When to Use the 312 Factor Rate in Philippine Labor Computations

Executive Summary

The 312 factor is a conversion constant used in payroll and HR computations in the Philippines for daily-paid employees on a six-day workweek who are not paid for unworked regular holidays, special (non-working) days, or their weekly rest day. Use it when you need to translate a daily rate into monthly, annual, or hourly equivalents (and vice-versa) in this specific pay arrangement. Do not use 312 for monthly-paid employees or for daily-paid employees who are entitled to pay on unworked holidays or who follow a five-day week.

Legal Context (Philippine Framework)

While the Labor Code and implementing rules do not “codify” the numbers 261/262/313/365/312 by statute, Philippine payroll practice—guided by the Labor Code, its IRR, DOLE handbook/guidelines, and jurisprudence—allows reasonable equivalent rate conversions consistent with the employee’s actual pay coverage:

Monthly-paid employees are paid for all days of the year (365)—workdays, rest days, regular holidays, and special days—unless a policy or agreement states otherwise.
Daily-paid employees are paid only for days actually worked and for unworked regular holidays if entitled by law; entitlement depends on minimum-workday conditions and company/CBA rules.

The factor you use must mirror which days are paid in the employment arrangement. The 312 factor corresponds to a six-day workweek where only the 6 workdays per week are paid—and unworked holidays and rest days are unpaid.

What Exactly Is the 312 Factor?

Derivation: 6 days/week × 52 weeks/year = 312 payable workdays/year
Assumed paid days: Ordinary workdays only
Assumed unpaid days: Weekly rest day(s), unworked regular holidays, unworked special days

It is therefore appropriate for daily-paid workers on a 6-day schedule where the employer’s policy (and practice) is no pay for unworked holidays and the weekly rest day.

When to Use 312 (Checklist)

Use 312 if all of the following are true:

Pay basis: Employee is daily-paid (not monthly-paid).
Schedule: Six-day workweek (typically Monday–Saturday).
Holiday coverage: Unworked regular holidays and special (non-working) days are not paid.
Rest day: Weekly rest day is unpaid if not worked.
Purpose: You are converting daily ↔ monthly/annual/hourly rates, costing manpower, or standardizing internal pay tables for this specific group.

If any of these fail, reassess (see “Which factor should I use instead?” below).

When Not to Use 312

Do not use 312 if:

The employee is monthly-paid (use 365 coverage logic).
The employee is daily-paid but entitled to pay on unworked regular holidays (consider 313, which assumes 365 − 52 rest days = paid 313 days).
The employee follows a five-day workweek (consider 261 if unworked holidays are unpaid; other variants exist depending on holiday treatment).
A CBA, policy, or DOLE order guarantees holiday/rest-day pay even if unworked.
You’re computing holiday pay for the day itself—holiday pay uses statutory multipliers, not the conversion factor.

Practical Payroll Applications

1) Converting Daily Rate → Monthly Equivalent

Formula:

Monthly Rate (MR) = (Applicable Daily Rate ADR × 312) ÷ 12

Example: ADR = ₱610 MR = (₱610 × 312) ÷ 12 = ₱15,860

Why 312? Because in a year you expect at most 312 payable workdays in this arrangement.

2) Converting Monthly Rate → Daily Rate (when your MR was built with 312)

Formula:

ADR = (MR × 12) ÷ 312

Example: MR = ₱15,860 ADR = (₱15,860 × 12) ÷ 312 = ₱610

Tip: Always reconfirm the factor originally used to build the MR before “back-solving.”

3) Getting the Hourly Rate

Common practice (for an 8-hour day):

Hourly Rate (HR) = ADR ÷ 8

If you need a monthly-to-hourly bridge based on 312:

HR = [(MR × 12) ÷ 312] ÷ 8

4) Overtime (OT), Night Shift Differential (NSD), Premiums

OT rate: ADR ÷ 8 × 1.25 (for ordinary OT; use correct multiplier for rest day/holiday OT)
NSD: Hourly × 0.10 for hours worked from 10:00 p.m. to 6:00 a.m. (unless a higher rate applies by CBA/policy)
Rest-day/holiday premiums: Apply statutory multipliers to the hourly/daily rate; the 312 factor does not change the multipliers—only the base.

