1. Overview: Fixed Salary Is Not “All-In,” Unless the Law and Contract Truly Make It So

In the Philippines, being on a fixed monthly salary does not automatically waive entitlement to premium pays such as night shift differential, rest day premiums, and holiday pay. The default rule under the Labor Code and its implementing regulations is coverage and entitlement, unless the employee is legally exempt or the salary is proven to be a valid “all-inclusive” pay that already incorporates the premiums.

Two principles anchor this topic:

Non-diminution and labor standards are mandatory. Employers cannot contract out of minimum statutory benefits.
Burden of proof is on the employer. If the employer claims exemption or inclusion, it must show a lawful basis and clear agreement.

2. Who Is Covered? Salary Type vs. Legal Status

2.1. Coverage is about job classification, not salary format

Fixed-salary workers may be:

Rank-and-file employees (generally fully covered by labor standards), or
Managerial/excluded employees (partially or fully exempt).

2.2. Employees commonly exempt from these premiums

Under Philippine labor standards, entitlement to certain premium pays generally does not apply to:

Managerial employees (those who manage the establishment or a department and have authority over hiring, discipline, etc.).
Officers or members of a managerial staff meeting regulatory tests (e.g., primary duty is management-related, regularly exercises discretion, and receives high-level salary).
Domestic helpers and persons in personal service (subject to different rules under Kasambahay law).
Workers paid purely by results (piece-rate, task, commission), insofar as the rules on premium pay may differ—though many still enjoy night differential and holiday premiums depending on circumstances.

Important: “Supervisor” or “team lead” titles do not automatically mean managerial exemption. The real test is function and authority, not rank name.

3. Night Shift Differential (NSD)

3.1. Statutory rule

Night Shift Differential is additional pay of not less than 10% of the employee’s regular hourly rate for any work performed between 10:00 PM and 6:00 AM.

3.2. Who must receive NSD

All covered employees who perform work in the night shift window—including monthly-paid/fixed salary employees—unless exempt by status.

3.3. How NSD is computed for fixed salary employees

Derive regular hourly rate:
- Monthly salary → daily rate → hourly rate
- A common legal method: Daily rate = Monthly salary ÷ 26 (for employees paid for all days except rest days), unless company practice uses another lawful divisor. Hourly rate = Daily rate ÷ 8 (or actual normal hours).
NSD per hour = Hourly rate × 10%
Multiply by number of hours worked from 10 PM to 6 AM.

3.4. NSD when work overlaps overtime, rest day, or holiday

Night differential is a separate premium stacked on top of other premiums. So if night work is also:

Overtime (beyond 8 hours), add NSD to the OT premium, and
On a rest day/holiday, add NSD to those premiums too.

3.5. Common compliance mistakes

Treating monthly salary as already inclusive of NSD without clear written basis.
Paying NSD only to daily-paid workers and not to monthly-paid staff.
Incorrect divisor (undercalculates hourly rate). Employer must use a divisor consistent with law and practice.

4. Rest Days and Rest Day Premium Pay

4.1. The right to a rest day

Employees are entitled to at least 24 consecutive hours of rest after six consecutive days of work.

Rest day is usually Sunday, but can be any day fixed by the employer after consultation.

4.2. Work on rest day: premium pay

If a covered employee works on a scheduled rest day, the employee must receive an additional premium of at least 30% of the regular wage for that day.

If the rest day work is also overtime, OT premiums apply on top.

4.3. Monthly-paid employees and rest day pay

A fixed monthly salary generally covers:

the regular workdays, and
may include pay for unworked rest days depending on the pay scheme.

But premium for actually working on a rest day is still due unless:

the employee is exempt, or
a proven lawful “all-inclusive” salary already covers rest day premiums (rare; must be explicit).

4.4. Alternative arrangements

Employers may implement:

Compressed Workweek (CWW)
Flexible work schedules These can redefine rest days, but must follow DOLE guidelines, be voluntary/consulted, and not reduce statutory benefits.

5. Holiday Pay for Fixed Salary Employees

5.1. Types of holidays

Regular Holidays (e.g., New Year’s Day, Araw ng Kagitingan, Labor Day, Independence Day, etc.)
Special (Non-Working) Holidays/Days (e.g., Ninoy Aquino Day, All Saints’ Day, etc.)
Special Working Days (paid as ordinary days unless a company policy grants premium)

Holiday line-up changes yearly, but the pay rules don’t change.

5.2. Regular holiday pay rules

For covered employees:

If not worked:

Employee gets 100% of daily rate (holiday pay).

