In order to fulfill the traffic localization, the network coding (NC) paradigm is a promising approach that can significantly improve the throughput, end-to-end (E2E) delay, and energy efficiency for passive optical network (PON).On the other hand, more recently, the hierarchical modulation (HM) incorporates with advanced digital signal processing (DSP) technology can optimize the total available capacity of PON. In this paper, in order to optimize the network performance, we propose a joint physical layer NC (PLNC) and HM in PON. Subsequently, we evaluate the bit error rate (BER) of M-QAM modulated PLNC that uses the proposed mapping scheme. Afterwards, as an application, a rate adaptation scheme for the method of PLNC is proposed. Simulation results show that combined HM and PLNC mechanism has better BER in OFDM-PON than the conventional NC. Meanwhile, the rate-adaptive PLNC is advantageous in various scenarios.