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There are instances when employees in the Philippines have to work beyond the usual eight-hour shift, especially when a task needs to be completed right away. When this happens, they are entitled to overtime pay, an additional compensation that has a different computation scheme based on the hours and days that employees exceed their regular work hours.
The kind of day the overtime work is performed affects the total of one’s overtime pay, such as an ordinary work day, a special holiday, a regular holiday, a double holiday, and a rest day.
If you’re an employee, you are probably curious about how it is computed as you don’t want to be underpaid. So, read on to know how to compute overtime pay in the Philippines.
The Formula on How to Compute Overtime Pay Philippines
|Formulas on How to Compute Overtime Pay Philippines
|Overtime Pay Formulas
|Ordinary Day Overtime
|Hourly Rate x 125%
|Rest Day Overtime
|Hourly Rate x 169%
|Special Holiday Overtime
|Hourly Rate x 169%
|Special Holiday + Rest Day Overtime
|Hourly Rate x 195%
|Regular Holiday Overtime
|Hourly Rate x 260%
|Regular Holiday + Rest Day Overtime
|Hourly Rate x 338%
|Double Holiday Overtime
|Hourly Rate x 390%
|Double Holiday + Rest Day Overtime
|Hourly Rate x 570%
How to Compute Overtime Pay Philippines?
Before we arrive at the specific overtime pay computation and rates, we must first find out how much you get paid on an hourly basis. So how do you compute your hourly rate?
Follow the steps below to determine how to compute overtime pay Philippines:
How to compute overtime pay Philippines for Daily Paid Filipino Employees:
Here’s how to compute overtime pay Philippines if a Filipino employee earns 570 PHP per day, you will divide it by your total working hours per day (excluding the overtime hours). So that would be:
Hourly rate = Daily rate / normal working hours per day
Hourly rate = PHP 570 / 8 hours
Hourly rate = PHP 71.25
How to compute overtime pay Philippines for Monthly Paid Filipino Employees:
Here’s how to compute overtime pay Philippines if a Filipino employee earns PHP 15,000 per month, you will multiply it by 12.
Then, you will divide the product by the total work days per year.
After that, you will divide the quotient by your normal working hours per day.
So the computation would be:
Hourly rate = (Monthly rate x 12) / Total work days per year / usual working hours per day
Hourly rate = (PHP 15,000 x 12 months) / 313 working days / 8 hours
Hourly rate = PHP 180,000 / 313 days / 8 hours
Hourly rate = PHP 575.07 / 8 hours
Hourly rate = PHP 71.88
How to compute overtime pay Philippines for Ordinary Work Day Overtime:
To know the overtime pay rate on an ordinary work day, use the computation below:
(Employee’s Hourly Rate x 125%) x number of overtime hours worked in one day
Example using the hourly rate of a daily paid employee:
Overtime pay rate = (PHP 71.25 x 125%) x 5 hours
Overtime pay rate = PHP 89.06 (per hour) x 5 hours
Overtime pay rate = PHP 445.31 (in one day)
Now, let’s say you had to work another 5 hours extra for one day more, just multiply PHP 445.31 by 2 (days) and you’ll get PHP 890.6 additional in your upcoming salary. And that’s how to compute overtime pay Philippines.
What is overtime pay?
Overtime pay is pay that is earned in addition to the regular wages an employee receives for hours worked over the normal workweek. In the Philippines, overtime pay is mandated by law in most cases. The Department of Labor and Employment (DOLE) establishes minimum wage, overtime, and recordkeeping requirements for employees in the Philippines under the Book 3 – Conditions of Employment, Article 87.
Under Article 87, an employee who works more than eight hours a day is entitled to receive time and quarter of his or her regular hourly wage for every extra hour worked over forty. This means that an employee who works 10 hours in a day would be paid 1.25x their regular hourly wage for those 2 hours of extra work.
“Art. 87. Overtime work. Work may be performed beyond eight (8) 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 (25%) thereof. Work performed beyond eight hours on a holiday or rest day shall be paid an additional compensation equivalent to the rate of the first eight hours on a holiday or rest day plus at least thirty percent (30%) thereof.” Source: DOLE
To learn on how to compute overtime pay Philippines, employees must be knowledgeable about their base pay.
Who Does Not Qualify for Overtime Pay?
Employers are required by the Philippine Labor Code to compensate workers for any overtime they put in over the course of an 8-hour shift. Some employees, however, are not entitled to overtime pay. They comprise:
1. Employees of the government, including those employed by firms that the government owns and controls
2. Managers or staff who oversee their company’s operations, including any of its divisions or branches
3. Employees in the field or those who work remotely and don’t have set working hours
4. Family members of an employer who rely on them for support
5. Domestic workers and people employed by another person as defined by The Batas Kasambahay Law
6. Barbers and massage therapists are two examples of staff members who are paid according on performance.
To know more about how to compute overtime pay Philippines, you must determine if a Filipino employee is qualified based on the above overtime pay exemptions.
When May Employers Demand Overtime?
