Computation of Overtime Pay

If covered employees perform overtime work, they are entitled to overtime pay of at least 25% their regular hourly rate.

1. Computation

These are the steps on how to compute for overtime pay.

The following are the assumptions:

1) The covered employee’s hourly rate is Php100.00.

2) The covered employee regularly works for 8 hours.

These are the steps on how to compute for overtime pay.

Step 1: Determine the employee’s hourly rate.
Formula:
daily rate ÷ 8 hours = hourly rate
Sample computation:
Php800.00 ÷ 8 hours = Php100.00/hour
Step 2: To get the hourly overtime pay, compute for 25% of the hourly rate or a total of 125%.
Formula:
hourly rate x 125% = overtime hourly rate
Sample computation:
Php100.000/hour x 125% = Php125.00/hour
Step 3: Multiply the overtime hourly rate against the hours worked (e.g. 2 hours).
Formula:
overtime hourly rate x 2 hours of work = pay with overtime pay
Sample computation:
Php125.00/hour x 2 hours = Php250.00
Step 4: Add pay with overtime pay for ordinary hours rendered (e.g. 6 hours).
Formula:
pay with overtime pay + pay for ordinary hours = day’s wage
Sample computation:
Php250.00 + Php600.00 = Php850.00

(2024 DOLE-BWC Handbook on Workers’ Statutory Monetary Benefits or “DOLE-BWC Handbook”, pp. 21-22)

b. COLA

Whether cost of living allowance (COLA) is included in overtime pay computation is unclear after the release of the 2023 DOLE-BWC Handbook.

In the 2022 DOLE-BWC Handbook, it provided that “COLA shall not be included in the computation of overtime pay. Thus, COLA was excluded.

However, the 2023 DOLE-BWC Handbook removed the above statement and is silent on whether COLA is still excluded.

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