A new legislation that aims to give tax breaks for nearly 904,00 employees with graveyard work shifts was recently submitted by Deputy Majority Leader and Makati City Rep. Mar-Len Abigail Binay.
According to the lawmaker, overtime and third shift premiums of workers receiving the minimum wage are taxed as much as 32 percent based on their tax bracket. She is hoping that with House Bills 2836 and 4682, all wages that fall under the graveyard shift and overtime category will be exempted from the tax deductions regardless of their hourly pay rate.
Binay explained that should the tax break take effect, it will empower the consumers to spend on taxed items such as goods and services. She said it will also alleviate the strain of rapid inflation in the country.
Binay also noted that workers in the business process outsourcing (BPO) sector will be the major beneficiaries of the proposed law. Also, BPO workers are remunerated above the stipulated minimum wage, and their third shift premiums and overtime pay are still subject to withholding taxes.
If an employee works beyond the required maximum eight hours a day, he/she is entitled to 25-30 percent additional compensation. As for the night shift premium, Binay explained that an additional 10 percent will be given to employees who work between 10:00pm and 6:00am.
Binay noted that under the Labor Code, if overtime work is within the graveyard shift, the additional overtime labor is first computed and added to the employee’s regular hourly rate before the night differential pay is added.