Premium Pay Meaning

Premium pay refers to the additional compensation required by law to be paid to employees for work performed on non-working days, such as rest days and special days.

“No Work, No Pay” Rule

During rest and special days, the principle of “no work, no pay” applies. Workers who were not required or permitted to work on those days are not by law entitled to any compensation.

This is consistent with the definition above that premium pay is to be paid for work performed.

Performance of work is necessary for entitlement to premium pay.

Premium Pay For Rest Days

As a general rule, where an employee is made or permitted to work on his scheduled rest day, whether it is a regular day or a holiday, he shall be paid an additional compensation of at least 30% of his regular wage for that day. The rule is different for work performed on a rest day which is also a special day, in which case, 50% of the regulary daily rate is added, instead of 30% of the daily rate for special day.

In sum, the premium pay rates for rest days are as follows:

  1. For work performed on rest days, an additional 30% of the daily rate or a total of 130%;
  2. For work performed on a rest day which is also a special day, an additional of 50% of the daily rate or a total of 150%; and
  3. For work performed on a regular holiday which is also the employee’s rest day, an additional 30% of the regular holiday rate of 200% or a total of 260%.
Computation

For work performed on rest day, using P250.00 as Basic pay, the rate may be determined as follows:

Rate on Rest day = Basic pay + Premium pay
Where,
Premium pay = 30% of Basic pay
= 30% of P250.00
= 0.3 x P250.00
= P75.00

Thus,

Rate on Rest day = Basic pay + Premium pay
= P250.00 + P75.00
= P325.00

For work performed on a regular holiday which is also the employee’s rest day, the rate may be determined as follows:

Rate = Daily rate on holiday + Premium pay
Where,
Premium pay = 30% of Daily rate on holiday, and
Daily rate on holiday = 200% of Basic pay = P500.00
Thus,
Premium pay = 0.3 x Daily rate on holiday
= 0.3 x P500.00
= P150.00

Thus, the rate on rest day falling on a holiday is:

Rate = Daily rate on holiday + Premium pay
= P500.00 + P150.00
= P650.00
Or,
Rate = 260% of Basic pay
= 2.6 x P250.00
= P650.00

Premium pay for Special Days

There are two national special days observed in the Philippines:

  1. All Saints Day (November 1); and
  2. The last day of the year (December 31).

Work performed on special days merits additional compensation of not less than 30% on top of the basic pay or a total of 130%.

Computation

Using P250.00 as daily rate (Basic pay), the Rate on special day may be determined as follows:

Rate on special day = Basic pay + Premium
Where,
Premium = 30% of Basic pay
= 30% of P250.00
= P75.00

Thus,

Rate on special day = Basic pay + Premium
= P250.00 + P75.00
= P325.00
Or,
Rate on special day = 130% of Basic pay
= Basic pay x 1.3
= P250.00 x 1.3
= P325.00

Premium Pay For Special Day falling on Rest Day.

If the special day falls on employees scheduled rest day, he is entitled to at least 50% over and above the basic pay or a total of 150%.

Computation

Rate for work on special days which is also the employee’s rest day entitles him to an additional 50% of the daily rate (Basic pay).

Rate = Basic pay + Premium pay
Where,
Premium pay = 50% of Basic pay
= P250.00 x 0.5
= P125.00

Thus,

Rate = Basic pay + Premium pay
= P250.00 + P125.00
= P375.00
Or,
Rate = 150% of Basic pay
= Basic pay x 1.5
= P250.00 x 1.5
= P375.00
If no regular workdays and no scheduled regular rest days

Where the nature of the work of the employee is such that he has no regular workdays and no regular rest days can be scheduled, he shall be paid an additional compensation of at least 30% of his regular wage for work performed on Sundays and holidays.

Premium Pay and Holiday Pay Comparison

Using the definition of premium pay above, holiday pay is not a premium pay because it does not require performance of work by the employee. In case of holiday pay, the employee is entitled payment even if he does not work. The same cannot be said of premium pay.

Thus, unlike in premium pay, the principle “no work, no pay” does not similarly apply to holiday pay.

