Overtime, nightshift pay should be tax-free


The Trade Union Congress of the Philippines (TUCP) has thrown its support behind two House bills seeking to exclude from income taxes all overtime and graveyard shift differential pay received by salaried employees, including the country’s 1.1 million business process outsourcing (BPO) workers who perform jobs all day and all night.

The measures will help middle-class families, rev up household consumption, create new demand for the products and services of domestic industries, and stimulate economic growth amid persistent government underspending

House Bills 2836 and 4682, authored by Makati City Rep. Mar-Len Abigail Binay, seek to exempt all overtime and graveyard shift benefits from the computation of the gross taxable income of all workers, regardless of their hourly pay rate.

Well-paid employees and salaried professionals stand to gain the most from congresswoman Binay’s twin proposals, since by law, the income of our lowest-paid workers — minimum wage earners — are already absolutely tax-free.

In her bills’ explanatory notes, Binay said the tax reprieves “are meant to give greater substance to the mandates of the Constitution for the State to provide a living wage, a rising standard of living, and improved quality of life for all.”

At present, overtime and night shift premiums of workers receiving more than the statutory minimum wage are slapped up to 32 percent in withholding taxes, depending on the employee’s tax bracket.

Overtime pay refers to the extra 25 percent to 30 percent compensation received by an employee for labor rendered in excess of the required maximum eight hours a day.

The night shift premium is the additional 10 percent remuneration for work delivered between 10 p.m. and 6 a.m.

Under the Labor Code, if the overtime work falls inside the graveyard shift, the extra reward for overtime labor is first added to the employee’s regular hourly rate before computing the night differential pay.

TUCP’s large member-federations include the BPO Workers’ Association of the Philippines (BWAP), which is led by former Labor Secretary and now TUCP vice president Ruben Torres.

The highly labor-intensive BPO and information technology-enabled services industry includes contact centers, back offices, data transcribers, animators, software developers, engineering designers, and digital content providers.

A labor leader should show the right way
A leader leads by example, whether he intends to or not, as the saying goes. Leadership is all about action, about doing the right thing. It is not about position. People will respect a leader who acts accordingly.

This is the same with labor leaders. A labor leader who spouts platitudes about labor rights but does not pay his own people the proper wages and benefits and is the first to violate labor laws himself will not be respected. A labor leader who does not look after his own people or the welfare of his members is a fake.

You cannot publicly work to increase wages, improve work conditions, stop unfair treatment of workers, while personally being unfair to your own workers or members and not pay them their wages, dues and benefits.

Pure, simple and responsible unionism is about doing the right thing, first and foremost in your own office.

While we are on the subject of leadership, the Supreme Court has declared with finality that I am the legitimate and constitutional TUCP president.

The Supreme Court First Division’s resolution dated February 9, 2015 affirms the 2013 Court of Appeals (CA) Seventh Division decision declaring “Herrera, along with other elective members of the Executive Board as the lawful officers of the TUCP.”

The CA decision “annulled and set aside” the status quo ante decision of the Department of Labor and Employment. The Court of Appeals also declared “any act performed by Mendoza after his resignation has no legal effect and is not binding, for lack of authority.”

With the Supreme Courts’ decision, the TUCP will resume full operation and engagement with tripartite partners, without encumbrance.

As the biggest trade union confederation in the Philippines, we reiterate our commitment towards equity, inclusive growth, workers’ protection, and decent work for all.

I will work every single day to be a labor leader who leads by example.


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  1. the best thing government can do, repeal the contractualization law … every six months lay off ang mga workers after they dont have job.. mabuti kung ang minimum wage nila ay PHP 500/day = 8 hrs. bakit ayaw irepeal ang contractualization law?? umiiwas ang mga company na magbayad ng benefits ng kanilang mga workers… magkano na ba ang minimum wage sa Pinas?? hindi namn nagbibigay si Abnoy ng salary increase sa mga workers… Labor Day, wala siyang annoucement sa mga daily wage increase.. bakit?? dahil pinoprotecktahan ni abnoy ang mga kaibigan nya na may business.. mabuti sana kung binibigayan ng gobyerno libreng pabahay ang mga workers, sa liit ng sweldo.. ang mayaman lang ang lalong yumayaman.. subukan ninyong magbusiness sa America at Europ??
    magagawa kaya ninyo ang ginagawa ninyo dito na puro pangaapi sa inyong mga workers ang mga ginagawa ninyo…

  2. fred villaragoisa on

    “, since by law, the income of our lowest-paid workers — minimum wage earners — are already absolutely tax-free.”

    What is the lowest paid — minimum wage earner in the PH; may be P72K per year, @ P300 a day? This is equivalent to $1.3 K, or a one month minimum pay in the US..
    Therefore, a PH worker need to work extra 11 months in order to get a one month salary of worker in the US. Por Santo -, don’t tax those workers that are making P300,000 per year.

  3. ito ang matagal na naming hinihintay. bwisit kasi yang tax na yan eh…pati ba naman yung pinagpupuyatan naming kita at overtime kinukuhanan pa rin ng tax. sana ma-approve ang proposed bill na yan. saludo ako sa yo Makati City Rep. Mar-Len Abigail Binay.