If worked:

Employee gets 200% of daily rate for the first 8 hours.

If worked on rest day too:

At least 200% × 30% extra (effectively 260% minimum for first 8 hours).

If overtime on a regular holiday:

OT premium is 30% of the hourly rate on that day, stacked on holiday rate.

5.3. Special non-working holiday pay rules

If not worked:

“No work, no pay” unless company policy or CBA grants pay.

If worked:

Employee gets additional 30% of daily rate (i.e., 130% for first 8 hours).

If special day falls on rest day and worked:

Higher stacking applies (typically 150% minimum for first 8 hours).

5.4. Monthly-paid employees—are they already paid holidays?

Many monthly-paid employees are paid using a divisor that already includes payment for holidays.

If the monthly salary is computed to cover all days of the year including holidays, then holiday pay for unworked regular holidays is already included.

But two critical points:

Inclusion must be real, not assumed.
- Employer should be able to show how the monthly rate was structured (e.g., divisor including holidays).
Even if unworked holiday pay is included, premiums for working on holidays are still due.
- The “included” portion is the base 100% for unworked holiday; the extra premium for working (e.g., additional 100% for regular holiday work) must still be paid.

5.5. Exclusions from holiday pay

Generally exempt:

Managerial employees
Covered field personnel who are unsupervised and paid by results
Certain government employees (different regimes)

6. Interplay and Stacking of Premiums (Quick Guide)

When an employee works at night and it’s a rest day/holiday/OT, premiums stack unless a lawful exemption applies.

Example stacking logic (minimums):

Night work on ordinary day: Hourly rate + 10% NSD
Night work overtime on ordinary day: Hourly rate × 1.25 (OT) + NSD on that OT hour
Night work on rest day: Daily rate × 1.30 (rest day premium) + NSD for night hours
Night work on regular holiday: Daily rate × 2.00 + NSD for night hours
Night work on regular holiday that is also rest day: Daily rate × 2.60 + NSD for night hours

7. “All-Inclusive Salary” Clauses: When They Work and When They Don’t

7.1. Valid inclusion requires clarity and fairness

Employers sometimes claim a fixed salary is “inclusive of all benefits and premiums.” Courts and DOLE standards treat these clauses strictly.

A salary may be treated as inclusive only if:

The contract clearly and specifically states which premiums are included (NSD, holiday premium, rest day premium, OT, etc.).
The inclusion does not result in a wage below legal minimums once broken down.
The employee is not deprived of mandatory benefits through vague wording.

Generic phrases like “all benefits included” are often insufficient to waive statutory premiums.

7.2. If inclusion is invalid

Then premiums must be paid on top of the salary, and underpayments become:

money claims, and possibly
basis for labor standards violations.

8. Record-Keeping and Proof

Employers are legally required to keep time records or equivalent systems. Where the employer fails to keep or produce accurate records:

Employee’s evidence and credible estimates may prevail.
Ambiguities are resolved in favor of labor.

9. Remedies for Underpayment

If a fixed salary employee is shorted on NSD/rest day/holiday premiums, typical remedies include:

Filing a complaint with DOLE or NLRC, depending on amount and employment status.
Claims may include:
- wage differentials
- other premium underpayments
- 13th month recalculations
- possible legal interest
Prescription period:
- Money claims generally prescribe in 3 years from the time they became due.

10. Practical Compliance Checklist

For employers

Classify employees correctly (managerial vs rank-and-file).
Ensure contracts do not vaguely waive labor standards.
Use correct pay divisors and computations.
Pay NSD whenever work hits 10 PM–6 AM.
Pay proper rest day premiums when rest days are worked.
Pay holiday premiums for holiday work even if base holiday pay is embedded in monthly rate.
Maintain accurate timekeeping.

For fixed salary employees

Check if your role is truly managerial/exempt.
Review contract language for specific “inclusion” items.
Track your actual night hours, rest day work, and holiday work.
Compare payslips against statutory multipliers.

11. Key Takeaways

Fixed salary does not erase premium pay rights.
Entitlement depends on legal status, not pay frequency.
Night shift differential is at least 10% extra per night hour.
Rest day work earns at least 30% premium, plus OT/NSD if applicable.
Regular holiday work earns 200% minimum; special non-working day work earns 130% minimum.
Premiums stack.
“All-inclusive” salary must be specific, provable, and not below legal minimums.
Poor employer records usually benefit the employee in disputes.

If you want, I can draft sample computation templates or a short “rights explainer” you can hand to HR or employees, tailored to a specific shift pattern.