We propose an algorithm for compensating the phase-shift error of polarization-based parallel two-step phase-shifting digital holography, which is a technique for recording a spatial two-step phase-shifted hologram. Although a polarization-based system of the technique has been experimentally demonstrated, there had been the problem that the phase difference of two phase-shifted holograms had been changed by the extinction ratio of the micropolarizer array attached to the image sensor used in the system. To improve the performance of the system, we established and formulated an algorithm for compensating the phase-shift error. Accurate spatial phase-shifting interferometry in the system can be conducted by the algorithm regardless of phase-shift error due to the extinction ratio. By the numerical simulation, the proposed algorithm was capable of reducing the root mean square errors of the reconstructed image by $1/4$ and $1/5$ in amplitude and phase, respectively. Also, the algorithm was experimentally demonstrated, and the experimental results showed that the system employing the proposed algorithm suppressed the conjugate image, which slightly appeared in the image reconstructed by the system not employing the algorithm, even when the extinction ratio was $10\text{:}1$ . Thus, the effectiveness of the proposed algorithm was numerically and experimentally verified.