Last Edited: Friday, August 19, 2011

Caveat: Subsequent court and administrative rulings, or changes to, or repeal of, laws, rules and regulations may have rendered the whole or part of this article inaccurate or obsolete.
employee benefits, overtime pay, premium pay, salary, wages
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44 comments

  1. “If no regular workdays and no scheduled regular rest days
    Where the nature of the work of the employee is such that he has no regular workdays and no regular rest days can be scheduled, he shall be paid an additional compensation of at least 30% of his regular wage for work performed on Sundays and holidays.”

    What do you mean exactly by the above statement?
    we are working in a company where we have a different work schedule every month. like for example, for this month my work days are mon-fri and come next month WED – SUNDAY. Am i entitled to premium pay for my sunday work? even if that is my regular working day and my restday falls on mon and tue??

    [Reply]

    monkey Reply:

    Hala, sakpan adi la ngay-an kamo! Hahahahaha…

    [Reply]

  2. I have 3 office employees. In their contract, it is specified that their working days are from Monday to Saturday and that their Monthly Basic Salary is P15,000. Because of this stipulation in their contract, THEY automatically identified themselves as Monthly-Paid employees. I have read the Labor Code and looked at other labor-related websites. The typical definition of Monthly-Paid Employees is: those paid every day of the month INCLUDING unworked rest days, special days and regular holidays. This definition honestly does not provide a lot of helpful information.

    Because my staff considered themselves as monthly-paid employees, they used 365 as the divisor in getting the rate to be used for OT, absences, leave credits, holiday pay and premium pay computation.

    I never really bothered to review their payroll computation because in a way I trusted that they knew what they were doing. I just ordered them to follow the basic requirements of the labor code. One time, I decided to check their computation for the period of June 16 – 30. As we all know, June 30 was declared a Special Non-Working Holiday.

    I am well aware that employees who worked on this day are given an additional 30% PREMIUM (assuming it is not their rest day). One of my employees did not go to work on this special non-working day. She did not deduct P493.15 ((P15000 x 12 months)/365 days) from her pay for this payroll period claiming that as a monthly-paid employee, all her UNWORKED holidays (regular AND special) are PAID.

    I did not agree with her on this stating that under the Labor Code “The no-work, no-pay principle applies during special days.” In addition, the Labor Code does not mention that monthly-paid employees are EXEMPT from this “no-work, no-pay” principle. The mere fact that the Labor Code does not specify the kind of pay that an employee should receive on an UNWORKED special day is already an indication that there is no pay to be received by an employee who does not go to work on a special day (as opposed to the pay an employee gets on an UNWORKED REGULAR holiday which is specifically called HOLIDAY PAY). This is just my own analysis.

    Unfortunately, my employee does not want to agree with me by always pointing out the Labor Code’s definition of monthly-paid employees.

    So who is correct in this case? (I hope it’s me.) If ever I prevail in this case, is the 365 factor still the correct divisor to use? My employees argue that if ever I am right, then their divisor should also be corrected. Using 365 as the divisor assumed that even the UNWORKED special days are paid. In my opinion, I would like to stick with the 365 divisor as this would also prevent us from always adjusting the divisor for new legal and special holidays that are proclaimed yearly. Is sticking with 365 as the factor legal? And kindly expound on what really is a monthly-paid employee. Avoid giving definitions already found in the labor code and other HR books because these definitions are not helpful at all. They are rather confusing. Kindly enlighten me. Thank you.

    [Reply]

    Ted Ferrolino Reply:

    Month paid employees are those paid uniformly every month regardless of the number of working days in any particular month. This is a devise intended primarily for convenience, e.g., to simplify computation of wages. Now to address some of your questions:
    (1) The definition you cited is based Section 2, Rule IV, Book III of the Omnibus Rules Implementing the Labor Code (not the Labor Code itself) which essentially states that monthly-paid employees are presumed to be paid for all days in the month whether worked or not. This provision has long been nullified by the Supreme Court because it expands the law.
    (2) No work no pay is founded on the principle of fair play. It applies to all employees, whether daily paid or monthly paid.
    (3) With regards to the divisor, the minimum allowable divisor in your case is 314 (365 less 51 Sundays). You can use a different divisor above that. The use of 365 as divisor simply means that your employees are paid for unworked rest days.

