AQs: Overtime Policies in the Philippines

Monday, February 17, 2014

Among the many challenges facing a business owner in the Philippines is learning
and applying the Philippine standard labor codes and policies. Regarding overtime
policies - can employees be required to render overtime, and if so, how much
compensation should be given? As a business owner, you do not want to break the
law by overworking and underpaying your employees, just as you wouldn't want to
overpay for a product or service.

To help out entrepreneurs starting a business or currently running one in the

Philippines, we've answered some of the frequently asked questions about the
Philippine Labor Code and its overtime policies:

A. How much should I pay to Filipino employees who work overtime? How is the
overtime pay computed?
Overtime pay computation varies depending on the day that the overtime was
rendered. Here are sample computations given a base pay of Php 18,000 (factor
rate of 258, composed of 246 total regular days plus 12 legal holidays):

Ordinary days (Regular workdays with no government declared holidays)

Number of hours in excess of 8 hours (125% x hourly rate x number of hours
rendered)

e.g. Monthly rate: 18,000

Daily rate: 18,000 x 12 / 258= Php837.21
Hourly rate (8 hours): 837.21 / 8= Php 104.65
Overtime hourly rate: 1.25 x 104.65= Php 130.81/hour
Rest days (Weekends or days when the employee should be off-duty)
First eight hours is 130%, in excess of 8 hours is 169% per hour

e.g. Monthly rate: 18000

Daily rate: 18,000 x 12 / 258= Php 837.21

First eight hours: ((18,000 x 12) / 258) x 1.3 = 1,088.37

In excess of eight hours: [((18,000 x 12) / 258) x 1.69]/8 = 176.86 per hour
Special days (Non-working days declared in observance of tradition usually: All
Saints' Day, Last Day of the Year, and Ninoy Aquino Day)

a. A special day (130% x basic pay)

e.g. Monthly rate: 18000 x 1.3 = Php 23400
Special day premium pay: (assuming there are 20 working days in a month):
23400/20 working days= Php 1170/day

b. A special day, which is also a scheduled rest day (150% x basic pay)
e.g. Monthly rate: 18000 x 1.5 = Php 27000
Special and rest day premium pay (assuming there are 20 working days in a
month): 27000/20 working days= Php 1350/day
Regular holidays (These are non-working days which are usually observed
nationwide i.e. Christmas Day, New Year's Day, Holy Week, etc.)

a. A regular holiday (200% x basic pay)

e.g. Monthly rate: 18000 x 2 = Php 36000
Holiday pay (assuming there are 20 working days in a month): 36000/20 working
days= Php 1800/day

b. A regular holiday, which is also a scheduled rest day (260% x basic pay)
e.g. Monthly rate: 18000 x 2.6 = Php 46800
Premium pay (assuming there are 20 working days in a month): 46800/20 working
days= Php 2340/day
B. How do you compute overtime for Filipino employees working the night shift?
Night shift overtime is higher, especially since working at night poses more risk on
the employee's safety and health. Here are sample computations given a basic pay
of Php18,000:

Ordinary days (Regular workdays with no government declared holidays)

110% x Number of hours in excess of 8 hours (130% x hourly rate)

e.g. Monthly rate: 18000

Daily rate (assuming there are 20 working days in a month): 18000/20= Php900
Hourly rate (8 hours): 900/8= Php 112.5
Night shift overtime hourly rate: 1.1 x (1.30 x 112.5)= Php 160.88/hour
Rest days (Weekends or days when the employee should be off-duty)
110% x Number of hours in excess of 8 hours (130% x hourly rate)

e.g. Monthly rate: 18000

Daily rate (assuming there are 20 working days in a month): 18000/20 working
days= Php900
Hourly rate (8 hours): 900/8= Php 112.5
Night shift overtime hourly rate: 1.1 x (1.30 x 112.5)= Php 160.88/hour
Special days (Non-working days declared in observance of tradition usually: All
Saints' Day, Last Day of the Year, and Ninoy Aquino Day)

a. A special day 110% x (130% x basic pay)

e.g. Monthly rate: 18000 x 1.3 = Php 23400
Special day premium pay, night shift: (assuming there are 20 working days in a
month): 1.1 x (23400/20)= Php 1287/day

b. A special day, which is also a scheduled rest day 110% x (150% x basic pay)
e.g. Monthly rate: 18000 x 1.5 = Php 27000
Special and rest day premium pay (assuming there are 20 working days in a
month): 1.1 x (27000/20)= Php 1485/day
Regular holidays (These are non-working days which are usually observed
nationwide i.e. Christmas Day, New Year's Day, Holy Week, etc.)

a. A regular holiday (200% x basic pay)

e.g. Monthly rate: 18000 x 2 = Php 36000
Holiday pay (assuming there are 20 working days in a month): 1.1 x (36000/20) =
Php 1980/day

b. A regular holiday, which is also a scheduled rest day (260% x basic pay)
e.g. Monthly rate: 18000 x 2.6 = Php 46800
Premium pay (assuming there are 20 working days in a month): 1.1 x (46800/20) =
Php 2574/day
C. Can employers require overtime?
Generally, the law discourages employers from requiring overtime because it puts
undue stress on their employees - aside from exerting additional physical and
mental effort, the employee is also unable to maintain work-life balance if he
spends too much time in the office. However, employers are allowed to require
overtime during the following circumstances:

When the country is at war or when any other national or local emergency has been
declared by the National Assembly or the Chief Executive;
When overtime work is necessary to prevent loss of life or property, or in case of
imminent danger to public safety due to actual or impending emergency in the
locality caused by serious accident, fire, flood, typhoon, earthquake, epidemic or
other disaster or calamity;
When there is urgent work to be performed on machineries, installations, or
equipment, in order to avoid serious loss or damage to the employer or something
of similar nature;
When the work is necessary to prevent loss or damage to perishable goods;
When the completion or continuation of work started before the 8th hour is
necessary to prevent serious obstruction or prejudice to the business or operations
of the employer;
When overtime work is necessary to avail of favorable weather or environmental
conditions where performance or quality of work is dependent thereon.
D. Is there a limit to allowable overtime hours?
Yes, all employees can render only up to eight (8) overtime hours except those who
are in the managerial positions, field personnel, persons in personal service of
another, members of the employer's family who are dependent on them for support,
domestic helpers, and employees who are paid by the results.

E. Can an employee insist on working overtime?

No. The employee cannot compel his employer to allow him to work overtime when
the circumstance does not require that or when there is actually no work to be
performed.

F. If an employee filed for undertime, can he offset it with overtime?

No. If the employee works for less than eight hours, he will be paid only for the
corresponding number of hours he actually worked. Employers cannot avoid paying
overtime rates through offset. However, they may either deduct the undertime from
the wage of the employee, or through other approaches.

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