According to the Labor Code, employees are permitted to work overtime freely with the consent of their line managers and get compensation for it.
Examples of situations when employers may demand workers to put in extra time are listed in Article 89 of the Labor Code:
1. In times of conflict or local or national emergencies.
2. During potentially fatal circumstances brought on by calamities such as fires, floods, typhoons, or earthquakes.
3. When workers must do urgent maintenance on machinery, installations, or equipment to prevent significant loss or harm.
4. When maintenance is required to avoid losing or harming perishable commodities.
5. When workers must avoid any hiccups in corporate operations.
To learn how to compute overtime pay Philippines, the company must teach their Filipino employees about Article 89 of the Labor Code.
Do I have to factor in the cost of living allowance when figuring out my overtime pay?
When calculating overtime pay in the Philippines, employers must not account for the cost of living allowance (COLA).
This allowance is mandated by law and is designed to offset the higher cost of living in the country but should not be included in how to compute overtime pay Philippines.
Under normal circumstances, employers must pay employees 1.25x their regular wages for overtime work excluding the COLA.
How do I calculate overtime pay for workers who work the night shift?
In the Philippines, overtime pay is typically calculated based on a worker’s regular wage rate plus an overtime rate of 1.25x their regular wage rate.
However, in certain cases, such as workers who work the night shift, overtime pay may be calculated based on a worker’s average hourly wage for the entire workweek instead of their regular wage rate.
In order to learn how to compute overtime pay Philippines for Pinoy workers who work the night shift, first determine their average hourly wage for the entire workweek.
Then, add 1.10x their average hourly wage to that number to determine their total hourly overtime pay for that week.
Observe these steps to compute overtime compensation for night shift:
- To get the Filipino employee’s hourly rate, divide their daily rate by eight.
- For the hourly wage for the night shift, multiply it by 110% (10% of the employee’s hourly rate).
- Add the number of hours worked to the employee’s hourly wage for the night shift.
- The employee’s usual working hours must be added to the differential remuneration for night shifts.
What is the maximum number of hours allowed for an employee to provide overtime in a day?
In the Philippines, the maximum number of hours allowed for an employee to provide overtime in a day is eight hours.
To understand how to compute overtime pay Philippines, OT compensation is payable at 1.25 times the regular rate of pay for every hour worked over 8 in a day, up to a maximum of 40 hours per week.
Are overtime hours required under Philippine labor laws?
Under the Philippine Labor Code, overtime is not mandatory for workers who work more than 8 hours in a day or 40 hours in a week.
However, there are circumstances where the company requires their employees to work longer than 8 hours if the job is not completed or there is a tight deadline.
In such cases, the employee must render extra hours to complete the mission and receive overtime pay for the additional hours worked.
Can an employee request permission from their employer to work overtime?
A Pinoy employee in the Philippines may be entitled to receive overtime pay if they work more than 8 hours in a day or 40 hours in a week.
Overtime work must be authorized in advance by the employer and must be compensated at 1.25 times the employee’s normal hourly wage.
Employers must teach their Filipino employees on how to compute overtime pay Philippines to determine the exact amount rendered by the employees.
Why do Filipino employees are taking overtime?
There are many reasons why employees might work extra hours.
Some employees may need to work extra hours because their job requires them to be on-call or available at all times, and they can’t get any sleep if they aren’t working.
Other employees may feel like they need to work extra hours in order to make up for missed time due to illness or vacation.
Then Filipino employees must learn how to compute overtime pay Philippines to determine their actual salary by end of the month.
Regardless of the reason, it is important that employers compensate their employees for working additional hours.
Overtime pay can help employees earn a fair wage and provide them with some financial stability while they are working on-call or away from their home office.
What is the Department of Labor and Employment in the Philippines?
The Department of Labor and Employment (DOLE) is the primary government agency responsible for protecting the rights of workers, managing labor-related disputes, and providing social protection to Filipinos.
DOLE also oversees the implementation of laws related to employment, including the Labor Code of the Philippines.
The agency has a monopoly on enforcing labor laws in the Philippines, making it an important source of guidance for employers.
Filipino employees can visit the website of DOLE to learn how to compute overtime pay Philippines more accurately.
Conclusion: How to compute overtime pay Philippines
The Philippines has a different overtime calculation scheme than most countries. In the Philippines, overtime is calculated on an hourly basis, not a daily or weekly basis. Overtime is also computed at a rate of 1.25 times the regular wage for every hour worked over 40 in a week.
In the Philippines, overtime is considered to be working beyond the normal 8 hours in a day. Overtime pay is computed based on the number of hours worked over 40 or 48 in a week. 40 hours for those who are working 5x a week while 48 hours for those employees working 6 days a week.
The rate of overtime pay will depend on the employee’s position and salary. Filipino laborers are included while managers are not entitled to overtime pay in the Philippines. The Philippine Labor Law Article 83 states that the normal hours of work of any employee shall not exceed eight (8) hours a day. Therefore, beyond that, it is considered as overtime.
Pinoy employees should visit the website of DOLE to learn how to compute overtime pay Philippines and be guided accordingly.