How to compute the daily and hourly rate
Daily rate is the monthly salary times 12 divided by the number of paid days in the year, and the hourly rate is the daily rate divided by eight hours.
The formula
Daily rate = (monthly salary × 12) ÷ number of paid days in the year
Hourly rate = daily rate ÷ 8
Example
An employee earns ₱26,100 a month and works five days a week, with a divisor of 261.
- Daily rate: ₱26,100 × 12 ÷ 261 = ₱1,200
- Hourly rate: ₱1,200 ÷ 8 = ₱150
With a divisor of 313 the same salary gives a daily rate of about ₱1,000.64. The divisor changes every figure that is built on the daily rate, so decide it once and apply it everywhere.
Where the daily and hourly rates are used
- Absences, late minutes and undertime
- Overtime pay and night shift differential
- Holiday pay
- Cash conversion of unused leave
- Prorated salary for new hires and resigned employees
Questions people ask
What divisor should I use for the daily rate?
It depends on the days the employee is paid for in a year. DOLE's handbook lists factors such as 365 for employees paid every day, 313 for those who work six days a week, and 261 for those who work five days a week. Use the factor stated in the contract or company policy.
How do I get the hourly rate?
Divide the daily rate by eight hours.
Why do two companies show different daily rates for the same monthly salary?
Because they use different divisors. A lower divisor gives a higher daily rate. The divisor should match how many days the monthly salary is meant to cover.
Sources
- DOLE, Handbook on Workers' Statutory Monetary Benefits, equivalent daily rate