Overtime Pay

1. Concept

Overtime pay – refers to an additional pay of 25% of a covered employee’s hourly rate for work performed during overtime. (P.D. 442, Labor Code, Article 94; Omnibus Rules Implementing the Labor Code or “Omnibus Rules”, Section 3, Rule IV, Book Three)

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 (Article 87, P.D. 442, Labor Code)

a. Legal basis

The following is the legal bases:

Legal BasisProvisions
1) P.D. 442, Labor CodeArticle 94
2) Omnibus RulesSection 3, Rule IV, Book Three

b. Daily- or monthly-paid, irrelevant

Whether employees are daily- or monthly-paid is not relevant.

Both daily-paid and monthly-paid are entitled to overtime pay.

Otherwise stated, the rules on overtime pay apply to both daily-paid and monthly-paid employees. There should be no distinction between the two.

c. Employee status, irrelevant

The employee’s status is not relevant.

Simply, so long as they are employees, they are entitled to night shift differential pay. Thus, it does not matter whether they are regular, probationary, casual, project, seasonal, or fixed-term.

2. Coverage

The benefit applies to all employees (called the “covered employees”), except these “exempt employees”:

1) Government employees;

2) Managerial employees;

3) Officers or members of a managerial staff;

4) Kasambahay and persons in the personal service of another;

5) Workers who are paid by results; and

6) Field personnel.

(Section 2, Rule I, Book III, Omnibus Rules; 2024 DOLE-BWC Handbook on Workers’ Statutory Monetary Benefits or “DOLE-BWC Handbook”, p. 21)

a. Government employees

The following are not entitled to overtime pay:

⦁ Government employees, whether employed by the National Government or any of its political subdivisions, including those employed in government-owned and/or controlled corporations with original charters or created under special laws. (DOLE Handbook; Rule IV, Book III, Omnibus Rules Implementing the Labor Code)

Thus, government employees do not have overtime pay.

More info: Government employees

b. Managerial employees

The following are not entitled to overtime pay:

⦁ Managerial employees, if they meet all of the following conditions:

1) Their primary duty is to manage the establishment in which they are employed or of a department or subdivision thereof;

2) They customarily and regularly direct the work of two or more employees therein; and

3) They have the authority to hire or fire other employees of lower rank; or their suggestions and recommendations as to hiring, firing, and promotion, or any other change of status of other employees are given particular weight. (Section 2, Rule I, Book III, Omnibus Rules; DOLE Handbook)

Thus, to be excluded from overtime pay, the manager should meet all three (3) conditions in the immediately preceding paragraph.

More info: Managerial employees

Grand Asian Shipping Lines, Inc. v. Galvez, G.R. No. 178184, 29 January 2014, Per Del Castillo, J.:

⦁ Galvez and Gruta, as managerial employees, are not entitled to their claims for overtime pay, service incentive leave pay and premium pay for holiday and rest day. Article 82 of the Labor Code specifically excludes managerial employees from the coverage of the law regarding conditions of employment which include hours of work, weekly rest periods, holidays, service incentive leaves and service charges.

1) Managers in name only

Under Labor Law, and to be exempt from overtime pay, managerial employees need to meet the three (3) conditions mentioned earlier.

Thus, the designation or title given to an employee is not determinative of whether or not the employee is indeed a manager – under Labor Law and for purposes of overtime pay.

Otherwise stated, giving an employee the title of a manager does not necessarily make them managers under Labor Law. To be managers who are exempt from overtime pay, the employees have to meet the three (3) conditions mentioned earlier.

For example, social media managers who only manages social media – and does not satisfy the three (3) conditions – is not a manager under Labor Law and thus they are entitled to overtime pay. They are only “managers” in name only.

Similarly, talent managers who go around assisting/helping talents/celebrities with various routines – and does not satisfy the three (3) conditions – will be entitled to overtime pay as the title “manager” in their role is descriptive of what they do, i.e., manage the routines of their talents/celebrities.

NB: Many employers have been held liable for overtime pay after a finding that the employee with the title of a “manager” was, in truth and in fact, not a manager under Labor Law as the conditions have not been met.

c. Managerial staff

The following are not entitled to overtime pay:

⦁ Officers or members of a managerial staff, if they perform the following duties and responsibilities:

1) Primarily perform work directly related to management policies of their employer;

2) Customarily and regularly exercise discretion and independent judgment

3) (a) Regularly and directly assist a proprietor or managerial employee in the management of the establishment or subdivision thereof in which he or she is employed; or

3) (b) execute, under general supervision, work along specialized or technical lines requiring special training, experience, or knowledge; or (c) execute, under general supervision, special assignments and tasks; and,

4) Do not devote more than twenty percent (20%) of their hours worked in a workweek to activities which are not directly and closely related to the performance of the work described in paragraphs 5.1, 5.2, and 5.3 above. (DOLE Handbook; Rule IV, Book III, Omnibus Rules Implementing the Labor Code)

More info: Managerial staff

1) Managerial staff in name only

Under Labor Law, and to be exempt from overtime pay, managerial staff employees need to meet the four (4) conditions mentioned earlier.

