Shift differential

A shift differential is an extra boost in pay given to employees when they work on late shifts. For example, a company increases the pay of anyone working on its graveyard shift by 10%, or an emergency care clinic pays its doctors an extra $300 to work the second shift. These payments are not required by law, but can be useful for retaining employees in posts that would otherwise be hard to fill. There is no legal requirement to pay a shift differential, so there is no standardized rate of pay associated with it. Instead, one may find a broad array of practices employed by businesses. That being said, the differential is usually paid as a percentage of wages. For example, a 10% shift differential is applied to a base wage of $20, resulting in $22 being paid per hour. If an employee then works overtime, the shift differential is included in the calculation of overtime. The exact terms of a shift differential arrangement will be stated in an employer’s employee handbook.

Related Courses

Human Resources Guidebook 
Optimal Accounting for Payroll
Payroll Management