Overtime Pay Philippines
Overtime pay is 25% of standard pay for work on a regular day and 30% of standard pay on holidays, special non-working days and double holidays.
It is paid for work done before work hours and is for all employees except for those listed as not eligible as per DOLE overtime pay guidelines.
In this article, I discuss
- Overtime Pay in the Philippines
- How to compute Overtime pay in the Philippines with sample computations
- FAQs such as Maximum overtime hours allowed in the Philippines, Is Mandatory overtime legal, etc.
If your labor case is especially complex you might need to discuss with one of our Philippine Labor Lawyers, but this guide should help with basic concerns.
Overtime Pay Philippines: What is it?
Overtime pay is pay for work performed beyond 8 hours a day.
The law recognizes that additional work over his regular hours should be awarded the appropriate pay, and so enacted this as part of Labor Law.
Article 87 in the Labor Code lays the basis for an additional 25% for overtime pay on regular days of and for an additional 30% for overtime on rest days and holidays.
Who is entitled to Overtime Pay in the Philippines?
All employees are entitled to Overtime Pay in the Philippines except for:
- Government employees
- Managerial employees who primarily manages the company, supervises 2 or more people, and who hires and fires
- Managerial staff who main work is to manage
- Personal servants
- Piece rate, task basis and other non-time work paid employees
- Field personnel whose work hours cannot be determined with certainty.
If you are in management, you might need to clarify with your HR whether you are entitled to Overtime pay.
It is best to do this before trying to file a case so that misunderstandings can be ironed out before hiring a Philippine Labor Lawyer.
How to compute Overtime Pay in the Philippines?
DOLE overtime calculation for overtime:
- Ordinary day overtime: 1.25 or 125%
- Rest day overtime: 1.30 or 130%
- Special day overtime: 1.3 x 1.3 = 1.69 or 169%
- Special day rest day overtime: 1.5 x 1.3 = 1.95 or 195%
- Regular holiday overtime: 2 x 1.3 =2.6 or 260%
- Regular holiday rest day overtime: 2.6 x 1.3 = 3.38 or 338%
- Double holiday overtime: 3 x 1.3 =3.9 or 390%
- Double holiday rest day overtime: 3.9 x 1.3 = 5.07 or 507%
DOLE overtime computation for overtime when there is also night shift:
- Ordinary day overtime and night shift: 1.25 x 1.3 x 1.1 = 1.375 or 137.5%
- Rest day overtime and night shift: 1.3 x 1.3 x 1.1 = 1.859 or 185.9%
- Special day overtime and night shift: 1.3 x 1.3 x 1.1 = 1.859 or 185.9%
- Special day rest day overtime and night shift: 1.5 x 1.3 x 1.1 = 2.145 or 214.5%
- Regular holiday overtime and night shift: 2 x 1.3 x 1.1 =2.86 or 286%
- Regular holiday rest day overtime and night shift: 2.6 x 1.3 x 1.1 = 3.718 or 371.8%
- Double holiday overtime and night shift: 3 x 1.3 x 1.1 =4.29 or 429%
- Double holiday rest day overtime and night shift: 3.9 x 1.3 x 1.1 = 5.577 or 557.7%
As you can see, there are several Overtime pay computations.
The first thing to determine is what type of day the overtime falls under.
Regular days are normal working days.
Holidays, Special Non-Working days and Double Holidays are usually announced the year before or – in the case of Special Non-Working days – announced a few weeks before the actual event.
I have a full discussion of the types of different days in Holiday Pay Philippines, if you need more details.
Then, you need to consider if the overtime also happens to be on your rest day.
You must also factor in also whether it was done on your night shift.
Then you can pick the right calculation.
Overtime Pay Computation (Sample Calculation)
You might be confused about how to compute overtime pay in the Philppines – after all, there are 16 formulas. Link to section up top
Let’s do one example, using one of the above DOLE overtime calculations.
Say you have worked an 8 hour shift in a hospital, but need to put in another 4 hours due to being short staffed.
Your overtime is from 8pm to 12 midnight.
Your pay on a regular day is 800 pesos or 100 pesos an hour.
It is a Special Non-Working Holiday but it is not your rest day.
The overtime pay computation for the 4 hours you worked is:
From 8pm to 10pm:
1.3 Special Day x 1.3 Overtime x 2 hours x 100 pesos = 338 pesos
For 10pm to 12 midnight:
1.3 Special Day x 1.3 Overtime x 1.1 Night shift x 2 hours x 100 pesos = 371.8 pesos
So, as calculated from the DOLE overtime pay rules, your total overtime pay is 709.8 pesos for the 4 hours additional hours you worked.
Overtime Pay Philippines: 8 FAQs
Are allowances included in the overtime pay computation?
Your regular base pay is the basis for calculating overtime and does not include money received for such things as Christmas bonus and other fringe benefits. [G.R. No. L-27761]
It does not include the Cost of Living Allowance as per DOLE Overtime Pay Rules and is the cash wage only. [Art 90, Labor Code]
So, the calculation base is the regular base pay only.
Is Mandatory Overtime legal in the Philippines?
Yes, Mandatory Overtime is legal in the Philppines – but only in certain situations.
