How Do Employees Benefit from Shift Differential?

By hrlineup | 30.11.2020

Scheduling employees to work during unpopular shifts that everyone doesn’t want isn’t an easy task. To unlock the standoff, most organizations offer shift differential pay to their employees. It’s a simple way of rewarding and getting employees to work during odd but necessary hours.

So in this article, we will discuss what shift differential pay is, how it works, and the kind of different industries that offer this premium package.

What is Differential Pay?

A shift differential pay refers to additional compensation that an employee gets when working outside regular working hours. Although the federal employment act doesn’t recognize shift differential laws, unlike overtime, most premium employees still offer it as a way of motivating employees to take up those “undesirable” shifts.

Companies usually offer differential pay for:

  • Weekend shifts
  • Overnight shifts
  • Evening shifts
  • Holiday shifts

Also, shift differential pay policy states that an employer must include shift differential pay in overtime calculations or face penalties. So, let’s say if an hourly employee works during the weekend or at night, they might receive an extra $5 per hour.

Industries with Shift Differential Pay

Not all industries offer differential pay. For example, the banking industry doesn’t provide it because banks typically operate within regular business hours. Therefore, industries offering the package can work up to 24 hours a day.

So, if you’re still wondering which businesses offer shift pay, here are some of them:

  • Customer service
  • Manufacturing
  • Healthcare
  • Restaurants
  • Transportation
  • Security

How Does Shift Differential Work?

Typically, the employer will decide what differential pay an employee gets. The employer will consider factors such as an employee’s wages, experience, responsibilities, hours, and whether the employee is salaried or hourly.

For an hourly employee, the shift differential pay can come as an additional flat amount per hour or a percentage of the base rate. Salaried employees, on the other hand, usually get it as a percentage.

For example, if an hourly employee receives a differential pay of 10% and earns $30 per hour during usual shifts, the employee would earn $33 per hour, with the $3 as the differential pay.

If a salaried employee earns $1000 per month, the employer might add 10% as the differential pay for every shift worked. So, if the employee works two shifts a month, they will eventually earn $200 as the differential pay.

Benefits of Shift Differential Benefits to Employees

Employees benefit from shift differential pay by making additional money on top of their gross salary. Also, the opportunity to work on a differential pay shift gives the employee a sense of recognition and dedication. Going over and above beyond working hours can be considered as a generous sacrifice by the employer.


Although it’s hard to convince your employees to leave the comforts of their homes and work during odd hours, shift differential pay can be an attractive incentive. This way, customer satisfaction is vastly improved, and so is the overall productivity.