Under Article 86 of the Labor Code, employees get a night shift differential of at least 10% of their regular hourly rate for each hour worked between 10:00 PM and 6:00 AM. When night work is also overtime, a rest day or a holiday, the 10% is applied to that hour's rate: for example 125% × 110% = 137.5% for overtime at night on a regular workday, and 200% × 110% = 220% on a regular holiday.
What Is Night Shift Differential?
Night shift differential (NSD) is extra pay for work done at night. Under Article 86 of the Labor Code, every covered employee gets at least 10% of their regular hourly rate for each hour worked between 10:00 PM and 6:00 AM.
It applies to every hour inside that window, even if only part of the shift falls in it. A 6:00 PM to 2:00 AM shift earns NSD for the 4 hours from 10:00 PM to 2:00 AM.
Who Is Entitled to Night Differential?
Most rank-and-file private-sector employees, including BPO, hospital, factory, security and retail staff. The same groups excluded from overtime pay are generally excluded from NSD:
- Managerial employees and officers or members of the managerial staff
- Field personnel whose hours can't be determined with reasonable certainty
- Domestic workers and persons in the personal service of another
- Workers paid by results under DOLE rules
- Employees of retail and service establishments regularly employing not more than five workers
Night Differential Rates by Day Type
NSD is 10% of the rate that applies to that hour, so it multiplies with overtime and holiday premiums:
| Night hour worked on… | Rate (of regular hourly rate) |
|---|---|
| Regular workday | 100% × 110% = 110% |
| Regular workday, overtime | 125% × 110% = 137.5% |
| Rest day or special non-working day | 130% × 110% = 143% |
| Rest day or special day, overtime | 169% × 110% = 185.9% |
| Regular holiday | 200% × 110% = 220% |
| Regular holiday, overtime | 260% × 110% = 286% |
For the holiday rates themselves, see our holiday pay guide; for overtime, see the overtime pay guide.
How to Compute Night Differential: Examples
All examples use a daily rate of ₱800 (hourly rate ₱800 ÷ 8 = ₱100).
Example 1: Regular Night Shift
Shift 10:00 PM to 6:00 AM on a regular workday, 8 hours, all within the NSD window:
- Basic pay: 8 × ₱100 = ₱800
- NSD: 8 × ₱100 × 10% = ₱80
- Total: ₱880
Example 2: Evening Shift with Overtime
Shift 2:00 PM to 10:00 PM, then 2 hours of overtime until midnight:
- Overtime rate: ₱100 × 125% = ₱125 per hour
- Overtime with NSD (10 PM–12 AM): ₱125 × 110% = ₱137.50 per hour
- 2 hours: ₱275 on top of the regular ₱800
Example 3: Night Shift on a Regular Holiday
Shift 10:00 PM to 6:00 AM on Christmas Day:
- Holiday rate: ₱100 × 200% = ₱200 per hour
- With NSD: ₱200 × 110% = ₱220 per hour
- 8 hours: ₱1,760
How to Process Night Differential in Payroll
- Record actual time in and time out — NSD depends on exact hours, so biometric or timesheet logs matter.
- Split each shift into hours inside and outside 10 PM–6 AM.
- Find each hour's base rate — regular, overtime, rest day or holiday.
- Add 10% of that rate for the night hours.
- Show NSD as its own line on the payslip.
Kinsweldo reads attendance logs, splits night hours automatically and shows the NSD multiplier on each payslip. It's free for up to 5 employees.
Frequently Asked Questions
From 10:00 PM to 6:00 AM. Every hour worked in that window earns at least an additional 10% of the hourly rate.
For most employees, yes — it is part of taxable compensation. For minimum wage earners, night shift differential is exempt from income tax under the TRAIN Law. See our withholding tax guide.
Yes. 10% is the legal minimum. Many BPO and healthcare employers pay a higher NSD by company policy or CBA.
Generally no. 13th month pay is based on basic salary, which excludes premiums such as night differential, overtime and holiday pay.
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