A shift allowance is an amount a company pays above its basic wage to employees who work during certain shifts in order to motivate people who work in less desirable shifts, such as an evening or overnight shift. It is also used to compensate employees who have worked overtime.
The shift allowance is also referred to as a shift differential, as it equals the difference between the amount workers make with the allowance and the amount others earn for regular shifts. In addition to schedule preferences, people who work overnight shifts face other challenges related to their health, nutrition and sleeping habits. Part of the point of the allowance is to acknowledge these challenges.