Daily Rate vs Monthly Rate on Manner of Payment of Workers

Labor Law

2. Monthly Rate vs Daily Rate
When it comes to salary rates, there are 2 types:
Monthly Rate and
Daily Rate.
Some companies do apply the Hourly Rate, but this follows the
same principles applied to the Daily Rate.

3. In essence, daily-rate and monthly rate employees are the same.
Both types of employees are paid for the amount of time they put in
at work.
The main difference is that
odaily-rate employees are paid based on the actual # of days
worked, while
omonthly-rate employees are paid a fixed amount per pay period,
assuming that they had no absences.

4. If an employee’s daily-rate is P500.00 and the employee worked for 10
days, that equates to a pay of P5,000.00. Given this, the salary of a daily-
rate employee may vary each pay period, depending on the actual # of
working days included in that period.
Monthly-rate employees are paid a fixed amount per pay period, regardless
of the # of actual working days included in the period.
So if an employee’s monthly rate is P15,000.00, the employee will be paid
the same amount in February as well as in March, even if February is a
much shorter month than March.
The monthly rate came about mainly for convenience’s sake, since it is
easier to compute for and pay a fixed payroll amount per period.

8. Monthly-rate Example:
•Monthly rate = P15, 000.00
•Semi-monthly rate = P15, 000 / 2 = P7, 500.00 per pay period.
•Hourly rate (based on 365 days per year factor) = P15, 000.00 x 12 / 365 / 8 =
P61.64 per hour.
•# of Absences = 16 hours
•# of Undertime = 2 hours
•# of Lates = 3 hours
•Total deduction = (16hrs + 2hrs + 3hrs) x P61.64 = P1, 294.44
•Payroll = P7, 500.00 – P1, 294.44 = P6, 205.56

12. •However, due to a void regulation by the then Ministry of Labor and
Employment (now DOLE), confusion resulted when a regulation was passed
providing the definition of monthly-paid employees as those that are paid by
the month “irrespective of the number of working days therein”.
•This rule was found in Section 2, Rule IV of Book III of the Omnibus Rules
Implementing the Labor Code, which again has been declared void by the
Supreme Court.