There will be instances where employees need to work some extra hours whether they’d be asked for it or they just have the luxury of time to do so. In our country, overtime pay depends on the rate of a certain employee. Meaning, the extra hours worked are not the only factor in computing it. In this article, we will be teaching you how you can compute your overtime pay in order for you to have a record of it and for you to be assured that you will be paid right.
It is important to keep in mind that computation for overtime pay varies from company to company; the computation we will be teaching you is just the basic one and in this case this one is the computation that most companies follow.
Overtime pay is additional compensation for work performed beyond the standard 8 hours in a day, as required by law. It is calculated as a percentage of the employee’s hourly rate.
For starters, you can actually have your overtime pay by just talking to your employer that you want to work extra hours for the day or in whatever day that you wish. But some companies have their schedules system-generated so, what they require their employees is to inform them when they wish to have their overtime 1-2 weeks prior to the date that they want.
Take note that this system varies from company to company and to profession. Some professions do not actually have overtime pay like being a doctor, being a lawyer, and other professions. If you want to be sure, inquire about it to your Human Resources team in your company.
Let’s say an employee works for 2 overtime hours on a regular workday. The employee’s monthly salary is ₱20,000, and they work 25 days a month.
To Calculate the regular hourly rate
Daily Rate = ₱20,000 ÷ 25 days = ₱800/day Hourly Rate = ₱800 ÷ 8 hours = ₱100/hour Regular Workday (with 2 hours overtime) Given:
Hourly Rate = ₱100 Regular Hours Worked = 8 hours Overtime Hours = 2 hours Overtime Rate = 125% Step 1: Compute regular daily wage
Regular Pay = ₱100 × 8 hours = ₱800 Step 2: Compute overtime pay
Overtime Pay = ₱100 × 1.25 × 2 hours = ₱250 Step 3: Compute total daily wages + overtime
Total Pay = Regular Pay + Overtime Pay Total Pay = ₱800 + ₱250 = ₱1,050 So, the total daily wages plus 2 hours of overtime on a regular workday is ₱1,050.
Rest Day or Special Non-Working Day (with 2 hours overtime) Given:
Hourly Rate = ₱100 Regular Hours Worked = 8 hours Overtime Hours = 2 hours Overtime Rate = 130% × 130% Step 1: Compute regular daily wage
On a rest day/special non-working day, regular hours are paid at 130%.
Regular Pay = ₱100 × 1.30 × 8 hours = ₱1,040 Step 2: Compute overtime pay
Overtime Pay = ₱100 × 1.30 × 1.30 × 2 hours = ₱338 Step 3: Compute total daily wages + overtime
Total Pay = Regular Pay + Overtime Pay Total Pay = ₱1,040 + ₱338 = ₱1,378 The total daily wages plus 2 hours of overtime on a rest day or special non-working day is ₱1,378.
Regular Holiday (with 2 hours overtime) Given:
Hourly Rate = ₱100 Regular Hours Worked = 8 hours Overtime Hours = 2 hours Overtime Rate = 200% × 130% Step 1: Compute regular daily wage
On a regular holiday, regular hours are paid at 200%.
Regular Pay = ₱100 × 2 × 8 hours = ₱1,600 Step 2: Compute overtime pay
Overtime Pay = ₱100 × 2 × 1.30 × 2 hours = ₱520 Step 3: Compute total daily wages + overtime
Total Pay = Regular Pay + Overtime Pay Total Pay = ₱1,600 + ₱520 = ₱2,120 The total daily wages plus 2 hours of overtime on a regular holiday is ₱2,120.
Scenario Regular Pay Overtime Pay Total Pay Regular Workday (2 hours overtime) ₱800 ₱250 ₱1,050 Rest Day/Special Non-Working Day (2 hours overtime) ₱1,040 ₱338 ₱1,378 Regular Holiday (2 hours overtime) ₱1,600 ₱520 ₱2,120
This breakdown shows how to calculate total daily wages plus overtime pay for different scenarios with a ₱100/hourly rate.
Now that is what we have for you about overtime pay, if you think that being inside the office for an extra hour or two would not make that kind of change in your payslip, recheck what you know and read this article because you may never know what can hit you.
When is an employee entitled to overtime pay? Employees are entitled to overtime pay when they work beyond the standard 8 hours per day, provided they are not part of exempt groups (e.g., managerial employees, government employees).
How is overtime pay computed? Overtime pay is computed as a percentage of the employee’s regular hourly rate, depending on whether the overtime is worked on a regular day, rest day, special non-working day, or holiday. The standard rate is 125% of the hourly rate for overtime on a regular workday.
What are the overtime rates in the Philippines? Regular Workday : 125% of the hourly rate.Rest Day/Special Non-Working Day : 130% of the hourly rate, then 130% for overtime.Regular Holiday : 200% of the hourly rate, then 130% for overtime. Is overtime pay required by law? Yes, the Labor Code of the Philippines requires overtime pay for eligible employees who work beyond 8 hours per day, with the appropriate overtime rates applied.
Can an employer refuse to pay overtime? No, an employer is legally required to compensate eligible employees for overtime work. Failure to do so may result in a violation of labor laws.
Can an employee refuse to work overtime? In general, employees can refuse to work overtime unless their contract specifies that overtime is mandatory. However, in certain industries or emergency situations, employers may require overtime work.
Are all employees entitled to overtime pay? No, not all employees are entitled to overtime pay. Managerial employees, those in supervisory roles, and field personnel who are not covered by normal work hours are typically exempt from receiving overtime pay.
Is overtime pay taxable? Yes, overtime pay is part of an employee’s total compensation and is subject to income tax.
How is overtime pay calculated for employees on a night shift? Employees working between 10 PM and 6 AM are entitled to a night differential in addition to overtime pay. The night differential is 10% of the hourly rate . Overtime on night shifts combines both night differential and overtime rates.
What happens if I work overtime on a holiday? If you work overtime on a regular holiday, you will receive 200% of your hourly rate for regular hours and 130% of that rate for each overtime hour.
Is there a maximum number of overtime hours allowed? The Labor Code does not explicitly limit the number of overtime hours. However, working hours should not exceed what is reasonably expected or specified in labor regulations, and health and safety considerations must be taken into account.
What should I do if my employer doesn’t pay overtime? If your employer does not pay overtime, you can report the issue to your company’s HR department or file a complaint with the Department of Labor and Employment (DOLE).
How is overtime pay computed for part-time employees? Part-time employees are generally entitled to overtime pay if they work beyond the standard 8-hour workday, similar to full-time employees. Overtime rates apply regardless of employment status.
What is the difference between overtime and night differential pay? Overtime pay applies when an employee works more than 8 hours a day.Night differential pay applies to work performed between 10 PM and 6 AM, regardless of whether it exceeds 8 hours. Night differential is an additional 10% on top of the regular hourly rate. Read Also: How to compute separation pay in the Philippines
Disclaimer: This article is intended for informational purposes only and provides general guidance on calculating overtime pay in the Philippines. While it follows Philippine labor guidelines, individual company policies and specific employment contracts may vary, which could impact overtime calculations. For precise payroll information or legal inquiries, consult your HR department or a labor law professional. This guide is not a substitute for professional advice, and readers are encouraged to confirm details with updated official resources.
REFERENCES:
Labor Code of the Philippines (Presidential Decree No. 442, as amended) – This is the primary law governing labor standards, including provisions for overtime pay, rest days, and holidays.Department of Labor and Employment (DOLE) – DOLE provides guidelines on overtime pay, night differential, and other labor standards. Visit their website for more details: DOLE Official Website 
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