|Premium Pay in the Philippines: What You Should Know|
"All employees qualified to a premium pay are entitled to premium payments as compensation for work hours rendered exceeding the maximum number of working hours."
What is premium pay? Should you be entitled to a premium pay? And how much should you get? These are the most common questions at the back of the minds of new employees as this is an entitlement that translates to additional cash in the coming payday.
All employees qualified to a premium pay are entitled to premium payments as compensation for work hours rendered exceeding the maximum number of working hours. The basis of the maximum number of work hours per day rests on the fact that humans are not machines. At the end of the day, we would have been worked out and need to rest. Thus, in many countries including the Philippines, governments set the maximum work hours to eight. Any hours of work rendered exceeding that shall be paid with a premium which is based on your daily regular wage.
When do premium pays apply?
In the Philippines, companies are obliged by law to pay premiums when you work on holidays, on your rest day, and when you render extra hours on any day (overtime). Premium pays are, however, mandated by law. In most cases, only regular employees are entitled to holiday premiums, while other companies may pay overtime premiums to probationary or contractual employees.
How are premium rates computed?
The Labor Code of the Philippines sets premium rates at 25% on your regular wage on regular days. This is increased to 30% if you render overtime on your rest day or on a holiday. Holidays, meanwhile, are categorized into special and legal holidays - different rates apply to each category.
The law mandates that employees be paid an additional 30% on their regular daily wage on special holidays. An additional 100% premium (equivalent to 100% of your daily wage) is given to qualified employees. Computations are as follows:
Who are covered?
Whatever your employment status is, the Philippine Labor Code says you should be entitled to a premium for any work rendered beyond the maximum hours (eight hours) required of you by the law and your company. However, this law ceases to apply to employees in management positions, field personnel, the employer's family members who are dependent on him/her for support, and employees paid on a per project or output basis. If you are a government employee, you may refer to Civil Service Laws and rules on premium payment.
How about personnel in the health sector?
For health personnel in the cities and municipalities who serve a population of at least on million (1,000,000) or in hospitals with at least one hundred bed capacity, maximum work hours should only be eight (8) hours for five (5) days a week, excluding times for break. Categorized under health personnel are resident physicians, nurses, midwives, clinic attendants, pharmaceutical technicians, laboratory technicians, social workers, dieticians, nutritionists, and other hospital personnel.
Employees in the health sector are, as a rule, not supposed to render overtime because of the high degree of physical work their jobs demands. Where exigencies of the service require, health personnel may render extra hours or one day provided that a 30% premium payment shall be added to his/her regular daily wage.