From ₱695 to ₱755: A Step-by-Step Payroll Recomputation Guide for NCR-28

Our NCR-28 explainer covered why there are two wage orders on the books and confirmed the date that matters: September 26, 2026, when the NCR minimum wage rises to ₱755. That piece named the payroll categories the increase touches: overtime, night differential, holiday pay, 13th-month accrual, and contributions. This one does the math.

If you run payroll for an NCR-based F&B, retail, logistics, or BPO business without a dedicated compliance team, this is the piece to have open on the first payroll cycle after September 26. We walk through each recomputation with worked examples, then flag the one tax consequence most SMEs miss entirely.

Quick reference: the rates you’re updating.

Effective September 26, 2026, and prospective only. There is no back pay to July 25, 2026 (that date belonged to the still-frozen Wage Order NCR-27). Every example below uses the ₱755 non-agriculture rate; the same formulas apply to the ₱718 rate for covered small establishments.

Before You Touch a Formula: Confirm Your Divisor

Every recomputation below starts from a monthly-equivalent basic salary, and that number depends on the divisor your payroll system already uses to convert a daily rate into a monthly one, commonly a factor like 261, 313, or 365, depending on whether the employee is paid for rest days, special days, and regular holidays.

Don’t change the divisor when you update the rate. The wage order changed the daily rate, not your company’s existing pay computation policy. If your system used a 313-day factor in August, it should still use a 313-day factor in September. Only the ₱755 or ₱718 figure plugged into it changes. Swapping both at once is how payroll errors compound.

For the worked examples below, we use a 313-day factor purely for illustration. Confirm your own company’s convention before applying these numbers directly.

Recomputing Overtime Pay

Formula: Hourly rate × 125% × overtime hours (ordinary working day)

Hourly rate = daily rate ÷ 8.

That’s a ₱18.75 difference per employee for a single 2-hour OT shift. It is small per instance, but it compounds fast across a team that regularly works overtime. Rest-day and holiday OT use different multipliers on top of the already-adjusted holiday/rest-day rate; treat those as a separate calculation rather than folding them into the ordinary-day formula above.

Recomputing Night Shift Differential (NSD)

Formula: Hourly rate × 10% × hours worked between 10:00 PM and 6:00 AM

One stacking rule worth flagging because it’s a common payroll error: when NSD and overtime occur in the same hours, NSD is computed on the OT-inclusive hourly rate, not the plain hourly rate. If your system computes NSD and OT independently and simply adds them, check that logic before your first post-increase cutoff.

Recomputing Holiday and Premium Pay

Three scenarios, each recomputed at the new ₱755 rate.

Every one of these recalculates automatically once the base daily rate in your payroll system is updated. The risk isn’t the formula; it’s forgetting a category exists because it doesn’t come up often (regular holiday pay, in particular, is easy to miss between holidays).

Blending the 13th-Month Accrual

This is the section most likely to trip up a manual payroll process, because the rate change lands mid-year. 13th-month pay is 1/12 of total basic salary actually earned during the calendar year. This means an employee’s 2026 13th-month figure is a blend of wages earned at ₱695 (roughly January 1 to September 25) and wages earned at ₱755 (September 26 to December 31), not simply 1/12 of whichever rate happens to be current in December.

Illustrative example (313-day monthly-equivalent factor, for illustration only):

• Old monthly-equivalent basic: ₱695 × 313 ÷ 12 ≈ ₱18,128
• New monthly-equivalent basic: ₱755 × 313 ÷ 12 ≈ ₱19,698
• Basic pay earned January 1 to September 25 (approximately 8.83 months) at the old rate: approximately ₱160,050
• Basic pay earned September 26 to December 31 (approximately 3.17 months) at the new rate: approximately ₱62,442
• Total basic earned for 2026: approximately ₱222,492
• 13th-month pay: ₱222,492 ÷ 12 ≈ ₱18,541

Notice that figure sits between the old and new monthly-equivalent amounts, closer to the old rate, because most of the year was still paid at ₱695. A system that simply applies December’s current rate to the whole year will overstate the accrual; one that never updates the year-to-date basic pay tracker will understate it. Use actual days and months worked, not the rough monthly split above, for your real computation. Remember that overtime, holiday pay, and night differential are excluded from the 13th-month base entirely.

Does This Change Your SSS, PhilHealth, and Pag-IBIG Contributions?

Short answer: possibly for SSS, proportionately for PhilHealth, and probably not at all for Pag-IBIG. Here is why. (Rates confirmed current as of September 15, 2026; see our full Government Contributions guide for the complete tables and remittance deadlines.)

SSS: the one to actually check. SSS contributions are 15% of Monthly Salary Credit (MSC), split 10% employer and 5% employee, computed on an MSC bracket rather than exact salary. Brackets run in ₱500 increments from a ₱5,000 floor to a ₱35,000 ceiling. Using the illustrative figures above, an employee’s monthly-equivalent basic moving from roughly ₱18,128 to ₱19,698 may cross into the next ₱500 bracket, which raises both the employee deduction and the employer share. This is the contribution most likely to move for minimum-wage employees, and the one most payroll systems get wrong after a wage change because the bracket lookup isn’t automatic. Check your system’s MSC bracket for every affected employee individually rather than assuming everyone shifts (or doesn’t).

