FAQ: Overtime Pay

Answers to frequently asked questions on overtime pay in the Philippines.

1. In General

What is overtime pay?

Overtime pay – refers to an additional pay consisting of 25% added to hourly rate for work hours that covers overtime work. (Article 87, P.D. 442, Labor Code)

What is overtime work?

Overtime work – refers to work done beyond eight (8) hours by covered employees if there is compressed workweek being observed in the establishment. (Ibid.)

If there is a compressed workweek being observed, overtime work refers to hours in excess of the prescribed 48 hour workweek by the Labor Code.

What is the rate for overtime pay?

Currently, 25% overtime hourly rate is what is prescribed by the Labor Code. (Ibid.)

How is overtime pay computed?

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

Step 1: Determine the employee’s hourly rate.Formula:daily rate ÷ 8 hours = hourly rateSample computation:Php800.00 ÷ 8 hours = Php100.00/hourStep 2: To get the hourly overtime pay, compute for 25% of the hourly rate of a total of 125%.Formula:hourly rate x 125% = overtime hourly rateSample computation:Php100.000/hour x 125% = Php125.00/hourStep 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 paySample computation:Php125.00/hour x 2 hours = Php250.00Step 4: Add pay with overtime pay for ordinary hours rendered (e.g. 6 hours).Formula:pay with overtime pay + pay for o...

 



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