    [Reply]

  3. thanks for the reply :)

    [Reply]

  4. “If no regular workdays and no scheduled regular rest days
    Where the nature of the work of the employee is such that he has no regular workdays and no regular rest days can be scheduled, he shall be paid an additional compensation of at least 30% of his regular wage for work performed on Sundays and holidays.”

    What do you mean exactly by the above statement?
    we are working in a company where we have a different work schedule every month. like for example, for this month my work days are mon-fri and come next month WED – SUNDAY. Am i entitled to premium pay for my sunday work? even if that is my regular working day and my restday falls on mon and tue??
    May I know the answer of the above concern of Miss Veronica? Because this must be the same concern of other employees with no regular workdays and no scheduled regular rest days, example are the shifting personnel with 3 shifts in a day. 1st shift is 12mn to 8am, 2nd shift is 8am to 4pm and the 3rd shift is 4pm to 12mn. These shifting personnel work on a 5 days a week and the divisor to get their daily rate is 262 which means they are paid for their unworked regular holidays and spceial non-working holidays…

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  5. Sir Ted Ferrolino, please reply

    [Reply]

  6. Is it possible that HR department can deduct the holiday to the basic salary of the employee if she/he don’t have available leave at that time. They issue this policy that employee who file a leave without pay 1 day before the holiday may not be paid or deduct from his/her salary the said holiday. Is it legal or unconstitutional.TThanks

    [Reply]

  7. http://newsinfo.inquirer.net/breakingnews/nation/view/20100830-289552/DoLE-issues-National-Heroes-Day-holiday-pay-rules –> here is the updated pay rule when employee works on a holiday (that falls on a work day)

    [Reply]

  8. hello,
    i am currently employed in a new call center here in the province of negros, and our contract states that we have to be employed as a casual emp for 6months and after that we have to serve for another 6months to be a probationary employee, but what bothers me is that we are not paid with overtime pay, but is required to do mandatory overtime for a few hours a week, and also we are not paid with holiday pay, our company will only pay holiday pay on USA holidays, is this legal even if this is stated in the contract that we signed? need you help. thanks.

    [Reply]

    Ted Ferrolino Reply:

    The 6 months casual and 6 months probation being practice by your company sounds illegal to me. Seems like it is nothing but a scheme to thwart regularization of employee. The nonpayment of overtime pay is also illegal. As to payment of US holidays, instead of Philippine holidays, I am not sure what’s the basis for this. I heard many companies are doing this. But if you follow the Labor Code, this is also illegal.
    To your last question, if the provision of the employment contract is illegal, it is invalid and without force and effect. The employer cannot rely on it to justify its acts or to avoid payment of an otherwise legal obligation.

    [Reply]

  9. We are a small-scaled BPO company with less than 10 employees but follows the DOLE guidelines in implementing our company policies. Our monthly divisor is 22, for those working 5 days a week and 26 for those working 6 days a week. My question is: If the regular holiday (May 1, 2011) falls on our rest days, are we entitled to an extra day-off? This caused some confusion as one of our employees claims that he should be given an extra day-off. Are we a daily-paid workers? Please help. Thanks.

    [Reply]

  10. Sir,illegal po b n hndi kmi bnibgyan ng double pay s mga special holidays?kasi working po kami kahit holiday eh regualar pay lng po ang ibinibgay s amin.. private owned company po kami.. i really need legal advice, tnx po

    [Reply]

  11. I have worked in a private company and paid as a monthly employee of Php 12120 per month, since half of month of it was paid as Php 6060. If I work on a rest day or special non-working holiday the company would only pay me an additional 30% of my daily rates since they used 360 days as a divisor for computing my salary, meaning if my monthly pay is 12120 divided by 30 days equals my daily rate of 404. since 404 is my daily rate, 404 divided by 8 hours is equals to my hourly rate of 50.5. Hourly rate of 50.5 x 1.3 equals to 65.65. Since Php 6060 is my basic regular pay for half month. If I render work on a rest day should I be paid a separate sunday overtime rate of 65.65 (130%) per hour? Total of Php 6585.20 for 8 hours.

