Overtime Pay Computation in the Philippines

PUBLISHED ON: March 4, 2021
LAST UPDATED ON: May 1, 2021

Overtime Pay in the Philippines is given to employees who performed work beyond 8 hours. Additional payment is based on the day overtime work is performed.

Filipinos would often joke about working beyond 8 hours as "OTy" which means that the company would only be thanking them for their work instead of giving their Overtime Pay, which should not be the case.

This article discuss the what are the employees' rights on Overtime Pay and the computation thereof.

Defining Overtime Pay

What is Overtime Pay in the Philippines?

Overtime Pay in the Philippines is stated in Article 87 of Presidential Decree No. 442, also known as the Labor Code of the Philippines.

Work may be performed beyond eight (8) hours a day provided that the employee is paid for the overtime work, an additional compensation equivalent to his regular wage plus at least twenty-five percent (25%) thereof. Work performed beyond eight hours on a holiday or rest day shall be paid an additional compensation equivalent to the rate of the first eight hours on a holiday or rest day plus at least thirty percent (30%) thereof.

Entitlement to Overtime Pay

Who are entitled to Overtime Pay?

All employees are entitled to Overtime Pay unless they are specifically excluded from entitlement to Overtime Pay. The following are exempted for Overtime Pay as stated in Section 2, Rule I, Book Three (3) of the Labor Code of the Philippines:

  • (a) Government employees whether employed by the National Government or any of its political subdivision, including those employed in government-owned and/or controlled corporations;
  • (b) Managerial employees, if they meet all of the following conditions:
    • (1) Their primary duty consists of the management of the establishment in which they are employed or of a department or sub-division thereof.
    • (2) They customarily and regularly direct the work of two or more employees therein.
    • (3) They have the authority to hire or fire employees of lower rank; or their suggestions and recommendations as to hiring and firing and as to the promotion or any other change of status of other employees, are given particular weight.
  • (c) Officers or members of a managerial staff if they perform the following duties and responsibilities:
    • (1) The primary duty consists of the performance of work directly related to management policies of their employer;
    • (2) Customarily and regularly exercise discretion and independent judgment; and
    • (3) Duties of the following
      • (i) Regularly and directly assist a proprietor or a managerial employee whose primary duty consists of the management of the establishment in which he is employed or subdivision thereof; or
      • (ii) execute under general supervision work along specialized or technical lines requiring special training, experience, or knowledge; or
      • (iii) execute, under general supervision, special assignments and tasks; and
    • (4) Who do not devote more than 20 percent of their hours worked in a work week to activities which are not directly and closely related to the performance of the work described in paragraphs (1), (2) and (3) above.
  • (d) Domestic servants and persons in the personal service of another if they perform such services in the employer's home which are usually necessary or desirable for the maintenance and enjoyment thereof, or minister to the personal comfort, convenience, or safety of the employer as well as the members of his employer's household.
  • (e) Workers who are paid by results, including those who are paid on piece-work, "takay," "pakiao" or task basis, and other non-time work if their output rates are in accordance with the standards prescribed under Section 8, Rule VII, Book Three of these regulations, or where such rates have been fixed by the Secretary of Labor and Employment in accordance with the aforesaid Section.
  • (f) Non-agricultural field personnel if they regularly perform their duties away from the principal or branch office or place of business of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty.

Are employees of Public Utility enterprises and Non-Profit institutions and organizations entitled to Overtime pay?

As stated in Section 9, Rule I, Book Three (3) of the Labor Code of the Philippines:

(b) Employees of public utility enterprises as well as those employed in non-profit institutions and organizations shall be entitled to the premium and overtime pay provided herein, unless they are specifically excluded from the coverage of this Rule as provided in Section 2 hereof.

Are security guards entitled to Overtime Pay?

Yes, security guards who performed work beyond 8 hours are entitled to Overtime Pay.

Are Kasambahay or Domestic workers entitled to Overtime Pay?

No, Kasambay or Domestic workers are not entitled to Overtime Pay.

Computation of Overtime Pay

How to calculate Overtime Pay?

A worker is entitled to Overtime Pay if the employee has worked beyond 8 hours. The calculation of Overtime Payment is based on the hourly regular wage and the day when Overtime was performed.

The term regular wage has been clarified by Article 90 of the Labor Code of the Philippines.

ART. 90. Computation of Additional Compensation. For purposes of computing overtime and other additional remuneration as required by this Chapter, the "regular wage" of an employee shall include the cash wage only, without deduction on account of facilities provided by the employer.

In addition to the number of hours work performed, the computation of Overtime rate to be paid to an employee is dependent on the day the work has been performed which could be a Scheduled Rest Day, Special Non-Working Day, Regular Holiday, or a combination of the mentioned dates.

