Philippines services
Regional minimum wage rules, de minimis benefits, overtime, night shift differential, and holiday premium pay — everything SME employers must know.
Two-directional risk: SMEs commonly overpay taxes on allowances that could be non-taxable, while underpaying employees on overtime and holiday premiums. Both errors surface during audits after years of compounding.
Minimum wage rules apply to all rank-and-file employees — full-time, part-time, or probationary. Overtime, night shift, holiday, and rest day pay rules apply to rank-and-file only; managerial employees are generally exempt. De minimis benefit rules apply to all employees regardless of rank.
Managerial exemption is narrower than most employers think. Simply giving someone a "manager" title does not exempt them. Sales leads, team leads, and senior individual contributors are typically rank-and-file.
The Philippines does not have a single national minimum wage. Each of the 17 regions has its own wage order issued by the Regional Tripartite Wages and Productivity Board (RTWPB).
Wage Order NCR-28 delivers the ₱60 increase effective September 26, 2026, through a separate order not covered by the Pasig RTC injunction against NCR-27. See the status note below for more info. The NCR rates below currently reflect Wage Order NCR-26.
Non-Agriculture — NCR₱695per day Agriculture / Small Retail — NCR₱658per day (≤15 workers retail) Kasambahay — NCR₱7,800per month (Wage Order NCR-DW-06, Feb 2026) Other Regions (approx.)₱435–600per day — varies by region & industry
The applicable rate depends on workplace location (not the employee's home address), industry classification, and employer size.
Status update (as of September 15, 2026): Wage Order NCR-28 is confirmed and takes effect September 26, 2026, delivering the ₱60 increase (₱755/day non-agriculture, ₱718/day for covered smaller establishments) through a separate order not covered by the Pasig RTC injunction against NCR-27.
For payroll: the ₱755/₱718 rates under NCR-28 apply from September 26 regardless of what happens with NCR-27's injunction. Whether NCR-27's remaining ₱25 stacks on top if that injunction is later lifted has not been clarified. Read the full Wage Order NCR-28 breakdown here.
1
The core taxable salary used to compute 13th month pay, SSS/PhilHealth/Pag-IBIG contributions, and most statutory benefits.
2
Some wage orders include a separate COLA component, generally integrated into basic pay for overtime and holiday pay computation.
3
Communication, transportation, rice, meal, uniform, and medical allowances — taxable or non-taxable depending on de minimis ceilings under RR 29-2025.
De minimis benefits are small-value employer-provided benefits exempt from income tax, withholding tax, and fringe benefit tax within BIR ceilings:
| De Minimis Benefit | 2026 Ceiling |
|---|---|
| Monetized unused vacation leave | Up to 12 days/year |
| Rice subsidy | ₱2,500/month or 1 sack 50 kg rice |
| Medical cash allowance to dependents | ₱333/month |
| Healthcare assistance (actual medical) | ₱12,000/year |
| Laundry allowance | ₱400/month |
| Uniform and clothing allowance | ₱8,000/year |
| Meal allowance (OT/night shift) | 30% of applicable minimum wage |
| Christmas and anniversary gifts | ₱6,000/year |
| Employee achievement awards | ₱12,000/year |
| CBA and productivity incentive schemes | ₱12,000/year |
1
An SME wants to offer ₱35,000/month total. Option B structures part as de minimis benefits:
Basic pay₱30,000 Rice subsidy (RR 29-2025)₱2,500 Uniform allowance (₱8,000 ÷ 12)₱667 Medical allowance for dependents₱333 Laundry allowance₱400 Additional allowance₱1,100 Total package (same cost)₱35,000
Result: ~₱3,900/month is non-taxable. Employee takes home more, employer cost is identical. Note: lowering basic pay affects 13th month and contributions — don't restructure too aggressively.
2
Employee with daily rate ₱1,000 (hourly ₱125) works 10 hours on April 9 (regular holiday):
First 8 hours on holiday (×200%)₱2,000 OT on holiday: ₱125 × 260% × 2 hrs₱650 Total for that day₱2,650
Note: Hours past 10:00 PM add +10% NSD on top. Always check whether holiday work crosses the NSD threshold.
3
A call center SME pays agents a flat daily rate for their 8pm–5am shift with no NSD computed. During a DOLE inspection this is flagged. The company is ordered to pay 10% NSD for all hours between 10:00 PM and 6:00 AM over three years.
Outcome: For 30 agents, back pay and penalties easily reach seven figures. NSD must appear explicitly in payroll records.
Track across pay cycles, wage order updates, and year-end
Every Pay PeriodApply correct regional minimum wage by workplace locationCompute premium pay for overtime, night shifts, rest days, and holidaysApply correct de minimis treatment per RR 29-2025Every JanuaryUpdate holiday calendar based on latest Presidential ProclamationVerify current wage order rates and tranche schedules for every regionReview de minimis structures against the ₱90,000 pool strategyWhenever a Wage Order Takes EffectUpdate payroll system with new rates and effective dateNotify affected employees of the new ratesAdjust retroactively if the effective date has already passedYear-EndReconcile total de minimis benefits against individual ceilingsReconcile bonuses and 13th month against ₱90,000 thresholdPrepare BIR Form 2316 with correctly classified compensation
The applicable rate is determined by the workplace location — not the company's head office or the employee's residence. A Makati-based company with a Cebu branch applies NCR rates for the Makati team and Region VII rates for the Cebu team.
Only if they are managerial in title but not in actual duties. When in doubt, treat the employee as rank-and-file.
Partially and carefully. Lowering basic pay reduces 13th month and contributions — document any changes and agree with the employee in writing.
Underpayment is a labor standards violation. DOLE can order back payment of the wage differential plus penalties, and in some cases double indemnity under RA 8188.
Yes. Any hour between 10:00 PM and 6:00 AM — whether regular shift or overtime — attracts the 10% NSD. There is no exception based on the nature of the regular shift.
No — they are optional employer-provided benefits. But since they are tax-efficient for both parties, most SMEs include at least rice subsidy, meal allowance, and medical allowance.
