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Basis.

All employees required to work beyond eight hours in one workday is entitled to overtime
pay. The basis of overtime pay is found in Article 87 of the Labor Code.
Article 87. Overtime work. Work may be performed beyond eight 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 thereof. Work performed beyond eight hours
on a holiday or rest day shall be paid an additional compensation equivalent to the rate for
the first eight hours on a holiday or rest day plus at least 30 percent thereof.
Terminology.
Overtime Pay.
Overtime pay is the additional compensation payable to employee for services or work
rendered beyond the normal eight hours of work. It is computed by multiplying the overtime
rate with the number of hours in excess of the regular eight hours of work.
Overtime Work.
Any work performed beyond the normal 8 hours of work in one workday is considered as
overtime work.
Workday.
A workday is the consecutive 24-hour period which commences from the time the employee
starts to work and ends at the same time the following day. To illustrate, if the employee
regularly works from 8AM to 4PM, hisregular workday is the 24-hour period from 8AM to 8AM
of the following day. Workdays do not necessarily corresponds to calendar days.
Overtime Pay Rates.
Overtime pay rates depend upon the day the work is performed, whether it is ordinary
working day, special day, holiday or rest day.
For ordinary working day, an additional compensation equivalent to his regular hourly rate
plus at least 25% thereof.
For holiday, special day and rest day, an additional compensation equivalent to the rate for
the first eight hours on a holiday or rest day plus at least 30% thereof.
Computation of Overtime Pay
Assuming that the mininum wage rate is P250, how much is the overtime rate per hour?
On ordinary day
On an ordinary day, the overtime rate per hour is determined as follows:
First, compute the hourly rate of the employee:
Regular hourly rate = Minumum wage rate 8 hours
= P250 8 hours
= P31.25 per hour

Now to determine overtime rate per hour:


Overtime rate = Regular hourly rate + 25% of Regular hourly rate
Overtime rate = P31.25 + (25% of P31.25)
= P31.25 x 1.25
= P39.06 per hour
On rest day and special day
Compute the hour rate of the employee on a rest day or special day:
Hourly rate = 130% of Regular hourly rate
= P31.25 x 1.30
= P40.625 per hour
(Note: The hourly rate on rest day and special day is 130% of the regular rate.)
To determine overtime rate per hour:
Overtime rate = Hourly rate on rest day + 30% Hourly rate on rest day
= P40.625 + (30% of P40.625)
= P40.625 x 1.30
= P52.81 per hour
On rest day which falls on a special day
Compute the hourly rate of the employee on a rest day which falls on a special day:
Hourly rate = 150% of Regular hourly rate
= P31.25 x 1.50
= P46.875 per hour
To determine overtime rate per hour:
Overtime rate = Hourly rate + 30% of Hourly rate
= P46.875 + (30% of P46.875)
= P46.875 x 1.30
= P60.94 per hour
On a regular holiday
Compute the hourly rate on regular holiday:
Hourly rate = 200% of Regular hourly rate
= P31.25 x 2
= P62.5 per hour
To determine overtime rate per hour:
Overtime rate = Hourly rate + 30% of Hourly rate
= P62.50 + (30% of P62.50)
= P62.50 x 1.30
= P81.25 per hour

On a rest day which falls on a regular holiday


Compute the hourly rate:
Hourly rate = 260% of Regular hourly rate
= P31.25 x 2.60
= P81.25 per hour
To determine overtime rate per hour:
Overtime rate = Hourly rate + 30% of Hourly rate
= P81.25 + (30% of P81.25)
= P81.25 x 1.30
= P105.625 per hour
Work need not be Continuous.
Work performed by the employee need not be continuous as long as it falls within the same
work day. For example, an employee who works in two shifts, one from 8AM to 12AM (four
hours), and another from 4PM to 8PM of the same work day (another four hours), suffers a
total of 8 hours of work. If he is required to work for another hour within the same work day
(from 8AM to 8AM of the following day), then such work is subject to overtime pay.
Undertime cannot be Offset by Overtime.
Some employers has the practice of offsetting undertime and overtime. For example, if an
employee work for only 7 hours on any given day (one hour undertime), he will be required
to make up for his undertime by requiring him to render additional one hour work on another
day. This practice is prohibited under Article 87 of the Labor Code, viz:
Article 87. Undertime not offset by overtime. Undertime work on any particular day shall not
be offset by overtime work on any other day. x x x
The rationale for provision is quite obvious. Offsetting undertime against overtime is
improper because the employee would be deprived of the additional compensation for the
overtime work he has rendered. Note that undertime is covered only by the regular hourly
rate whereas overtime is subject to additional overtime rate. If the two are to be offset, the
employee loses overtime pay to which he is entitled.
Emergency Overtime Work.
As a general rule, employees may not be compelled to work in excess of eight hours or to
render overtime work on any given day against his will.
The exception to this rule is found in Artile 89 of the Labor Code. Under the said article,
employees may be compelled to perform overtime work in any of the following cases:
1.

When the country is at war or under any national or local emergency;

2.

When overtime work is necessary to prevent loss of life or property, or in case of


imminent danger to public safety;

3.

When there is urgent work to be performed on machines, etc., in order to avoid


serious loss or damage to the employer;

4.

When the work is necessary to prevent loss or damage to perishable goods;

5.

When the completion or continuation of work is necessary to prevent serious


obstruction or prejudice to the business; or

6.

When overtime work is necessary to avail of favorable weather or environmental


conditions.
Managerial Employees not Entitled to Overtime Pay.
Article 82 of the Labor Code states that the provisions of the Labor Code on working
conditions and rest periods shall not apply to managerial employees. This includes overtime
pay for overtime work. Thus managerial employees are not entitled to overtime pay for
services rendered in excess of eight hours a day.
Cases

1.

Supervisory employees are considered as officers or members of the managerial


staff, and hence are not entitled to overtime, rest day and holiday pay. (Natl Sugar
Refineries Corp. vs. NLRC, G.R. No. 101761. March 24, 1993)
Last Edited: Friday, August 19, 2011
Caveat: Subsequent court and administrative rulings, or changes to, or repeal of, laws,
rules and regulations may have rendered the whole or part of this article inaccurate or
obsolete.