The percentage of Overtime Pay is stated in Section 8 and Section 9, Rule I, Book Three regarding work performed on Ordinary days, Rest Days, and Special Non-Working Days; and computation of Overtime Pay for Regular Holidays is provided by Section 4 and 5, Rule IV, Book Three of the Implementing Rules and Regulations of the Labor Code of the Philippines.

Overtime Payment during an Ordinary working day

An employee that worked beyond 8 hours on an ordinary working day is entitled to an additional payment of 25% of their additional regular hourly rate.

The computation is as follows:

Hourly rate of the basic wage x 125% x number of hours worked

Overtime Payment during a Scheduled Rest Day

An employee that performed work on their rest days shall be paid with an additional compensation of 30% percent of their regular wage.

The computation is as follows:

Hourly rate of the basic wage x 130% x number of hours worked

Overtime Payment during Special Non-Working Day

An employee that worked overtime on a Special Non-Working Day shall be paid an additional 30% of their hourly rate.

The computation is as follows:

Hourly rate of the basic wage x 130% x 130% x number of hours worked

Overtime Payment during a Special Non-Working Day and scheduled Rest Day

An employee that worked overtime on a Special Non-Working Holiday and that is also their scheduled Rest Day shall be shall be paid an additional 30% of their hourly rate.

The computation is as follows:

Hourly rate of the basic wage x 150% x 130% x number of hours worked

Overtime Payment for Regular Holiday

An employee that worked overtime on a Regular Holiday shall be shall be paid an additional 30% of their hourly rate to the 200% additional compensation for the Regular Holiday work.

The computation is as follows:

Hourly rate of the basic wage x 200% x 130% x number of hours worked

Overtime Payment during a Holiday and scheduled Rest Day

An employee that worked overtime during a Regular Holiday, which was supposedly his rest day, shall be paid an additional 30% of their hourly rate on said day to the 200% to the Regular Holiday Work which has also has an additional compensation of 30% for their scheduled Rest day.

The computation is as follows:

Hourly rate of the basic wage x 200% x 130% x 130% x number of hours worked

In this computation, the excess hours is compensated as work performed on a Regular Holiday, Rest Day, and Overtime.

Management of Overtime

Can an employee be forced or mandated to work Overtime?

Employees may be required to work overtime depending on the situation. The following situations necessitates overtime, as provided by Article 89 of the Labor Code of the Philippines and Section 10, Rule I, Book Three (3) of the Implementing Rules and Regulations, provided that they are given Overtime pay:

  • When the country is at war or when any other national or local emergency has been declared by Congress or the Chief Executive;
  • When overtime work is necessary to prevent loss of life or property, or in case of imminent danger to public safety due to actual or impending emergency in the locality caused by serious accident, fire, floods, typhoons, earthquake, epidemic or other disaster or calamities;
  • When there is urgent work to be performed on machines, installations, or equipment, in order to avoid serious loss or damage to the employer or some other causes of similar nature;
  • When the work is necessary to prevent loss or damage to perishable goods;
  • When the completion or continuation of work started before the 8th hour is necessary to prevent serious obstruction or prejudice to the business or operations of the employer; or
  • When overtime work is necessary to avail of favorable weather or environmental conditions where performance or quality of work is dependent thereon.

An employee should not be required to work Overtime against their will should the situation not fall within the abovementioned cases.

Should Overtime need approval?

Management and administration of Overtime is dependent upon the company policy and management prerogative. There is no explicit rule stated in the Labor Code of the Philippines or its Implementing Rules and Regulations that mandates rules.

Best practices dictate that Overtime should require approval. The approval should be from the manager of the employee requesting the approval.

is 30 minutes or less considered Overtime?

Regardless of the length of what is considered Overtime, it is dependent on the company policy what should be considered overtime.

Overtime should be first considered to be urgent that it would fall into the 6 categories that when Overtime is mandated. Once approved, any length of time should be considered as Overtime.

Employees are recommended to refer to their respective company policy regarding Overtime.

Can Overtime pay not be given?

An employee who was mandated by their Employer to work beyond 8 hours should be compensated with Overtime pay. Unfortunately, employers would often not even pay the equivalent hourly wage of the employees let alone pay the additional compensation.

Can Overtime be used to Offset Undertime?

Employers may often require employees to perform Overtime on another day to compensate the undertime incurred on a previous day. This belief may stem from

ART. 88. Undertime Not Offset by Overtime. Undertime work on any particular day shall not be offset by overtime work on any other day. Permission given to the employee to go on leave on some other day of the week shall not exempt the employer from paying the additional compensation required in this Chapter.

Miscellaneous

Burden of Proof for Overtime

The employee has the burden of proof should Overtime be contested. This is due to the fact overtime is beyond the normal operations or working hours of the company.

It is important for an employee to have the request for Overtime be approved by their manager and proof that Overtime has been performed.

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