This article explains how to compute holiday pay, overtime pay, and night shift differential (NSD) in the Philippines, and how these interact (for example: overtime performed at night on a holiday). It is written in Philippine legal context and follows the standard rules applied in practice under the Labor Code, Department of Labor and Employment (DOLE) issuances, and long-standing wage computation principles.

I. Key Concepts and Legal Framework

A. The “normal wage” and what it includes

Most computations are anchored on the employee’s daily wage rate (for monthly-paid employees, a daily equivalent is used). In wage computations:

Basic wage is the primary base.
Certain benefits may be treated as integrated into the wage only if they meet legal tests (e.g., they are part of compensation, not reimbursement).
COLA treatment depends on how it is structured and whether it is integrated by policy or wage order; in many payroll practices, the “wage” used in premium computations includes legally mandated wage components per applicable wage orders and DOLE guidance.

Because workplaces differ, the safest approach in payroll policy is to define, consistently and in writing, what constitutes the base for premiums (basic wage alone vs. wage inclusive of mandated components), aligned with applicable wage orders and company practice.

B. Two types of holidays matter

Philippine pay rules distinguish:

Regular Holidays (e.g., New Year’s Day, Araw ng Kagitingan, etc.)
Special Days (commonly called special non-working days; also includes special working days depending on proclamation)

Regular holidays have a statutory holiday pay concept; special days are generally “no work, no pay” unless policy/contract/CBA provides otherwise, but if work is performed, a premium applies.

C. Premium pay vs. overtime pay vs. night differential

These are distinct and can stack:

Premium pay: additional compensation because work occurs on a holiday/rest day/special day.
Overtime pay (OT): additional compensation for hours beyond 8 hours in a day.
Night Shift Differential (NSD): additional compensation for hours worked between 10:00 PM and 6:00 AM.

Stacking typically follows this structure:

Determine the applicable day premium (holiday/rest day/special day).
Compute overtime based on the premium-adjusted rate.
Add night differential to night hours (and if overtime night hours exist, NSD is likewise applied on the appropriate base).

II. Who Is Covered (and Who Is Commonly Excluded)

A. Holiday pay coverage (regular holidays)

Holiday pay generally applies to employees who are rank-and-file and covered by labor standards. Common exclusions include:

Managerial employees
Certain field personnel (as legally defined) whose actual hours cannot be determined with reasonable certainty
Domestic workers (kasambahay) have distinct rules under a special law and regulations
Workers paid purely by results may have different treatment depending on whether they are covered by hours-of-work rules

B. Overtime and night differential coverage

Overtime and NSD are tied to hours of work regulation. Common exclusions:

Managerial employees
Some members of the managerial staff or those whose work is not subject to hours-of-work regulation
Certain field personnel (again, depending on whether hours are determinable)

In practice, determine coverage by role and legal classification, not job title alone.

III. The Basic Building Blocks for Computation

A. Daily rate

For a daily-paid employee:

Daily Rate (DR) = stated daily wage.

For a monthly-paid employee: Employers typically compute a daily equivalent using a divisor. Two common lawful approaches in practice (depending on pay scheme) are:

262 divisor (if monthly rate covers only working days in a year)
365 divisor (if monthly rate is intended to cover all days of the year, including rest days/holidays)

Use the divisor consistent with how the monthly salary is structured and how leave/holiday/rest day pay is treated in the company’s pay scheme.

B. Hourly rate

Hourly Rate (HR) = DR ÷ 8

Premiums and OT multipliers generally apply to this hourly base (or premium-adjusted hourly base).

C. What counts as “hours worked”

As a rule, hours worked include:

All time an employee is required to be on duty or at a prescribed workplace
Short rest periods counted as hours worked under regulations and practice
Authorized work performed during time that is effectively controlled by the employer

Meal periods are generally not hours worked unless conditions convert them into compensable time.

IV. Regular Holiday Pay

A. If the employee does not work on a regular holiday

As a general rule, the employee is paid 100% of the daily wage for that day, provided the employee is present or on paid leave on the workday immediately preceding the holiday (subject to recognized exceptions such as authorized absences, company policy, or where the holiday falls on a rest day, depending on pay scheme).

Regular Holiday – No Work:

Pay = 100% × DR

B. If the employee works on a regular holiday (first 8 hours)

Regular Holiday – Worked (8 hours or less):

Pay = 200% × DR for the day (or 200% of the hourly rate for the hours worked, up to 8 hours)

Equivalent hourly expression:

Holiday hourly rate (first 8 hours) = HR × 2.00

C. If the employee works overtime on a regular holiday

Overtime is paid on top of the holiday premium. A common applied computation:

Regular Holiday OT rate = holiday hourly rate × 1.30

So:

OT hourly rate on regular holiday = HR × 2.00 × 1.30 = HR × 2.60

D. If the regular holiday falls on the employee’s rest day

This adds a rest day premium on top of the regular holiday rule for work performed.

