The term ‘overtime’ has been commonly used for work done beyond the normal working hours. However, how exactly does the Labor Code of the Philippines define overtime work? And how to compute overtime pay?

This article will help you to understand the following:

  • What is overtime work?
  • What is the overtime rate in the Philippines?
  • Overtime Pay for Managers in the Philippines
  • Common question: is not paying overtime illegal?
  • Computation of Overtime Pay

Overtime Work

Overtime is defined as work performed beyond 8 hours in a work day. A work day is also defined as a 24 hours period from the start of work. So if an employee works from 8am to 4pm and then from 12am to 8am, even though there is a 8 hours gap in between, it is still considered a single work day. Therefore, overtime premium shall apply.

Overtime Rates

According to article 87 of the Labor Code of the Philippines, there are 2 different overtime rates. The overtime rate for a normal working day in the Philippines is 25% plus the employee’s regular wage. However, if overtime time is performed on a rest day or holiday, the overtime rate shall be increased to 30% plus the employee’s regular wage.

Overtime Pay for Managers in the Philippines

Managerial employees and officers or members of the managerial staff are not entitled to overtime pay. However, the designation or the employee’s job title does not automatically exclude the employee from overtime pay entitlement. It depends if the employee’s duties and responsibilities qualify to be considered as a managerial employee or a member of the managerial staff.

Is not paying overtime illegal?

If the employee does not fall under the exempted categories then the employer is required to pay the employee the overtime premium for work performed beyond 8 hours in a work day.

However, if the company is under the compressed work week scheme, then the employee may work up to 12 hours in a single workday without the corresponding overtime premium. This is also provided that the total number of working hours should not exceed 48 hours in a week. Exceeding which, overtime premium shall apply.

Illustration for Overtime in Compressed Work Week Scheme

Weekly Work Example 1 Example 2
Hours of Work Overtime Hours of Work Overtime
Monday 8.5 hours 0 12 0
Tuesday 8.5 hours 0 12 0
Wednesday 8.5 hours 0 10 0
Thursday 8.5 hours 0 10 0
Friday 8.5 hours 0 10 0
Total Working Hours: 42.5 hours 54 hours
Overtime for the week: 0 hours 54 – 48 = 6 hours

Total number hours of overtime for example 1 is 0 hours because hours of work for each day did not exceed 12 hours and the total number of working hours for the week did not exceed 48 hours.

Total number hours of overtime for example 2 is 6 hours because the total number of working hours for the week exceeded 48 hours.

Overtime Computation

Example 1: How to compute overtime pay
Regular Hourly Wage P50
Overtime Hourly Wage P50 × 125% = P62.50
Example 2: How to compute overtime pay with night differential
Regular Hourly Wage P50
Overtime Rate 25%
Night Differential 10%
Overtime with Night Differential Hourly Rate 125% × 110% = 137.5%
Actual Hourly Wage P50 × 137.5% = P68.75
Example 3: How to compute overtime pay on special non working holiday
Regular Hourly Wage P50
Overtime Rate 30%
Overtime Hourly Rate
on Special Holiday
130% × 130% = 169%
Actual Hourly Wage P50 × 169% = P84.50
Example 4: How to compute overtime with night differential on special non working holiday
Regular Hourly Wage P50
Night Differential Rate 10%
Overtime Rate 30%
Overtime with Night Differential Hourly Rate on Special Holiday 130% × 110% × 130% = 185.9%
Actual Hourly Wage P50 × 185.9% = P92.95
For more information on labor regulations, please see Presidential Decree No. 442, s. 1974.