Let’s take a look at these situations before you call your Philippine Labor Lawyer (please link to contact us page) because of Mandatory Overtime:
- When the country is at war or there is a local or national emergency
- To prevent loss of life or property or in case of imminent danger due to emergency
- For urgent work on equipment to prevent serious loss or damage
- To prevent loss/damage of perishable items
- When completing work started before the 8th hour would prevent serious obstruction to operations [Art 89, Labor Code of the Philippines]
Mandatory Overtime in these situations is recognized by law and are also recognized in the DOLE Overtime Pay Guidelines.
These are the only situations in which Mandatory Overtime Pay is allowed.
Overtime Pay Philippines: Can Undertime offset Overtime?
Undertime does not offset overtime.
In Philippine Labor Law, Art 88 specifically states that undertime cannot be offset by overtime and that employee leave also cannot be offset by overtime.
In other words –
If an employee goes on leave on one day and performs overtime on another day, the employer must pay for the overtime. Leave time does not replace overtime.
It is the same for undertime. Undertime cannot offset Overtime.
In G.R. No. 121004, Cityland offset the alleged rest day hours worked with equivalent time on regular workdays. The Supreme court stated that this “circumvent the law on payment of premiums” and that off-setting would be detrimental to the worker.
Can the Salary of an Employee that is more than minimum offset Overtime?
If the salary of an employee is more than minimum, this excess over the minimum does not offset the additional pay due to them.
In GR. 115755, store clerk Damasco worked from 8:30am to 6:30pm daily but was not paid Overtime Pay.
Damasco’s employer claimed that her basic salary was more than enough to cover the one hour excess.
However, the Supreme Court stated that because Damasco worked beyond eight hours daily, the latter is entitled to overtime compensation even assuming that Damasco received a wage which is higher than the minimum provided by law.
So, a salary more than minimum does not offset Overtime Pay that should be paid.
Can Overtime Pay in the Philippines be waived?
No, an employee cannot waive his right to Overtime Pay.
Even if an employee signs a Quitclaim, he is still entitled to Overtime Pay.
In G.R. No. L-12046, the Supreme Court states that the alleged quit claim signed by the appellant in favor of the appellee renouncing “any and all kinds of claims against the said factory”, cannot deprive the appellant of his right to collect overtime and legal holiday wages under the provisions of Commonwealth Act No. 444. Overtime pay cannot be waived.
Thus, Overtime Pay cannot be waived.
Overtime Pay Philippines: How does it work in a Compressed Work Week?
Overtime should be paid in a compressed work week and starts after the end of the extended work hours.
Let’s break that down a little.
A Compressed Work Week is when the number of work days is reduced but the total number of work hours remains.
So, a 6 day work week can become a 5 day work week.
However, the total number of 48 hours can be kept so workdays would now have extended hours.
In a 6 day work week from 8 to 5pm, work hours could be from 8am to 6:36pm in a 5 day work week.
Overtime pay would start after 6:36pm in this case.
Overtime pay would not start after 5pm, since the time from 5pm to 6:36 pm is still part of the regular hours of a compressed work week.
The Supreme Court reinforced this concept in GR 151309 by stating:
…Thus, under this scheme, the generally observed workweek of six (6) days is shortened to five (5) days but prolonging the working hours from Monday to Friday without the employer being obliged for pay overtime premium compensation for work performed in excess of eight (8) hours on weekdays, in exchange for the benefits that will accrue to the employees – savings on meal and snack expenses, longer weekends, additional 52 off-days per year, etc.
In a compressed work week, the normal workday is increased to more than eight hours but shall not exceed 12 hours without corresponding overtime premium. [DOLE Advisory No-4-10]
Overtime Pay Philippines: Overtime requires Prior Approval
Yes, Overtime Pay requires prior approval.
Just because an employee worked more hours than his schedule, it does not mean that these additional hours worked should be paid.
Only when management authorized overtime should an employee’s additional hours worked form part of his Overtime Pay computation.
DOLE Overtime Pay guidelines also follow this principle in Section 4(c), Rule I, Book III of the Omnibus Rules Implementing the Labor Code.
This was upheld in Robina Farms vs Villa.
Employee Villa’s Daily Time Records showed that she stayed on company premises longer than 8 hours – but that is not sufficient to prove that overtime pay was done since management first should have authorized this overtime.
There is an exception for requiring private management authorization – which we see in the case of the Manila Railroad company vs CIR.
In this case, the conductor of the Luzon Bus Line was working a trip that lasted more than his regular time. He could not quit his work during the trip, so the Supreme Court stated that the company should paid for this overtime.
Overtime Pay Philippines: Burden of Proof is on the Employee
Jurisprudence has shown that the burden of proof falls on the employee.
Thus, if the employee alleges that some overtime hours should be included in his Overtime Pay Computation, he must prove that since these are not incurred in the normal course of business. [G.R. 189404]
This was further reinforced in Minsola vs New City Builders with the Supreme Court stating:
“It is thus incumbent upon the employee to first prove that he actually rendered service in excess of the regular eight working hours a day..”
So, if you state that you are entitled to overtime, you and your Labor Lawyer must be prepared to prove it.