All you need to know about overtime pay in the Philippines: how to calculate it
People in the workforce sometimes work extra hours or overtime. This often happens when your employer requires you complete an assignment with a tight deadline, cover during a busy period, or help with an emergency.
Workplace policies should define the overtime hours your employer might expect and dictate the compensation you should receive. There are legislations in place to ensure fair treatment for employees and provide employers with clarity on the amount to pay employees for overtime.
Knowing if you're eligible for overtime and learning how to calculate the amount you're due can help ensure your payment is correct. Read on to discover some aspects of overtime compensation. Here's what we'll cover:
- What is overtime (OT) pay?
- What do the regulations consider as overtime?
- Who is eligible for overtime pay?
- How to calculate overtime pay in the Philippines
- Overtime pay regulations in the Philippines
- Conclusion
- FAQs
What is overtime (OT) pay?
Overtime pay is the extra money you receive when you do overtime work past your regular hours. Its purpose is to offer fair compensation for your extra time and effort in completing your duties and your meaningful contribution to the company's operations. Companies usually pay overtime at a fixed hourly rate, which they calculate based on your salary.
What do the regulations consider as overtime?
According to the Labor Code of the Philippines, employees can receive overtime when they work more than the legislated eight hours per day. However, if the company follows a compressed workweek scheme, overtime pay may be given if the employee exceeds their agreed-upon schedule.
Who is eligible for overtime pay?
All regular employees are entitled to overtime pay. The exceptions to this rule are managerial staff, piece rate staff, house helpers, and non-agricultural field personnel.
How to calculate overtime pay in the Philippines
Several factors affect how employers pay for overtime in the Philippines. Payment depends on whether overtime falls on a normal workday, rest day, or public holiday. The regulations also limit how many overtime hours an employee can do. Let’s learn to calculate overtime by using this hypothetical scenario as an example:
- Sofia works as an administrative assistant.
- They receive ₱‚±20,000 per month.
- Sofia's standard daily rate is ₱‚±20,000 / 26 days = ₱‚±769
- Sofia's standard hourly rate is ₱‚±769 / 8 hours = ₱‚±96
Overtime pay on a normal working day
For a normal working day, overtime pay is equivalent to 125% or 1.25 of your regular hourly rate. Here's an example of Sofia's overtime compensation if they work beyond their work period on a normal workday:
Example: Sofia works an additional two hours on a normal working day outside ordinary work hours.
- ₱‚±96 x 1.25 = ₱‚±120 (Overtime hourly rate)
- ₱‚±120 x 2 = ₱‚±240 (Total overtime wage)
- ₱‚±769 + ₱‚±240 = ₱‚±1009 (Total wage for the day
Overtime pay on holidays
Working overtime during a holiday entitles you to an additional 30% of your rate for each hour worked. However, the computation for the total income for the day will differ depending on which type of holiday is being discussed. The Philippines has two types of holidays: regular and special non-working. Here are some sample overtime pay computations for each type.
Regular holidays
If you work on a regular holiday, you are entitled to 200% of your rate. Working overtime during a regular holiday entitles you to an additional 30% of your rate for each hour worked. Here’s how to compute overtime pay for a regular holiday:
Hourly rate × 200% × 130% × number of hours worked
Using Sofia as our example again:
Sofia works 10 hours on Christmas. They rendered two hours of overtime.
- ₱‚±769 x 2 = ₱‚±1538 (Regular holiday pay)
- ₱‚±96 x 2 x 1.3 x 2 overtime hours = ₱‚±499.2 (Overtime hours)
- ₱‚±1538 + ₱‚±499.2 = ₱‚±2037.2 (Total income for the day)
Special non-working holidays
If you work on a special non-working holiday, you will receive 130% of your rate. The overtime pay computation is the same. Here’s how to compute it:
Hourly rate × 130% × 130% × number of hours worked
Using Sofia as our example again:
Sofia works 10 hours on December 31. They rendered two hours of overtime.
- ₱‚±769 x 1.3 = ₱‚±999.7 (Special non-working holiday pay)
- ₱‚±96 x 1.3 x 1.3 x 2 overtime hours = ₱‚±324.48 (Overtime hours)
- ₱‚±999.7 + ₱‚±324.48 = ₱‚±1324.18 (Total income for the day)
Overtime pay on rest days
When you work on your rest day, you're entitled to the same compensation as on a special non-working day, which is an additional 30% of your daily rate. If you also work overtime, you'll receive an extra 30% of your hourly rest day rate. Use the formula provided for special non-working days to compute your overtime pay.
Overtime pay regulations in the Philippines
In addition to what’s already been discussed above, there are additional rules regarding overtime pay in the Philippines:
- Undertime does not offset overtime. If an employer permits an employee to leave early, this does not exempt them from paying overtime in the future.
- An employee may be required to render emergency overtime for the following reasons:
- When the country is at war or if there is a national or local emergency
- Necessary to prevent loss of life or property or in cases of imminent danger to public safety
- When there is urgent work to be performed on equipment to avoid loss or damage to the employer
- To prevent the loss of perishable goods
- When it is necessary to complete the work in order to prevent serious obstructions or prejudice to the business of the employer
Conclusion
By following the employment guidelines and calculation methods for overtime pay, workers can safeguard themselves against employers who miscalculate their pay or undercharge overtime rates. Employees who work overtime should be compensated fairly, but also try to work within the standard working hours to prevent overstretching their limits. Ultimately, this motivates employees to work hard for the company.
FAQs
- What is the maximum number of hours that qualify for overtime pay?
The Labor Code does not set a maximum number of overtime hours.
- Can salaried employees receive overtime pay?
Yes, they can. As long as these employees meet the eligibility criteria for overtime pay, they can qualify for overtime compensation.
- Are there different overtime pay rates for weekends and holidays?
Yes, there are. Normal overtime rates are 125% of your standard rate. For weekends (rest days) and holidays, it’s 130% of your daily rate. Keep in mind that your daily rate for rest days and holidays is also different from your standard rate.
- Are overtime pay regulations the same across different industries?
Yes, the regulations are usually the same regardless of which industry the employee works in.
- What should I do if my employer refuses to pay overtime?
If your employer violates overtime pay laws, you can file a complaint with the Department of Labor and Employment (DOLE).
- Is overtime compensation mandatory, or can employers choose not to offer it?
Yes, overtime pay is mandatory under the Labor Code of the Philippines. Failure to follow them can result in employers receiving penalties.
