How to Compute Night Differential and Overtime Pay
A complete guide on computing Night Shift Differential (NSD) and Overtime (OT) pay accurately based on the Philippine Labor Code.
Identify the Night Shift Window
Under Philippine law, the Night Shift Differential (NSD) window is from 10:00 PM to 6:00 AM. Any work performed during these hours entitles the employee to an additional 10% of their regular wage for each hour of work.
Calculate the Hourly Rate
Determine the employee's hourly rate. For a monthly paid employee, divide the monthly basic salary by the number of working days in a month, then divide by 8 hours.
Compute Regular Night Differential (No Overtime)
Multiply the hourly rate by 1.10 (10% premium). Multiply this new rate by the number of hours worked between 10 PM and 6 AM.
Compute Regular Overtime (Outside NSD)
For work exceeding 8 hours on an ordinary working day outside the night shift window, multiply the hourly rate by 1.25 (25% premium) to get the OT hourly rate.
Compute Night Shift Overtime
If the overtime falls between 10 PM and 6 AM, calculate the OT rate first (125%), then add the 10% night differential on top of that OT rate (Hourly Rate x 1.25 x 1.10).