Holiday Pay, Overtime, and Rest Day Pay: How to Compute Premium Pay in the Philippines (2026)

There is a particular kind of quiet that settles over a business owner the week before a holiday. Everyone else is looking forward to the day off. You are looking at the calendar and doing math in your head, because you are the one who has to get payday right.

August makes this especially real. There are two holidays in the month, and they are not the same kind of holiday, so they are not paid the same way. Ninoy Aquino Day on August 21 is a special non-working day. National Heroes Day on the last Monday of August, which falls on August 31 in 2026, is a regular holiday. If you pay both the same way, you will either overpay and quietly lose margin, or underpay and quietly lose trust.

If premium pay has always felt like a rule you follow without fully understanding, this guide is for you. None of it is complicated once you see where each number comes from. We will use one clean daily rate throughout so the math stays easy to follow, and you can swap in your own figures afterward.

Throughout, we will assume a daily wage of 1,000 pesos for an eight-hour day. That makes the hourly rate 125 pesos. Every example below is built on those two numbers.

First, the one distinction that changes everything

Before any computation, you need to know which kind of day you are paying for. Philippine labor rules recognize a few different day types, and each one carries its own premium. Getting the day type right is more than half the work.

• Regular holiday: the highest premium. Employees are paid even if they do not work.
• Special non-working day: a lighter premium, and it follows the no work, no pay principle unless your company policy or agreement says otherwise.
• Rest day: the employee's scheduled weekly day off, which carries its own premium when worked.
• Ordinary working day: the baseline, where overtime and night differential still apply but no day premium does.

A regular holiday and a special non-working day feel similar on a calendar. On a payslip they are very different. That single distinction is the source of most payroll confusion in August, and most of the year.

Regular holiday pay

A regular holiday, like National Heroes Day on August 31, comes with the strongest protection for the employee.

If the employee does not work, they are still entitled to 100 percent of their daily wage, as long as they were present or on paid leave on the workday immediately before the holiday. This is the part owners often miss. You may owe a full day's pay for a day nobody worked.

On a regular holiday, no work does not mean no pay. If the employee was present the day before, you still owe a full day.

If the employee does work, the first eight hours are paid at 200 percent of the daily wage. On our example rate, that is 2,000 pesos for the day.

If the regular holiday also happens to fall on the employee's rest day and they work, you add another 30 percent on top of the 200 percent. That brings the day to 260 percent, or 2,600 pesos on our example rate.

• Regular holiday, did not work: 1,000 pesos (100 percent)
• Regular holiday, worked eight hours: 2,000 pesos (200 percent)
• Regular holiday and rest day, worked eight hours: 2,600 pesos (260 percent)

Special non-working day pay

A special non-working day, like Ninoy Aquino Day on August 21, works on a gentler and more forgiving logic.

The default rule is no work, no pay. If the employee does not report, you are not required to pay for that day, unless your own company policy, an employment contract, or a collective bargaining agreement grants it. Many businesses do choose to pay it as a matter of goodwill, and that is a legitimate decision, but it is a decision, not an obligation.

If the employee works, the first eight hours are paid at 130 percent of the daily wage. That is an extra 30 percent for showing up on a special day, or 1,300 pesos on our example rate.

If the special day also falls on the employee's rest day and they work, the premium rises to 150 percent, or 1,500 pesos.

• Special non-working day, did not work: 0 pesos, unless company policy grants it
• Special non-working day, worked eight hours: 1,300 pesos (130 percent)
• Special non-working day and rest day, worked eight hours: 1,500 pesos (150 percent)

Rest day pay on an ordinary day

Sometimes there is no holiday at all, and the employee simply works on their scheduled rest day. That still carries a premium.

Work performed on a rest day is paid at 130 percent of the daily wage for the first eight hours, the same 1,300 pesos in our running example. The premium exists because you are asking someone to give up the day that was meant to be theirs.

Overtime, added on top

Overtime is work beyond eight hours, and it is computed on the hourly rate that already applies to that day. This is the step where owners most often lose the thread, so go slowly.

On an ordinary working day, overtime is paid at an additional 25 percent of the hourly rate. On our example, the hourly rate is 125 pesos, so each overtime hour is 125 multiplied by 1.25, which is 156.25 pesos.

On a rest day, special day, or holiday, overtime is paid at an additional 30 percent, and crucially it is 30 percent of the already elevated hourly rate for that day, not of the ordinary rate. So overtime on a regular holiday is far more expensive than overtime on a normal Tuesday, because the base it is built on is already doubled.

• Ordinary day overtime: hourly rate plus 25 percent (125 becomes 156.25 per hour)
• Rest day, special day, or holiday overtime: the day's elevated hourly rate plus 30 percent

Night differential, the layer that is easy to forget

Any work performed between 10 in the evening and 6 in the morning earns a night shift differential of at least 10 percent of the hourly rate for each hour worked in that window.

This applies on top of everything else. A holiday, worked into the night, with overtime, can carry the holiday premium, the overtime premium, and the night differential all at once. It is not one rate replacing another. The premiums stack. This is exactly the kind of layered computation that a manual spreadsheet gets wrong under the pressure of a payday deadline.

Why this is really a decision, not just a rule

It is tempting to treat premium pay as a compliance chore, a box to tick so DOLE has no reason to knock. But there is a decision hiding inside it.

When you can see, clearly and in advance, what a holiday shift will cost, you can decide whether to schedule it. Maybe the sales on August 31 justify paying 260 percent to keep the branch open. Maybe they do not, and the smarter move is to close and pay the 100 percent holiday pay to a rested team. You cannot make that call if you only discover the cost after payroll has already run.

That is the difference between payroll as paperwork and payroll as information. The numbers were always going to be paid. The question is whether you got to decide with your eyes open.

Where Quenta fits

This is the thinking behind Quenta's integrated payroll. Quenta is a cloud accounting platform with payroll, now live, built so that these premiums are computed correctly and, just as importantly, so that the cost of labor flows straight into your financial reports.

That means a holiday is not a surprise line item you reconcile later. It is a cost you can see before you commit to it, connected to the sales it is meant to support. Payroll stops being the thing you dread each payday and becomes one more number you actually understand.

The premium rules in this guide are drawn from the standard DOLE framework on premium pay and are stable from year to year. Holiday dates, however, are set by annual proclamation, and a few move. Before you run an August payroll, confirm the official holiday list for the year, and when a situation is unusual, check with DOLE or your accountant. This article is for guidance and is not legal or tax advice.