PhilHealth: scales but rarely jumps a bracket. PhilHealth is a flat 5% of monthly basic salary (2.5% employee and 2.5% employer), with a ₱10,000 floor and a ₱100,000 ceiling. There is no bracket structure to cross. The premium simply scales proportionately with the new basic salary. A minimum-wage employee’s PhilHealth deduction increases slightly, but there’s no threshold effect to watch for.

Pag-IBIG: probably unchanged. Pag-IBIG contributions are 2% each side (1% employee if monthly compensation is ₱1,500 or below), but the computation base is capped at a ₱10,000 Maximum Fund Salary regardless of actual salary. At either ₱18,128 or ₱19,698 monthly-equivalent, a minimum-wage employee is already well above that ₱10,000 cap. This means both shares are almost certainly already at the ₱200/₱200 mandatory maximum, and the wage increase changes nothing here. Worth telling your team explicitly so no one spends time “fixing” a Pag-IBIG deduction that was never going to move.

The Tax Consequence Most SMEs Miss: Minimum Wage Earner Status

Here’s the insight that doesn’t show up in most recomputation checklists. Under the NIRC as amended by the TRAIN Law, a Minimum Wage Earner (MWE), meaning someone paid exactly the DOLE-mandated regional minimum wage, is fully exempt from income tax on their basic pay and on overtime, holiday pay, and night shift differential. MWE status is binary: earning even one peso above the regional minimum wage removes it entirely, and normal withholding tax rules apply to the whole paycheck, not just the increment above minimum. (See our full breakdown in Withholding Tax on Compensation.)

NCR-28 changes who qualifies. An employee earning, say, ₱720 a day was not an MWE under the old ₱695 floor. ₱720 sat above minimum wage, so that pay was fully taxable. From September 26 onward, ₱720 is now below the new ₱755 statutory floor, so that employee must be raised to at least ₱755 for wage compliance. Raise them to exactly ₱755, and they become a Minimum Wage Earner, gaining full income tax exemption they did not have the month before.

Practically, this means two things for your payroll team:

• Audit anyone paid between ₱695 and ₱755 a day. They’re both a wage-order compliance gap and, once corrected, a newly tax-exempt employee.
• Re-run withholding tax for anyone whose MWE status changes, in either direction. This includes supervisors whose pay was adjusted upward for wage distortion, who may cross back out of MWE eligibility if their new rate lands above ₱755.

Common Recomputation Mistakes to Avoid

• Applying the new rate before September 26, 2026, or missing the exact date because it fell mid-cutoff rather than at the start of a pay period.
• Updating the daily rate but not the hourly rate feeding OT and NSD formulas. Some systems store these as separate fields rather than deriving one from the other.
• Assuming no SSS bracket changed without checking each affected employee’s MSC individually.
• Getting the 13th-month blend wrong by applying only the December rate to the full year, or forgetting to track basic pay separately for the pre- and post-September 26 periods.
• Leaving wage distortion unaddressed. If a supervisor earned ₱760/day specifically to sit above the old ₱695 floor, the new ₱755 minimum nearly closes that gap. Employers are required to address distortion through negotiation once it appears, not leave it unresolved. (More on identifying distortion cases in our NCR-27 cost breakdown.)
• Not re-checking MWE status for employees whose pay crosses the new ₱755 line in either direction.

How CloudCFO Helps

Wage-order changes are exactly the kind of moving target that is easy to get technically right and practically wrong. The formula is correct, but one input (a divisor, a bracket, a forgotten category) is stale. Our payroll services team handles the full recomputation across OT, night differential, holiday pay, 13th-month accrual, and contribution brackets, and flags wage distortion and MWE status changes before they become compliance gaps.

If you want a second set of eyes on your specific payroll after September 26, we’re happy to walk through the numbers with you.

Frequently Asked Questions

Does the ₱755 rate apply starting September 26, or the start of my next pay cycle?
September 26, 2026 itself. If that date falls mid-cutoff, the new rate applies to days worked on or after September 26 within that same cutoff, not the following pay period.

Do part-time or probationary employees get the same recomputation treatment?
Yes. The minimum wage and all derived premium computations (OT, NSD, holiday pay) apply regardless of employment status, prorated for actual hours or days worked.

Does this affect 13th-month pay for the whole year, or just the months after September 26?
The whole year’s 13th-month figure changes, because it’s based on total basic salary actually earned across 2026, which now includes wages paid at both the old and new rates. See the blended worked example above.

Will my SSS contribution definitely increase because of this?
Not necessarily. It depends on whether the new monthly-equivalent salary crosses into a higher ₱500 MSC bracket. Check each employee individually rather than assuming a uniform increase.

Does the wage increase itself make an employee a Minimum Wage Earner?
Only if they’re paid exactly the new regional minimum (₱755 or ₱718, as applicable). Anyone paid above that amount, even a small differential kept for seniority or a supervisory role, remains a taxable employee for the full paycheck.