Computing the Daily Wage Rate from a Monthly Salary (Philippine Private-Sector Context)

This guide explains, in practical legal terms, how to convert a monthly salary into a daily wage rate in the Philippines—and how that interacts with minimum wage compliance, holiday pay, absences, and other payroll rules. It’s written for employers, HR/payroll, and workers who want a clear, defensible method grounded in the Labor Code, wage orders, and long-standing DOLE computation practice.

1) Start by classifying the employee

A. Monthly-paid employees

Paid for all days of the month, whether worked or not: ordinary working days, weekly rest days, regular holidays, and special days.
Typical examples: office staff with fixed monthly pay.

B. Daily-paid employees

Paid only on days actually worked (and on unworked regular holidays only if the law or policy pays them).
Typical examples: operations/field staff on timekeeping, with pay that fluctuates with attendance and holidays.

Why this matters: Your conversion factor (the number of paid days per year) depends on which group applies, and on the workweek pattern and holiday treatment.

2) The governing idea: pick the right annual paid-days factor

The annual factor is the count of days the worker is considered paid for in a full year. Convert between monthly and daily rates by multiplying or dividing by 12 (months) and that annual factor.

Common annual factors used in DOLE practice

365 — monthly-paid (paid for all calendar days).
313 — daily-paid under a 6-day workweek who are not paid on their weekly rest day (365 − 52 Sundays).
261 — daily-paid under a 5-day workweek who are not paid on Saturdays and Sundays (365 − 104 weekend rest days).

Adjustments: If your policy or a CBA pays unworked regular holidays to daily-paid workers, add those days (typically 12) to the base factor. If your policy pays unworked special days (company practice, CBA), add the actual count paid. If rest days are paid (rare), add those too.

3) Core formulas (monthly ↔ daily)

Let:

MR = monthly rate (basic salary per month)
ADR = applicable daily rate (basic wage per day)
F = annual factor (# of paid days per year)

Then:

Monthly-paid (paid all days)

Daily from monthly: ADR = (MR × 12) / 365
Monthly from daily: MR = (ADR × 365) / 12

Daily-paid (factor varies)

Daily from monthly: ADR = (MR × 12) / F
Monthly from daily: MR = (ADR × F) / 12 where F is one of 261, 313, or a custom number you derive as explained above (e.g., 261 + 12 if unworked regular holidays are paid for a 5-day schedule).

4) Worked examples

These are illustrations. Always align your factor with the actual workweek and holiday pay policy.

Example 1 — Monthly-paid employee (paid all days)

MR = ₱30,000
ADR = (30,000 × 12) / 365 = 360,000 / 365 ≈ ₱986.30/day

Example 2 — Daily-paid, 6-day workweek, no pay on rest day, no pay on unworked special days, paid unworked regular holidays

Base factor: 313 (all days except Sundays)
Add 12 regular holidays (paid even if unworked) → F = 325
MR = ₱18,000 → ADR = (18,000 × 12) / 325 = 216,000 / 325 ≈ ₱664.62/day

Example 3 — Daily-paid, 5-day workweek (Mon–Fri), no pay on weekends, no pay on unworked holidays

F = 261
MR = ₱20,000 → ADR = (20,000 × 12) / 261 = 240,000 / 261 ≈ ₱919.54/day

Sanity check: If you reverse the formulas (daily → monthly) using the same F, you should arrive close to the original monthly rate (small rounding differences aside).

5) Minimum wage compliance (regional wage orders)

Minimum wages are set per region and generally expressed as daily minimums.
To assess compliance for a monthly-paid worker, convert the monthly basic salary to a daily rate using 365. The result must not be lower than the applicable daily minimum for a day’s work.
For daily-paid workers, simply compare the ADR against the daily minimum for the sector/industry (non-agri, agri, retail/service with certain headcount caps, etc.).
COLA (if any) is treated according to the wage order; check whether it is integrated or separate.

Tip: If the monthly salary is barely above the minimum, re-confirm that your conversion is using the correct factor and that you’re not inadvertently dipping below the minimum on certain days (e.g., when applying deductions).

