premium pay of 30% of his basic wage or a total of 150%.

day’s wage x 150% = day’s wage with premium pay

Example:

Php1,000.00 x 150% = Php1,500.00

2. If there is work performed on a regular holiday which is also a rest day, a covered employee is entitled to a premium pay of 30% of the regular holiday rate of 200% based on his/her daily basic wage or a total of 260%.

day’s wage x 260% = day’s wage with premium pay

Example:

Php1,000.00 x 260% = Php2,600.00

Take note that there are employees who are not covered by holiday pay, such as those in retail/service establishments with less than 10 employees.

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
  • Omnibus Rules Implementing the Labor Code
  • DOLE-BWC Handbook on Workers’ Statutory Monetary Benefits