Computing the Daily Wage Rate from a Monthly Salary in the Philippines

This article explains how to translate a monthly salary into a legally sound daily wage rate in the Philippines. It covers governing concepts, standard conversion methods recognized in practice, variants for different workweek patterns, treatment of paid/unpaid days, inclusions/exclusions in the “basic wage,” and common compliance pitfalls—plus worked examples.

1) Key concepts and legal framing

Basic wage vs. other pay. The basic wage is the pay for work performed during normal hours, excluding allowances and monetary benefits that are not integrated into the basic wage (e.g., COLA, transport or meal allowances, discretionary bonuses, OT pay, night shift differential, and premium pay). Computations below refer to basic monthly salary unless stated otherwise.

Monthly-paid vs. daily-paid.

Monthly-paid employees are paid for all calendar days of the month—worked or unworked—including rest days, regular holidays, and often special days depending on policy or practice.
Daily-paid employees are paid only for the days they actually work, and for unworked regular holidays if they are entitled by law or company practice. Entitlements on special (non-working) days generally follow the “no work, no pay” rule unless there is a favorable company policy, CBA, or consistent practice.

These distinctions matter because they determine which day-count factor to use when converting between monthly and daily rates.

2) The two standard approaches to conversion

A. “365-day” approach (typically for monthly-paid)

When a monthly salary is intended to compensate for all days in a year, the neutral way to derive a daily rate is to annualize then divide by 365:

Daily Rate = (Monthly Rate × 12) ÷ 365

This yields a calendar-day daily equivalent suitable for monthly-paid employees whose salary covers regular days, rest days, and holidays (i.e., pay does not fluctuate by month length).

From the daily rate, the hourly rate for standard 8-hour workdays may be estimated as:

Hourly Rate ≈ Daily Rate ÷ 8

When to use: Monthly-paid status; employment contracts or policies state the monthly salary covers all days; payroll practice is uniform across months (no per-month day-count recalculation).

B. “Working-day” approach (typically for daily-paid or when the monthly figure is just a convenience label)

If the intent is to transact on worked days only, pick a working-day divisor that reflects the established workweek:

6-day workweek: use 26 working days per month (approximate)

Daily Rate ≈ Monthly Rate ÷ 26
5-day workweek: use 22 working days per month (approximate)

Daily Rate ≈ Monthly Rate ÷ 22

These 26/22 divisors mirror typical payroll practice (52 weeks × 6 or 5 workdays ÷ 12 months). They are widely used in HR/payroll systems for daily-paid personnel or where the monthly figure is merely a budgetary expression rather than a true “monthly-paid” classification.

For annualized consistency (useful in audits), you may translate daily back to monthly using yearly working-day factors commonly referenced in practice:

6-day pattern (Mon–Sat): 313 working days/year → Monthly ≈ Daily × 313 ÷ 12
5-day pattern (Mon–Fri): 261 working days/year → Monthly ≈ Daily × 261 ÷ 12

When to use: Daily-paid status; “no work, no pay” on rest days; monthly figure is only notional; or contracts explicitly peg pay to worked days.

3) Choosing the correct method

Read the contract and policy. If the contract says the employee is monthly-paid and salary already covers unworked rest days and regular holidays, use the 365-day method.
Check payroll practice. If payroll pays the same fixed monthly amount regardless of the month’s length and does not dock pay for unworked rest days/regular holidays, that again suggests the 365-day method.
If pay is tied to attendance (e.g., absences reduce pay; rest days are unpaid unless worked), then the working-day method (26 or 22) is more faithful.
Be consistent. The divisor you adopt should align with how you compute absences, tardiness, holiday pay, and daily premium pay. Inconsistency is a common source of disputes and assessments.

4) Treatment of rest days, regular holidays, and special days

Rest days.
- Monthly-paid: already covered by the monthly rate; daily equivalent from the 365-day method inherently prices in rest days.
- Daily-paid: not paid unless worked or there is a policy to the contrary.
Regular holidays.
- If unworked and the employee is monthly-paid or daily-paid but entitled, pay is due (commonly one day at 100%).
- If worked, premium rules apply (e.g., first 8 hours at 200% of the basic rate; plus differentials where applicable).
- Your daily rate should represent the “basic” day; the holiday premium is computed on top of that.
Special (non-working) days.
- Generally “no work, no pay,” unless company policy/CBA says otherwise.
- If worked, premium rules apply (e.g., first 8 hours at 130%).

Implication for daily rate: The 365-day daily number already averages in unworked paid days typical of monthly-paid status; the 22/26 daily number does not and is suited for “no work, no pay” arrangements.

