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Calculating Premium Pay

What is Premium Pay

A. Definition

Premium pay refers to the additional compensation for work performed within eight (8) hours on non-work days, such as rest days and special days.

B. Coverage

This benefit applies to all employees except:

  1. Government employees, whether employed by the National Government or any of its political subdivisions, including those employed in government-owned and/or controlled corporations with original charters or created under special laws;
  2. Managerial employees, if they meet all of the following conditions:
    1. Their primary duty is to manage the establishment in which they are employed or of a department or subdivision thereof;
    2. They customarily and regularly direct the work of two or more employees therein;
    3. They have the authority to hire or fire other employees of lower rank; or their suggestions and recommendations as to hiring, firing, and promotion, or any other change of status of other employees are given particular weight.
  3. Officers or members of a managerial staff, if they perform the following duties and responsibilities:
    1. Primarily perform work directly related to management policies of their employer;
    2. Customarily and regularly exercise discretion and independent judgment;
    3. (a) Regularly and directly assist a proprietor or managerial employee in the management of the establishment or subdivision thereof in which he or she is employed; or (b) execute, under general supervision, work along specialized or technical lines requiring special training, experience, or knowledge; or (c) execute, under general supervision, special assignments and tasks; and
    4. Do not devote more than twenty percent (20%) of their hours worked in a workweek to activities which are not directly and closely related to the performance of the work described in paragraphs 3.1, 3.2, and 3.3 above.
  4. Kasambahay and persons in the personal service of another;
  5. Workers who are paid by results, including those who are paid on piece rate, takay, pakyaw, or task basis, and other nontime work, if their output rates are in accordance with the standards prescribed in the regulations, or where such rates have been fixed by the Secretary of Labor and Employment; and
  6. Field personnel, if they regularly perform their duties away from the principal or branch office or place of business of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty.

C. Special Days

1. Special Days

Unless otherwise modified by law, order, or proclamation, the following are the three (3) special days in a year under Executive Order No. 292, as amended by Republic Act 9849 that shall be observed in the Philippines:

  • Ninoy Aquino Day – Monday nearest August 21
  • All Saints Day – November 1
  • Last Day of the Year – December 31

The “no work, no pay” principle applies during special days and on such other special days as may be proclaimed by the President or by Congress.

Workers who are not required or permitted to work on special days are not entitled to any compensation. This, however, is without prejudice to any voluntary practice or provision in the Collective Bargaining Agreement (CBA) providing for payment of wages and other benefits for days declared as special days even if unworked.

On the other hand, work performed on special days merits additional compensation of at least thirty percent (30%) of the basic pay or a total of one hundred thirty percent (130%). Where the employee works on a special day falling on his rest day, he/s he shall be entitled to an additional compensation of at least fifty percent (50%) of his/her basic wage or a total of one hundred fifty percent (150%).

2. Special Work Days

For work performed on a declared Special Work Day, an employee is entitled only to his/her daily wage rate. No premium pay is required since work performed on said day is considered work on an ordinary workday.

D. Premium Pay Rates

The COLA shall not be included in the computation of premium pay. The minimum statutory premium pay rates are as follows:

1. For work performed on rest days or on special days: Plus 30% of the daily basic rate of 100% or a total of 130%.

  • Non-agriculture Sector:
    • Rate: P481.00
    • Computation: P481 x 130% = P625.30
  • Retail/Service Establishment:
    • Rate: P444.00
    • Computation: P444 x 130% = P577.20

2. For work performed on a rest day which is also a special day: Plus 50% of the daily basic rate of 100% or a total of 150%.

  • Non-agriculture
    • Rate: P481.00
    • Comptation: P481 x 150% = P721.50
  • Retail/Service Establishment
    • Rate: P444.00
    • Computation: P444 x 150% = P666.00

3. For work performed on a regular holiday which is also the employee’s rest day (not applicable to employees who are not covered by the holiday-pay rule). Plus 30% of the regular holiday rate of 200% based on his/her daily basic wage rate or a total of 260%.

  • Non-agriculture Sector:
    • Rate: P481.00
    • Computation: (P491 x 200%) + 30% (P481 x 200%) = P1,270.60
  • Retail/Service Establishment employing less than 10 workers
    • Rate: P444.00
    • Not covered by holiday pay rule