Thus, the designation or title given to an employee is not determinative of whether or not the employee is indeed a manager staff – under Labor Law and for purposes of overtime pay.

Otherwise stated, giving an employee the title of a manager staff does not necessarily make them managerial staff under Labor Law. To be managerial staff who are exempt from overtime pay, the employees have to meet the four (4) conditions mentioned earlier.

NB: Many employers have been held liable for overtime pay after a finding that the employee with the title of a “managerial staff” was, in truth and in fact, not a managerial staff under Labor Law as the conditions have not been met.

d. Kasambahay and persons in the personal service of another

The following are not entitled to overtime pay:

Kasambahay and persons in the personal service of another. (Section 2, Rule I, Book III, Omnibus Rules; DOLE Handbook)

1) Kasambahay

Domestic worker or Kasambahay – refers to ‘any person engaged in domestic work within an employment relationship such as, but not limited to, the following: general househelp, nursemaid or “yaya”, cook, gardener, or laundry person, but shall exclude any person who performs domestic work only occasionally or sporadically and not on an occupational basis.’ (R.A. 10361, Domestic Workers Act or Batas Kasambahay. Section 4 [d])

More info: Kasambahay or Domestic Worker, Guide: Batas Kasambahay or Domestic Workers Act

2) Persons in the personal service of another

Persons in the personal service of another – refers to individuals who regularly provide service to another individual, a family, or a household, without being a kasambahay or a domestic worker.

More info: Persons in the personal service of another

e. Field personnel, etc.

The following are not entitled to overtime pay:

⦁ Field personnel and other employees whose time and performance is unsupervised by the employer, including those who are engaged on task or contract basis, purely commission basis or those who are paid a fixed amount for performing work irrespective of the time consumed in the performance thereof. (Section 2, Rule I, Book III, Omnibus Rules; DOLE Handbook)

1) Field personnel

Field personnel – refers to ‘non-agricultural employees who regularly perform their duties away from the principal place of business or branch office of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty.’ (Paragraph 3, Article 82, P.D.442, Labor Code; See also Section 1[e], Rule II, Book III, Omnibus Rules Implementing the Labor Code)

More info: Field personnel

3. The Benefit

The benefit consists of adding 25% to the hourly rate covering the overtime.

a. Computation

See: Computation of Overtime Pay

4. Emergency overtime work

General Rule. The general rule is that no [covered] employee may be made to work beyond eight hours a day against his will. (Omnibus Rules, Section 10, Rule I, Book Three)

Exceptions. In any of the following cases, an employer may require any of his employees to work beyond eight (8) hours a day, provided that the employee required to render overtime work is paid the additional compensation required by these regulations:

1) When the country is at war or when any other national or local emergency has been declared by Congress or the Chief Executive;

2) 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, floods, typhoons, earthquake, epidemic or other disaster or calamities;

3) When there is urgent work to be performed on machines, installations, or equipment, in order to avoid serious loss or damage to the employer or some other causes of similar nature;

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

5) 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; or

6) When overtime work is necessary to avail of favorable weather or environmental conditions where performance or quality of work is dependent thereon. (Omnibus Rules, Section 10, Rule I, Book Three)

Thus, to require overtime work without the employee’s consent, either one of the above circumstances must be present and invoked by the employer.

Realda v. New Age Graphics, Inc., G.R. No. 192190, April 25, 2012, Per Reyes, J.:

⦁ [The Complainant was a machine operator. The Company operated a printing business. The Complainant was dismissed after refusing to do overtime work despite the rush of orders from customers and the deadlines that the Company needed to meet set by the Complainant himself.]

⦁ [SC Resolution: The employee was legally dismissed.] First, [the Complainant’s] arbitrary defiance to [the Company’s] order for him to render overtime work constitutes willful disobedience. Taking this in conjunction with his inclination to absent himself and to report late for work despite being previously penalized, the CA correctly ruled that the [the Complainant] is indeed utterly defiant of the lawful orders and the reasonable work standards prescribed by his employer.

