Night differential, priced honestly

Night differential is the most commonly mispriced line in an offshore engineering budget, and it is also the easiest one to get right, because the rule is short and it is written down. Article 86 of the Labor Code: every employee shall be paid a night shift differential of not less than ten percent of his regular wage for each hour worked between ten o'clock in the evening and six o'clock in the morning.

Three things follow from that sentence, and they are the whole post.

It is the hours, not the country

The differential attaches to hours, not to job titles, shift names or the location of the person you report to. If the work happens between 10 p.m. and 6 a.m. Philippine time, those hours carry it. If it does not, they do not.

Which means the question "how much does night differential add?" cannot be answered until you have answered a different one: how many hours of live overlap do you actually need, and with whom? Philippine time is UTC+8. Work that out against your own team and the differential calculates itself.

• AU/NZ. Sydney runs two hours ahead of Manila. A standard Philippine day, nine to six, covers eleven in the morning to eight in the evening in Sydney — six hours of overlap with a normal Australian working day without anyone going near the window. The differential is zero.
• US East. Twelve hours apart. A Philippine evening shift from seven to eleven meets a US East morning from seven to eleven. Four hours of overlap, roughly one of them inside the window.
• US Pacific. Fifteen hours apart. A shift running 10 p.m. to 7 a.m. in Manila is 7 a.m. to 4 p.m. on the US west coast — and eight of those nine hours fall between 10 p.m. and 6 a.m. The differential applies to nearly the whole shift.

That is the real finding, and it is not a gradient. Two of those three patterns cost nothing extra. One of them changes the price of the role.

Ten percent is a floor

"Not less than ten percent" is a minimum, and in a competitive market for senior engineers it behaves like one. An experienced candidate choosing between two offers at the same nominal rate, one of which asks them to be awake at three in the morning, will price that themselves — and the premium they have in mind is usually not ten percent.

So treat the statutory figure as the bottom of the range rather than the number to budget. What the market asks for a genuine graveyard shift is a live question we can answer for your specific role and band; what the law asks is settled.

Put it in the first offer

The failure mode we see most often is a rate agreed without the differential, a shift pattern agreed afterwards, and a correction landing somewhere between the first payslip and the first renewal. Everybody involved behaves reasonably at each step and the outcome is still a candidate who believes they were quoted one number and paid another.

Decide the overlap before you quote. If the answer is US Pacific, say so in the brief, carry the differential in the offer, and show the candidate the arithmetic. It is a conversation about ten percent that costs nothing to have early and costs a replacement hire to have late.