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  12. Dear Sir,
    I would like to ask some situation that is happening in our company. As per our Comapny Handbook regulations, we must work from monday to saturday, but the company issue a no work on saturdays but they deducted to our sick leaves and vacation leaves thus saturdays that they required us not to work. Is it legal for the company that they deducted on our sl/vl the days that they required us not to work? As for the monthly, i want to ask if the company needs us to pay every saturday even when we didnt report to work, because we always render overtime but they didn’t pay us an overtime pay. I hope that you could answer my question. Thank you very much.

    [Reply]

  13. Hi Sir,

    We are working as an Analyst on a shifting schedule. Our regular working days required us to work from 8AM to 8:30PM from WED to SAT then the next will be THURS to SAT, basically an alternating 3daysON-4daysOFF-4daysON-3daysOFF and so on schedule. I previously work on other companies with the same shifting schedule and my previous company offers me Shifting Premium pay, Overtime pay for hours exceeding 80 hrs per 2 weeks or 160 hrs per month, and Night Differentials if required to work on a graveyard shift. MY previous company explained to us that those benifits are the equivalent of the mandatory benifits from an 8hr working schedule by the Labor Code. A company can only exchange an equivalent benifit if its monetary value is equal or more than what is provided for by the Labor Code. Now my problem is my current Company does not offer ANY of it. Can you please enlighten me and it will be better if their are links or excerpts from previous actual Case decision by the Court.

    Here are my inquiries:

    1. My current company only let us charge 11.5hrs when working from 8AM to 8:30PM. I argue that we should be charging 12 hrs since its mandatory that the company gives us a two (2) 15 mins break if we are working more than 8hrs/day besides from the mandatory non-paid 1 hour break. (12.5hrs – 1 hr non-paid break + (2)15mins = 12 hrs compensable working hours). Which one is correct, the 11.5 hrs or the 12 hrs?

    2. Since we are working more than 12 hrs per day on an average of 15 working days per month, We are averaging 173hrs/month way above the normal 160hrs allowed by the law. Are we entitled to Overtime Pay for any working hours rendered exceeding 80hrs/2weeks or 160hrs/month?

    3. We are working regulary on SATURDAYS and SUNDAYS, are we still entitled to Premium Pay?

    4. If our Job Contract explicitly stated that we are not entitled to OVertime Pays and Night Differentials, do we already waived our right for those benifits? Can a Job Contract overrule the Labor Code?

    5. Does the Company need a permit from DOLE to implement a 12hr shifting schedule or it only needs the consent of the employees?

    6. If the Company does not want to follow the Labor Code, what actions can the employees take?

    Sincerely Hoping you can help us.

    [Reply]

  14. Hello Sir,
    Just wanted to ask about the no work no pay policy here in our company. We are not paid during holidays, since our bosses said that all the contractual employees are not eligible to be paid during holidays. But base on our contract that we are signing every 3 months (it was stated there that our Salary will be on monthly basis, but during payday, it is not actually monthly basis, instead we are paid in a daily basis). And since, I am not yet a regular employee (Thou I’ve been working here for almost a year now) i am not entitled to be paid for those holidays. Since we will be having long weekend this coming 2 weeks, therefore, on the next payroll, it will only count as 8 working days (instead of 11 days, because of the 3 holidays, the 31st of Oct, 1st and 7th of November).Do you think sir that i should make a complain about this matter? Looking forward to your answer asap. Thanks.

    [Reply]

  15. Hi,

    Is there any rule that payment/ salary should be credited to an employee’s payroll account by 12:01 am of the 15th and 30th of the month? My previous company (call center) was practicing this while my current employment credits our salary on the afternoon of every 15th or 30th of the month. Should this be at exactly 12:01 am or what my current company is doing is considered LEGAL?

    [Reply]

  16. Good evening… is there a definite rule of criteria for monthly paid employees… what is the rule for monthly paid employees… is it legal if we are not paid for for days that we are required to work… where can i see such rules…

    Thank you very much…

    [Reply]

  17. i would to ask regarding daily rate employee what would be the basis in computing their legal holiday pay for ex. basic is 271 and cola of 15 pesos total of 286 daily rate. what would be the basis is it 271 or their basic rate only or the total rate including the cola, same with computing special holiday and sunday premium?