For work on a regular holiday that is also a rest day (first 8 hours), the commonly applied premium is:

Pay (first 8 hours) = 260% × DR Equivalent hourly:
HR × 2.60

Overtime beyond 8 hours is commonly computed as:

OT rate = (HR × 2.60) × 1.30 = HR × 3.38

V. Special Days (Special Non-Working Day) Pay

Special days are generally “no work, no pay,” unless:

There is a company policy, CBA, or practice granting pay even if unworked; or
A proclamation/issuance designates it a special working day with a different rule.

A. If the employee does not work on a special non-working day

Special Day – No Work:

Pay = 0 (unless policy/practice/CBA says otherwise)

B. If the employee works on a special non-working day (first 8 hours)

The common statutory premium:

Pay (first 8 hours) = 130% × DR Equivalent hourly:
HR × 1.30

C. Overtime on a special non-working day

Overtime premium is commonly:

OT rate = (HR × 1.30) × 1.30 = HR × 1.69

D. Special day falling on rest day

If a special day also falls on a rest day and work is performed (first 8 hours), the common rate:

Pay (first 8 hours) = 150% × DR Equivalent hourly:
HR × 1.50

Overtime:

(HR × 1.50) × 1.30 = HR × 1.95

VI. Rest Day and Ordinary Day Premiums (Non-Holiday Context)

Even outside holidays, premiums apply:

A. Work on rest day (not a holiday)

Rest day worked (first 8 hours): 130% × DR (or HR × 1.30)
Rest day OT: (HR × 1.30) × 1.30 = HR × 1.69

B. Work on a regular day overtime

Ordinary day OT rate: HR × 1.25 (i.e., 125% of hourly rate for OT hours)

VII. Night Shift Differential (NSD)

A. Coverage and time window

NSD applies to hours worked between 10:00 PM and 6:00 AM.

B. The minimum statutory rate

NSD = at least 10% of the employee’s regular wage for each hour worked within the night window.

C. How NSD is computed with premiums

In practice, NSD is computed as an add-on to the applicable hourly rate for the hours that fall within 10 PM–6 AM.

Typical approach:

Identify night hours worked.
Determine the applicable base hourly rate for those hours (ordinary, holiday, rest day, special day, etc.).
Compute NSD per hour: Base hourly rate × 10% (or higher if policy/CBA provides).

So:

NSD hourly add-on = Applicable hourly rate × 0.10

Examples of applicable hourly rate:

Ordinary night hour: HR
Holiday night hour (within first 8 hours): HR × 2.00
Special day night hour (within first 8): HR × 1.30
Rest day night hour (within first 8): HR × 1.30
Holiday-rest day night hour: HR × 2.60

VIII. Putting It Together: Stacking Rules and Step-by-Step Method

Step 1: Determine the day classification

Ordinary day
Rest day
Regular holiday
Regular holiday that is also rest day
Special non-working day
Special non-working day that is also rest day

Step 2: Determine hours worked and split by time bands

First 8 hours vs. OT hours
Within night window (10 PM–6 AM) vs. outside

Step 3: Apply the correct rate for each bucket of hours

Use multipliers on HR:

A. Ordinary day

Regular hours: 1.00
OT: 1.25
NSD add-on: +0.10 of applicable rate for night hours

B. Rest day (not holiday)

Regular hours: 1.30
OT: 1.30 × 1.30 = 1.69
NSD add-on: +0.10 of applicable rate on night hours

C. Regular holiday

Regular hours: 2.00
OT: 2.00 × 1.30 = 2.60
NSD add-on: +0.10 of applicable rate on night hours

D. Regular holiday + rest day

Regular hours: 2.60
OT: 2.60 × 1.30 = 3.38
NSD add-on: +0.10 of applicable rate on night hours

E. Special non-working day

Regular hours: 1.30
OT: 1.30 × 1.30 = 1.69
NSD add-on: +0.10 of applicable rate on night hours

F. Special non-working day + rest day

Regular hours: 1.50
OT: 1.50 × 1.30 = 1.95
NSD add-on: +0.10 of applicable rate on night hours

IX. Worked Computation Examples

Assume:

Daily Rate (DR) = ₱610
Hourly Rate (HR) = ₱610 ÷ 8 = ₱76.25

Example 1: Regular holiday, worked 8 hours (day shift)

Rate = HR × 2.00 = ₱76.25 × 2 = ₱152.50/hour
Pay = ₱152.50 × 8 = ₱1,220.00 (Equivalent to 200% × ₱610)

Example 2: Regular holiday, worked 10 hours (2 OT hours), day shift

First 8 hours: HR × 2.00 = ₱152.50/hour → ₱152.50 × 8 = ₱1,220.00
OT hours: HR × 2.60 = ₱76.25 × 2.60 = ₱198.25/hour
OT pay: ₱198.25 × 2 = ₱396.50
Total = ₱1,616.50

Example 3: Ordinary day, 8 hours all within 10 PM–6 AM (pure night shift)

Base: HR × 1.00 = ₱76.25/hour
NSD add-on: 10% × ₱76.25 = ₱7.625/hour
Night hourly total: ₱76.25 + ₱7.625 = ₱83.875/hour
Pay: ₱83.875 × 8 = ₱671.00 (rounded per payroll rules)

