Shift differential is a method used to compensate employees for working less desirable shifts, such as evenings, nights, or weekends. The calculation typically involves adding a predetermined amount to the employee’s base hourly rate. For example, if an employee earns $20 per hour and the night shift differential is $2, the employee would earn $22 per hour for each hour worked on the night shift. This additional compensation can be either a flat rate or a percentage of the base pay.
Offering such compensation is vital for attracting and retaining staff who are willing to work outside of standard daytime hours. It acknowledges the disruption to employees’ personal lives and potential hardships associated with these schedules. Historically, this practice arose from the need to ensure adequate staffing across all operational periods in industries requiring continuous service, such as healthcare, manufacturing, and public safety.