How do you compute the daily rate in the Philippines? Here is an easy-to-follow guide with detailed examples for different circumstances.
The monthly rate refers to the basic monetary salary that you pay your employees based on their working hours and total working days. However, it does not include deductions, incentives, or bonuses.
On the other hand, standard monthly salary deductions include withholding tax and government contributions, tardiness and absences, and unpaid leaves or time off.
Furthermore, example bonuses may include rest days, overtime pay, calculated additional tax benefits, and 13th-month pay.
Lastly, employees can also receive employer-specific incentives. However, these are not part of the paid monthly rate.
Employee’s daily rate computation based on monthly rate
The formula below is used to calculate the daily rate of employees in the Philippines.
General Formula:
Daily Rate = (Monthly Rate x 12) / Total working days annually
However, the actual number of days varies.
The number of working days per week, the number of work hours per day, and leap years are all contributing factors that should be considered when calculating your employee’s monthly salary.
The actual location of your offices also determines how much you need to pay your employees.
Rates per hour vary if the site of your company is located in an urban or rural area in the country.
Below are additional formulas that you can use to get a more accurate computation of employee pay and determine their hourly and daily rates, as needed.
Different formulas to compute an employee’s daily rate
Employees are paid based on the total number of hours worked over a period of a week or a month. However, actual rates per hour, daily rate, and the monthly rate for monthly paid employees and minimum wage earners may vary.
Even so, the method of computation is generally based on the same number of working days in a year. Moreover, this does not include pay for special days, holidays, or overtime.
Employees who work from Mondays through Fridays will have 260 total working days in a year. One additional day is added for each leap year. As a result, some companies indicate 261 as the total working days.
For employees who work from Mondays to Saturdays, the total number of working days in a year is 331.
Regular Working Days
For regular working days, the daily rate is based on:
Monthly rate x Number of months/Total working days in a year
Example:
P15,000 x 12/261 = P689.66 (daily rate)
Take note that 12 here is for the number of months in a year.
Special Working Days
Special days can be anything from company holidays to Employee Appreciation Day and the like.
The calculated daily rate is based on:
Daily rate x 130%
Using the daily rate above as a basis:
P689.66 x 1.30 = P896.56
For Special Working Days scheduled on an employee rest day, the computation is:
Daily rate x 150%
The monetary figure should look like this:
P689.66 x 1.50 = P1,034.49
Regular Holidays
Regular holidays are fixed-date holidays that are observed all over the country.
The computation for the rate looks like this:
Daily rate x 200%
Using the daily rate above as the basis, the calculation should be:
P689.66 x 2.0 = P1,379.32
If the Regular Holiday falls on the employee’s scheduled rest day, it should be computed as follows:
Daily rate x 260%
Still using the same daily rate as a basis, the calculation should appear like this:
P689.66 x 2.6 = P1,793.12
Night Shift
Night shift is defined as the period of a work schedule set at nighttime.
In the Philippines, night shift employees are paid a 10% night differential on top of their basic daily rate, based on the number of hours worked at night.
Regular night differential rates are computed based on the period between 10:00 p.m. and 6:00 a.m.
Since working hours for night shifters vary, the hourly rate is used as the basis instead of the daily rate.
The standard number of working hours per day is eight (8).
To compute hourly rates, use this:
Daily rate/standard number of work hours per day
Thus (using the daily rate above as a basis):
P689.66 / 8 = P86.21 (hourly rate)
For night differential rates, use the following:
Ordinary Working Day
Hourly rate x 110% x 8
A sample of the night shift rate on an Ordinary Work Day (using the calculated hourly rate above) is as follows:
P86.21 x 1.1 = P94.83 (hourly rate with night differential) x 8 (number of work hours) = P758.65
Rest Day and Special Day
Hourly rate x 143% x 8
Your employee should get the following amount:
P86.21 x 1.43 x 8 = P986.24
Regular Holiday
Hourly rate x 220% x 8
Employee salary for one night shift with a night differential should be computed like this:
P86.21 x 2.2 x 8 = P1,517.30
Overtime
Overtime refers to hours worked beyond the employee’s regular work schedule and requires a corresponding monetary compensation.
To solve for overtime pay, use the following methods:
Regular Work Day
Hourly rate (in excess of the 8 regular work hours) x 125%
In this sample, one hour will be used as the basis:
P86.21 (1 hr overtime) x 1.25 = P107.76 (overtime pay for 1 hr)
Suppose the employee worked for more than one hour on top of his regular work hours. In that case, the hourly rate should be multiplied by the exact number of additional hours worked.
Rest Days and Special Days
Hourly rate x 169%
The computation should look like this:
P86.21 x 1.3 = P145.70
Related: Undertime computation for employees in the Philippines
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