Example 4: Regular holiday, 8 hours, all within 10 PM–6 AM

Holiday base hourly: HR × 2.00 = ₱152.50/hour
NSD add-on: 10% × ₱152.50 = ₱15.25/hour
Total night holiday hourly: ₱167.75/hour
Pay: ₱167.75 × 8 = ₱1,342.00

Example 5: Regular holiday that is also rest day, 9 hours where 2 hours are night (10–12 PM) and 1 hour is OT (12–1 AM)

Breakdown:

First 8 hours include 2 night hours (10–12 PM)
9th hour is OT and night (12–1 AM)

Compute:

Holiday-rest day base hourly (first 8): HR × 2.60 = ₱76.25 × 2.60 = ₱198.25
NSD add-on for night hours within first 8:
- 10% × ₱198.25 = ₱19.825 per night hour
- Night hours pay (10–12 PM): (₱198.25 + ₱19.825) × 2 = ₱436.15 (rounded)
Non-night hours within first 8 (6 hours): ₱198.25 × 6 = ₱1,189.50
OT night hour (9th hour):
- OT base: (HR × 2.60) × 1.30 = HR × 3.38 = ₱76.25 × 3.38 = ₱257.73
- NSD add-on: 10% × ₱257.73 = ₱25.77
- OT night hourly total: ₱283.50
- OT night pay: ₱283.50

Total:

₱436.15 + ₱1,189.50 + ₱283.50 = ₱1,909.15 (rounded)

X. Common Compliance Issues and Clarifications

A. “No work, no pay” vs. entitlement rules

Regular holiday: holiday pay exists even if no work is done, subject to qualifying conditions and lawful absences.
Special non-working day: generally no pay if no work, unless policy/practice grants it.

B. “Double holiday” situations

Occasionally, a date is both a regular holiday and another classification by proclamation or coincidence. The applicable pay treatment can depend on the issuance and how DOLE directs the computation for that event. Employers should follow the specific DOLE labor advisory for that date if available, because multipliers can vary by the exact designation.

C. Monthly-paid employees and “already paid” holidays

For monthly-paid employees whose monthly salary is designed to cover holidays/rest days, the payroll treatment must remain consistent with the pay scheme. Even when holidays are “built in,” work performed on those days still triggers premium obligations; what changes is how the base is represented in payroll accounting (avoid double-counting by structuring the divisor and premium computation correctly).

D. Rounding and payroll policy

Rounding can materially change compliance in edge cases. A defensible practice:

Maintain computations to at least two decimal places per hour,
Round only at final payable amounts per payroll policy,
Apply rounding consistently.

E. Interplay with paid leaves

If an employee is on a paid leave on the day preceding a regular holiday, many pay schemes treat that as satisfying the “present on the preceding day” condition; unlawful denial often comes from treating paid leave as absence. The correct handling depends on the nature of leave and policy consistency.

F. Burden of proof and recordkeeping

Accurate time records are crucial, especially for NSD and OT. Employers should maintain:

daily time records,
overtime authorizations where required by policy,
holiday work schedules and approvals.

XI. Practical Reference Table of Common Multipliers (Based on Hourly Rate HR)

Day / Situation	First 8 hours multiplier	OT multiplier (beyond 8)	Notes
Ordinary day	1.00	1.25	NSD add-on applies to night hours
Rest day	1.30	1.69	OT = 1.30 × 1.30
Regular holiday	2.00	2.60	OT = 2.00 × 1.30
Regular holiday + rest day	2.60	3.38	OT = 2.60 × 1.30
Special non-working day	1.30	1.69	OT = 1.30 × 1.30
Special non-working day + rest day	1.50	1.95	OT = 1.50 × 1.30

Night Shift Differential add-on: For each hour between 10 PM–6 AM, add 10% of the applicable hourly rate for that hour.

XII. Drafting a Payroll Rule Set (Recommended Structure)

Organizations commonly reduce disputes by formalizing:

Definitions: regular holiday, special day, rest day, night hours, overtime.
Coverage: which positions are exempt from hours-of-work rules.
Base rate: what wage components are included in the premium base.
Divisors for monthly-paid employees and how holidays/rest days are treated.
Approval rules for overtime and holiday work (without using approval to defeat statutory pay once work is suffered or permitted).
Timekeeping and dispute resolution process.

XIII. Summary of Core Rules

Regular Holiday (no work): 100% of daily rate (subject to qualifying rules).
Regular Holiday (worked 8 hours): 200% of daily rate.
Regular Holiday OT: hourly rate × 2.00 × 1.30.
Special Non-Working Day (no work): generally no pay unless policy says otherwise.
Special Non-Working Day (worked 8 hours): 130% of daily rate.
NSD: add at least 10% per hour worked from 10 PM–6 AM, computed using the applicable hourly base (ordinary/holiday/rest day/special day and OT where applicable).

This framework allows correct computation even in complex overlaps (holiday + rest day + night + overtime) by separating hours into buckets and applying the correct multiplier to each bucket.