    [Reply]

  18. good day.. i just want to ask if only the minimum wager and daily basis employees are those who can avail the benefits of holiday pay that fall on sundays? what about the monthly paid and above minimum employees?

    [Reply]

  19. is it allowed when the company has its own way of computing the overtime pay?for example, if 500 was your daily rate, your overtime pay per hour would be computed at (500/8)x no. of extra hours. whats the effect of this if there is any?

    [Reply]

  20. sir, i was on leave due to total hysterectomy and i was able to avail the special leave for women, but after a month i need to report in office at least 2 days in a week. i filed the worked days as an overtime and my boss approved the overtime file. but our hr refuse to give the overtime pay, and said they will cancel my leave so they can pay my overtime. how about days i reported for work because they need my reports? will i not get an additional payment for that?

    [Reply]

  21. Hi,

    Are the holiday pay rules applicable on Monthly paid employees?

    Scenario:
    A monthly paid employee worked on a regular holiday which is also his/her rest day. Should he/she be able to have been paid of 260% of his/her rate? Or this rules only applicable on daily paid employees?

    Thanks.

    [Reply]

  22. i am employed in an educational institution. our manual stipulates that all non-teaching personnel whose regularization took effect before 2000 shall enjoy a 10-day service incentive pay while those whose regularization took effect in 2000 and thereafter shall enjoy only five days service incentive leave.

    is this legal? can we, who were made regular after 2000 claim the same benefit? after all, we are all employees of the institution. i find it unfair to one who has been made regular in 1999 and another who has been regularized in 2000. while the law only requires every employer to give 5 days of service incentive leave, i believe that our school, one that claims it upholds justice, should treat each employee fairly.

    i would be very grateful should you give me feedback regarding this matter the soonest time you can. thank you

    [Reply]

  23. Jonel C. Osio Comment:
    August 10th, 2012 at 10:10 am

    Does our agency should not pay our casual employees during the past two days (Aug. 7 & 8, 2012) since these are not regular holidays and just mere a declaration of the Hon. President PNoy due to calamity? Thanks

    [Reply]

  24. john general Comment:
    August 14th, 2012 at 10:07 am

    Sir,

    Are Philippine part time workers entitled to premium pays (holiday pays)?

    [Reply]

  25. Cristina Rama Comment:
    August 21st, 2012 at 01:19 pm

    i would like to ask because we are a monthly base employee and now we are confuse because our employer receives feedback that all monthly employees are required to work even on holiday’s whether regular or special and they will no longer pay the additional percentage for it was already agreed that monthly base employee are paid for all the days. Is it right? for admin employees we cannot enjoy the holiday payment because we are monthly base employee? I would like to ask what is really the stand of a monthly employee?

    [Reply]

  26. Sir, I would like to ask if the company is obliged to pay the employee for November 1 and 2 if the employee was suspended from oct 29-31. Or Since she/he was suspended, that means November 1 and 2 are also without pay?

    [Reply]

  27. I have been working in a prominent company for six years under an agency. I have not complained of the situation because the principal company officers are considerate to us, we have good employee employer relationship. I would like to ask about our scenario

    1. The Owner of the Agency is at the same time the owner of the principal company I am assigned.
    2. Our Manager(principal company) recommended me to the principal company owner for my regularization but he denied – thru verbal recommendation
    3. My position in the principal company is Accounting Staff handling Inventory Computation, VAT Computation and Filing of BIR returns, General Accounting preparing vouchers, Receivable reconciliation and handling petty cash.
    4. The principal company hired a new regular employee as accounting staff replacing my co-worker who resigned(under same agency)
    5. I know that the principal company still has a vacant regular position
    6. I have resigned from the company because it seems there is no improvement for me in the company.

    Questions:

    - Even though I have resigned from the agency, can i complain to the Department of labor for the improper labor practice of the principal company?
    - Will the principal company be liable for the labor practice?