⦁ This particular issue is far from being novel as this Court had the opportunity in R.B. Michael Press v. Galit to categorically state that an employer has the right to require the performance of overtime service in any of the situations contemplated under Article 89 of the Labor Code and an employee’s non-compliance is willful disobedience…

In the present case, there is no question that [the Company’s] order for [the Complainant] to render overtime service to meet a production deadline complies with the second requisite. Art. 89 of the Labor Code empowers the employer to legally compel his employees to perform overtime work against their will to prevent serious loss or damage:

Art. 89. EMERGENCY OVERTIME WORK

Any employee may be required by the employer to perform overtime work in any of the following cases:

x x x x

(c) When there is urgent work to be performed on machines, installations, or equipment, in order to avoid serious loss or damage to the employer or some other cause of similar nature;

In the present case, [the Company’s] business is a printing press whose production schedule is sometimes flexible and varying. It is only reasonable that workers are sometimes asked to render overtime work in order to meet production deadlines.

The issue now is, whether [the Complainant’s] refusal or failure to render overtime work was willful; that is, whether such refusal or failure was characterized by a wrongful and perverse attitude. In Lakpue Drug Inc. v. Belga, willfulness was described as “characterized by a wrongful and perverse mental attitude rendering the employee’s act inconsistent with proper subordination.” The fact that [the Complainant] refused to provide overtime work despite his knowledge that there is a production deadline that needs to be met, and that without him, the offset machine operator, no further printing can be had, shows his wrongful and perverse mental attitude; thus, there is willfulness.

[The Complainant]’s excuse that he was not feeling well that day is unbelievable and obviously an afterthought. He failed to present any evidence other than his own assertion that he was sick. Also, if it was true that he was then not feeling well, he would have taken the day off, or had gone home earlier, on the contrary, he stayed and continued to work all day, and even tried to go to work the next day, thus belying his excuse, which is, at most, a self-serving statement.

After a re-examination of the facts, we rule that [the Complainant] unjustifiably refused to render overtime work despite a valid order to do so. The totality of his offenses against [the Complainant] R.B. Michael Press shows that he was a difficult employee. His refusal to render overtime work was the final straw that broke the camel’s back, and, with his gross and habitual tardiness and absences, would merit dismissal from service.

⦁ Noticeably, this case and R.B. Michael Press share a parallelism. Similar to the dismissed employee in the above-quoted case, the [the Complainant] exhibited willful disobedience to a reasonable order from his employer and this Court does not find any reason why [the Complainant] should be accorded a different treatment.

5. Undertime Not Offset by Overtime

‘Undertime work on any particular day shall not be offset by overtime work on any other day. Permission given to the employee to go on leave on some other day of the week shall not exempt the employer from paying the additional compensation required in this Chapter.’ (Labor Code, Article 88)

6. Burden of proof: on the employee

Whether an employee worked overtime and be entitled to overtime pay must be proven by the employee.

In general, the burden of proof for paying monetary claims which are incurred in the normal course of business is on the employer. However, “for overtime pay, premium pays for holidays and rest days, the burden is shifted on the employee, as these monetary claims are not incurred in the normal course of business. It is thus incumbent upon the employee to first prove that he actually rendered service in excess of the regular eight working hours a day, and that he in fact worked on holidays and rest days.” (Minsola v. New City Builders, Inc., G.R. No. 207613, January 31, 2018, Per Reyes, Jr., J.)

A monetary claim that is incurred in the normal course of business refers to those that the employee would receive if there were no additional circumstances, such as rendering overtime work, doing work on a special day, and so on. Hence, an employee is entitled to his daily wage, 13th month pay, among others.

However, an employee does not usually receive overtime pay nor premium pay because they are conditioned on whether overtime work was done or whether work was performed on a rest day or special non-working day. Since an employer does not usually require overtime nor work on a rest day or special day, overtime pay and premium pay are not “incurred in the normal course of business.” If this is the case, it is the employee who has the burden of proof that he was duly and properly authorized to do overtime work or to render work on a rest day or a special non-working day. That is why in many companies, an overtime work form or a special work form is required to be filled-up by the employee and signed by his immediate supervisor as proof.

7. Favorable employee stipulations

The above discussion may be superseded by any stipulation favorable to the employee via an employment contract, company policies, collective bargaining agreement, or analogous thereto.

8. When in doubt, interpretation favors labor

Art. 1702. In case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and decent living for the laborer. (R.A. 386, Civil Code)
ART. 4. Construction in Favor of Labor. – All doubts in the implementation and interpretation of the provisions of this Code, including its implementing rules and regulations, shall be resolved in favor of labor. (P.D. 442, Labor Code)

Article 4 of the Labor Code provides that all doubts in the implementation and interpretation of its provisions, including its implementing rules and regulations, shall be resolved in favor of labor. For the working man’s welfare should be the primordial and paramount consideration. (Asian Transmission Corporation v. CA, G.R. No. 144664, March 15, 2004, Per Carpio-Morales, J.)

Similar Posts