5) Leaves (SL/VL) Monetization

When monetizing unused leave for daily-paid staff under this scheme, use ADR (not a monthly rate built on a different factor). If company policy pays leaves at average earnings, compute the average using days actually worked; 312 can be a planning constant but the payout typically uses the current ADR.

6) 13th-Month Pay

By law, 13th-month is 1/12 of basic salary actually received within the calendar year. For daily-paid employees, sum the basic pay actually earned (worked days and paid holidays, if any). The 312 factor is a planning/conversion tool only; the statutory payout uses actual earnings, not an assumed 312.

7) Costing & Budgeting

For manpower planning where your six-day daily-paid workforce has no pay for unworked holidays/rest days, using ADR × 312 gives you an annual cost baseline per head for basic pay. Add projected premiums (OT, rest-day work, holiday work) separately.

Edge Cases & How to Handle Them

Holiday Policy Changes Mid-Year: If your company later starts paying unworked regular holidays, shift future conversions to 313. Historical pay already made under 312 usually remains valid if compliant at the time.
Compressed Workweek: If you compress six days into five by lengthening daily hours, the factor may change (often aligning with five-day equivalents). Re-document the arrangement and recompute.
Irregular Scheduling / Seasonal Work: Use actual earnings for statutory pay (13th-month, last pay). The factor is for standardization, not a substitute for real payroll records.
Minimum Wage Compliance: Minimum wage is tested per day (or per hour) against the applicable wage order. Make sure your ADR meets or exceeds the current daily minimum, regardless of factor.
CBAs and Company Policies: A CBA or written policy can grant better benefits (e.g., paying unworked holidays). If so, the factor must reflect the more generous coverage.
Hires/Separations Mid-Year: Pro-rate using actual days worked/paid. Factors are inappropriate for prorating statutory benefits where the rule is “actual basic pay received.”

“312 vs. 313 vs. 261 vs. 365” at a Glance

Factor	Typical Use Case	What It Assumes Is Paid
312	Daily-paid, 6-day week, no pay on unworked holidays/rest day	Workdays only (6/day × 52 weeks)
313	Daily-paid, 6-day week, with pay on unworked regular holidays (rest day unpaid)	365 − 52 weekly rest days = 313 paid days
261	Daily-paid, 5-day week, no pay on unworked holidays/weekends	365 − 104 rest days (Sat/Sun) = 261 workdays
365	Monthly-paid (paid all days of the year)	All days (workdays, rest days, regular & special days)

These are pay-coverage mirrors. If your coverage differs, pick the factor that matches what you actually pay.

Worked Examples

A. Setting Monthly Pay from a Daily Rate (312 Arrangement)

ADR = ₱610
MR = (₱610 × 312) ÷ 12 = ₱15,860

B. Back-Solving Daily Rate from a Monthly Budget (Assuming 312 Coverage)

Target MR = ₱16,000
ADR = (₱16,000 × 12) ÷ 312 ≈ ₱615.38

C. Costing One Headcount for the Year (Base Pay Only)

ADR = ₱610
Annual Base = ₱610 × 312 = ₱190,320 (Add projected OT/rest-day/holiday work premiums separately.)

Compliance Tips & Documentation

Put the pay coverage in writing. State explicitly that the employee is daily-paid, follows a six-day workweek, and that unworked regular holidays, special days, and rest days are unpaid.
Align payroll systems and HRIS. Ensure the factor used in rate tables matches the employee’s classification.
Audit periodically. Holiday entitlements and wage orders change; re-validate that your factor still mirrors actual pay practices.
When in doubt, pay the higher benefit or seek legal review—especially for gray areas like special days and temporary closures.

Bottom Line

Use the 312 factor when—and only when—your workforce is daily-paid, on a six-day workweek, and unworked holidays/rest days are not paid. It is a conversion tool that must match actual pay coverage. If your policy or law entitles employees to paid unworked holidays, move to 313 (or another appropriate factor). For statutory benefits like 13th-month, always anchor on actual basic pay received, not on a factorized estimate.