    [Reply]

  28. it’s more of question/s:

    if you were hired like almost 2 years now and you’ve been reporting to work only for 5 days a week (M-F)8am to 5pm and you were told by the boss or the owner of the company that effective next month, you will report to work from Monday to Saturday 8 to 5pm, should the company pay your saturdays as OVERTIME? Knwing that you only have 1 day REST which is Sunday. Isn’t it the law says, that employee should only work 8 hours a day 5 days a week which is 40 hours a week? in excess of 5 days / 8 hours a day should be charged as overtime?

    [Reply]

    ching Vega Reply:

    I hope you could send me the reply so i could advise my child. Thank you.

    [Reply]

  29. randy_garcia Comment:
    December 1st, 2012 at 10:12 am

    if you do not plan to go to work on a special holiday, can i file a leave? and if i worked on a regular holiday but was absent the day before, can i still file a leave?

    [Reply]

  30. Junalyn B. Malaran Comment:
    January 12th, 2013 at 09:42 am

    hi good day!

    I just want to clarify something regarding if absent on or before the regular holiday,you cannot avail the regular holiday pay, but in this case, December 31, 2012 is a special holiday, then jan 01, 2013 is a regular holiday, will the employees cannot avail the regular holiday of jan 01, 2013 since December 31 is a special holiday??pls give me the section or article from the labor code stating this matter.

    I am hoping for your kind reply.

    Thanks,

    Junalyn

    [Reply]

  31. ALDRIN SOBREVIÑAS Comment:
    January 29th, 2013 at 02:53 pm

    Good day! I am a private employee having Tuesday to Saturday work schedule. Would like to know whether my employer should pay me additional premium/pay on top of my daily rate for my service on Saturdays?

    Please let me know.

    Thanks,

    Aldrin

    [Reply]

  32. May my employer ask me to have Easter Monday off to have a long weekend and work on the regular holiday of April 9.

    [Reply]

  33. what if an employee work less than 8 hours on a regular holiday which is also his rest day? how to compute his salary for that day? Thank you.

    [Reply]

  34. Good day Sir Ted!

    I would like to inquire regarding this concern.

    Our company didn’t have operation last Nov. 1 and 2 because it’s All Saints Day and All Souls Day. So we were not really absent if we didn’t worked at that time. We just didn’t work because the institution was really closed.

    I’m a monthly rated employee with a 365 divisor.

    Based on Memorandum Circular No.1 that in special non-working holidays it’s gonna be “no work no pay” policy. So does that mean my monthly salary will be deducted an amount good for two days (so it’s considered two days absent)?

    I read your reply to “Mr. Johnd” dated Aug. 19, 2010. But in his case, the company was opened during that special day where his one employee was absent. But in our case, there was really no operation at that time.

    Thank you so much for reading my query. I just need clarification if the same principle applies in our situation compared to Mr. Johnd’s situation.

    [Reply]

    admin Reply:

    It’s a different situation. Normally, the monthly salary of monthly-paid employees has been computed to already include holidays and special days. Deduction is only made in case of employee’s absence under the principle of no work no pay. It is odd for the company to make deductions for absence when there is no work in the first place.

    [Reply]

    Joseph Reply:

    Thank you so much for taking the time to reply. I greatly appreciate it.

    Sad to say, we were deducted for not working during All Saints Day, All Souls Day, Dec. 24 and Jan. 31. The HR’s basis is the said Memorandum Circular No. 1 citing that on special non-working holiday it is a “no work no pay” day without considering the formula being used. Haiii…

    [Reply]

  35. Good Day!

    Is it ok to create a policy that employees cannot be absent before and after a long holiday since this hampers the smooth flow of the operations?

    Is this not a violation of our labor laws?

    Thanks

    [Reply]

    admin Reply:

    Yes, controlling/managing employees attendance and the entire operation of the business are management prerogatives recognized by the Labor Code.

    [Reply]

  36. will you be considered absent if not report to work on regular non working holidays? because the company is operating 24 hours a day 7 days a week, I hope you can enlighten me on this matter.. thank you..

    [Reply]

  37. same case here, is it proper to file as vacation leave if we do not go to work on holiday ( supposed to be on duty).

    [Reply]

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