6) Holidays, premiums, and the daily rate

Once you’ve established the ADR, pay the statutory premiums against it:

Regular holidays (unworked): daily-paid get 100% of ADR if the day is a paid regular holiday per law/policy; monthly-paid are already covered in the monthly salary.
Regular holidays (worked): at least 200% of ADR for the first 8 hours; OT beyond 8 hours adds the regular holiday OT premium.
Special (non-working) days: “no work, no pay” unless company practice/CBA says otherwise; if worked, at least 130% of ADR for the first 8 hours.
Rest day work: premium applies (commonly 130% if special day, 150% if rest day alone), subject to the current DOLE rules.
Night shift differential: at least 10% of the hourly rate for work between 10:00 p.m. and 6:00 a.m.
Overtime: at least 25% (ordinary day) or the higher corresponding premium if OT falls on rest days, special days, or holidays.

Convert the ADR to an hourly rate by dividing by the standard hours in a workday (usually 8), unless there’s a shorter normal day by law or policy.

7) Absences, tardiness, undertime, and the divisor you use

For monthly-paid employees, the conservative legal divisor for a per-day deduction is 365 (consistent with being paid for all days).
Many companies adopt operational divisors such as 26 (6-day workweek) or 22 (5-day workweek) for convenience in payroll deductions and leave conversions. This may be acceptable if it does not reduce statutory benefits or drop effective pay below the minimum.
State the divisor in the handbook, contract, or policy, apply consistently, and ensure it never operates to diminish legally mandated pay.

8) 13th-month pay, SIL conversion, service charges

13th-month pay: at least 1/12 of basic salary actually earned within the calendar year. If you’ve converted from monthly to daily for proration, use the same factor you used for attendance and paid days to avoid understatement.
Service Incentive Leave (SIL) cash conversion (if any): use the ADR (or hourly rate if policy states) at the time of conversion.
Service charge distribution (hospitality/food service): treated separately from basic wage; don’t blend it into the ADR used for minimum wage checks.

9) Rounding, payroll cut-offs, and documentation

Keep a two-decimal standard for peso amounts (₱0.01). For internal audit, maintain calculations to at least four decimals during intermediate steps, rounding only at the final payable.
Disclose in payslips: MR, ADR, workdays counted, holidays/premiums, deductions, and the factor used.
If your holiday calendar changes (it does, annually), update the F for daily-paid workers prospectively and document the basis.

10) Quick decision tree (what divisor should I use?)

Monthly-paid? → Use 365.
Daily-paid?
- 5-day workweek (no pay on weekends): start with 261.
- 6-day workweek (no pay on weekly rest day): start with 313.
- Then add the count of unworked holidays (and special days) your policy pays.
- If any rest days are paid, add those rest days.

Formula: ADR = (MR × 12) / F

11) FAQs

Q: Isn’t “monthly ÷ 26” a standard daily rate? It’s common in practice for a 6-day schedule, but it’s not the legal method for a monthly-paid employee who is paid for all days. The conservative, regulation-aligned conversion for monthly-paid is (MR × 12) / 365. If you use 26 or 22 internally, ensure it never causes underpayment of minimum wage, holiday pay, or 13th-month.

Q: How do I check compliance when the wage order is daily but my people are monthly-paid? Convert monthly → daily using 365 and compare to the regional daily minimum for an 8-hour day.

Q: What if a wage order increases the minimum mid-year? Adjust prospectively from the effectivity date. If you’re benchmarking a monthly offer against a daily minimum, convert the daily minimum to monthly using (ADR × 365) / 12 for monthly-paid, or the appropriate F for daily-paid.

Q: Do I include allowances in the daily rate? Only if they are part of basic wage (i.e., wage-integrated by policy/CBA). Excluded benefits (e.g., de minimis, non-wage benefits) should not be counted for minimum wage compliance.

12) A compact template you can reuse

Determine status: monthly-paid or daily-paid.
Choose F:
- Monthly-paid → 365.
- Daily-paid → 261 (5-day) or 313 (6-day), then add any unworked paid holidays/special days/rest days.
Compute ADR: ADR = (MR × 12) / F
Derive hourly rate (if needed): Hourly = ADR / 8.
Apply premiums (OT, night diff, rest day, holiday) to the ADR/Hourly as required.
Check against regional minimum wage for compliance.
Document the factor and rules in contracts/policies; update when the holiday calendar or wage orders change.

Bottom line

Use 365 for monthly-paid, and a work-schedule-and-holiday-accurate factor for daily-paid. Apply the same factor consistently across payroll computations, keep documentation tight, and re-validate each time wage orders or holiday proclamations change. This keeps you compliant, transparent, and audit-ready.