5) What to include (and exclude) in the base

Include: Basic monthly salary that compensates the standard 8 hours/day; wage increases that expressly form part of basic pay.

Exclude: COLA, OT, night shift differential, premium pay, hazard pay (unless the contract integrates it into basic), 13th month, de minimis benefits, and discretionary bonuses. Keep the daily basic wage clean; compute add-ons separately as required by law or policy.

6) Worked examples

Example 1: Monthly-paid employee (all days covered)

Monthly basic salary: ₱30,000
Daily (365-day method): ₱30,000 × 12 ÷ 365 = ₱986.30 (rounded to centavos)
Hourly (8-hour day): ₱986.30 ÷ 8 = ₱123.29

If the employee works on a regular holiday:

Premium for first 8 hours @ 200%: ₱986.30 × 2 = ₱1,972.60 (before other differentials, if any).

Example 2: Daily-paid, 6-day workweek (no work, no pay on rest days)

Monthly amount used for budgeting: ₱26,000
Daily (26-day method): ₱26,000 ÷ 26 = ₱1,000.00
Hourly: ₱1,000 ÷ 8 = ₱125.00
Back to monthly (consistency check): ₱1,000 × 313 ÷ 12 ≈ ₱26,083.33 (The small difference reflects the rough 26-day monthly divisor vs. 313/12; choose one scheme and stick to it.)

Example 3: Daily-paid, 5-day workweek (Mon–Fri)

Monthly amount used for budgeting: ₱22,000
Daily (22-day method): ₱22,000 ÷ 22 = ₱1,000.00
Hourly: ₱1,000 ÷ 8 = ₱125.00
Back to monthly using 261 days/year: ₱1,000 × 261 ÷ 12 = ₱21,750.00 (If you need exact alignment, use either 22 or 261/12 ≈ 21.75 consistently across payroll rules.)

7) Interaction with minimum wage rules

Daily basic rates derived from a monthly salary must not fall below the applicable regional daily minimum wage for the employee’s location and sector (non-agriculture/agriculture/retail-service thresholds, etc.).
For monthly-paid staff, the 365-day daily equivalent is commonly used for minimum-wage compliance comparisons because it normalizes the monthly basic over the full year.
For daily-paid staff, compare the actual payable daily basic (e.g., the 22- or 26-day method) to the posted daily minimum wage for the region/industry.

8) Absences, tardiness, and salary deductions

Your chosen divisor governs how you value an absence or tardiness deduction:

Monthly-paid (365-day). To deduct for one day of absence without pay (AWOL/LOA), use the 365-based daily rate; hourly deductions use the hourly equivalent.
Daily-paid. No need to “deduct”; you simply do not pay the unworked day. If you maintain a notional monthly budget, recompute actual pay from the daily rate × actual days worked (+ holiday entitlements, if any).

Consistency between the divisor for conversion and the divisor for deductions is essential to avoid wage disputes.

9) Payroll documentation and audit tips

State the pay basis in the contract/handbook (monthly-paid vs. daily-paid; workweek pattern; paid/unpaid status of rest and special days).
Declare the conversion divisor (365, 26, 22, or the annualized 313/261 ÷ 12) and use it consistently for daily rate, absences, and premium computations.
Separate basic wage from allowances and premiums on the payslip.
Track regional wage orders for the workplace location; adjust promptly when increases take effect.
Document company practices (e.g., paying special days even if unworked) because consistent favorable practice can ripen into a demandable benefit.
Keep a reconciliation file showing how monthly figures map to daily/hourly rates and to statutory pay on holidays and special days.

10) Quick reference

Monthly-paid daily: Daily = Monthly × 12 ÷ 365 Hourly ≈ Daily ÷ 8
Daily-paid (6-day): Daily ≈ Monthly ÷ 26 (or Monthly ≈ Daily × 313 ÷ 12)
Daily-paid (5-day): Daily ≈ Monthly ÷ 22 (or Monthly ≈ Daily × 261 ÷ 12)
Check minimum wage: Derived daily basic must meet or exceed the applicable regional daily minimum.

Final notes

The 365-day method is the norm for monthly-paid employees whose salaries cover the whole calendar year, while the 22/26 working-day method is appropriate where pay is strictly tied to days worked.
Whichever method you adopt, spell it out in your documents and apply it uniformly across payroll computations (daily rate, absences, holiday pay, premiums).
If a salary package “bundles” allowances into the headline monthly figure, separate them first to get the true basic monthly wage before conversion.