diff --git a/app/Services/PayrollService.php b/app/Services/PayrollService.php
index 7475820dc..9aea07987 100644
--- a/app/Services/PayrollService.php
+++ b/app/Services/PayrollService.php
@@ -58,6 +58,7 @@ class PayrollService
 
         $earnedBasicSalary = 0;
         $holidayPay = 0;
+        $holidayPremiumPay = 0;
         $holidayDaysNotWorked = 0;
         $regularOtTotal = 0;
         $nightDiffAmount = 0;
@@ -192,6 +193,7 @@ class PayrollService
                     $premium = ($earnedDaily - $proratedDailyRate);
                     if ($isRegularHoliday || $isSpecialHoliday) {
                         $holidayPay += $premium;
+                        $holidayPremiumPay += $premium;
                     }
                     // Rest Day Premium removed per client request
                 }
@@ -303,8 +305,10 @@ class PayrollService
             
             // Extract paid leaves AND holiday pay from basic to show them as separate line items
             // This matches the client's expected payslip format:
-            // Basic = CutOff - Leaves - Holidays, then add them back as separate earning lines
-            $earnedBasicSalary = max(0, $cutOffSalary - $paidLeavesAmount - $holidayPay);
+            // Basic = CutOff - Leaves - Holidays (only the unworked holiday portion), then add them back as separate earning lines
+            // Any extra premium earned from working on a holiday is an addition, NOT deducted from base salary.
+            $holidayPayNotWorked = max(0, $holidayPay - $holidayPremiumPay);
+            $earnedBasicSalary = max(0, $cutOffSalary - $paidLeavesAmount - $holidayPayNotWorked);
             
             // We explicitly deduct absent days (LWOP)
             $absenceDeduction = $absencesCount * $actualDailyRate;