Overtime Pay Computation Guide Philippines
What’s more important: extra cash or extra time for your loved ones? That’s what I didn’t understand when I was a child. I didn’t know that we needed the extra cash and that my parents were doing longer work hours as a sacrifice.
As prescribed by law, there are eight (8) hours of work per day. If an employee worked beyond eight (8) hours, he / she is entitled for overtime pay. In the overtime pay computation, the basic wage is used but the cost of living allowance (COLA) is not included.
Who are entitled for an overtime pay?
Not all employees / workers are entitled to overtime pay according to the law. The following employees are not included for overtime pay benefits as well as the premium pay benefits.
- Government employees employed by the National Government or Government -owned and/or controlled corporations (GOCC’s) with original charters or created under special laws;
- Managerial employees
- Officers or members of a managerial staff
- Kasambahay and persons in the personal service of another
- Workers who are paid by output, task basis or kada
- Field personnels
5 Cases for the Overtime Pay Computation
- Overtime Work on ordinary working days
- Overtime Work on a scheduled rest day or a special day
- Overtime Work on a special day which falls on a scheduled rest day
- Overtime Work on a regular holiday
- Overtime Work on a regular holiday which falls on a scheduled rest day
To illustrate the differences among these cases, let’s use the following wage data from the 2016 Wage Order for the National Capital Region (NCR)
Basic wage for NCR:
- Non-Agriculture Industry: Php 481.00
- Retail /Service Establishments Industry: Php 444.00
Case 1: Overtime Work on ordinary working days
Workers shall receive an additional compensation of 25% of the basic pay per hour. For example, using the basic wage for the National Capital Region (NCR).
Case 1: Overtime Work on ordinary working days
Workers shall receive an additional compensation of 25% of the basic pay per hour. For example, using the basic wage for the National Capital Region (NCR).
Sector/ Industry |
Rate |
Overtime Pay Computation |
| Non-agriculture | P481.00/day or P60.13/hour | = P60.13 x (OT factor) x (number of hours OT work)
= P60.13 x 125% x (number of hours OT work) |
| Retail/Service Establishment | P444.00/day or P55.5/hour | = P55.5 x (OT factor) x (number of hours OT work)
= P55.50 x 125% x (number of hours OT work) |
Case 2: Overtime Work on a scheduled rest day or a special day
Workers shall receive an additional compensation of 30% of the basic pay per hour.
Sector/ Industry |
Rate |
Overtime Pay Computation |
| Non-agriculture | P481.00/day or P60.13/hour | = P60.13 x (OT factor) x (special or rest day factor) x (number of hours OT work)
= P60.13 x 130% x 130% x (number of hours OT work) |
| Retail/Service Establishment | P444.00/day or P55.5/hour | = P55.5 x (OT factor) x (special or rest day factor) x (number of hours OT work)
= P55.5 x 130% x 130% x (number of hours OT work) |
Case 3: Overtime Work on a special day which falls on a scheduled rest day
Workers shall receive an additional compensation of 30% of the basic pay per hour.
Sector/ Industry |
Rate |
Overtime Pay Computation |
| Non-agriculture | P481.00/day or P60.13/hour | = P60.13 x (OT factor) x (special day on rest day factor) x (number of hours OT work)
= P60.13 x 130% x 150% x (number of hours OT work) |
| Retail/Service Establishment | P444.00/day or P55.5/hour | = P55.5 x (OT factor) x (special day on rest day factor) x (number of hours OT work)
= P55.5 x 130% x 150% x (number of hours OT work) |
Case 4: Overtime Work on a regular holiday
Workers shall receive an additional compensation of 30% of the basic pay per hour.
Sector/ Industry |
Rate |
Overtime Pay Computation |
| Non-agriculture | P481.00/day or P60.13/hour | = P60.13 x (OT factor) x (regular holiday factor) x (number of hours OT work)
= P60.13 x 130% x 200% x (number of hours OT work) |
| Retail/Service Establishment | P444.00/day or P55.5/hour | = P55.5 x (OT factor) x (regular holiday factor) x (number of hours OT work)
= P55.5 x 130% x 200% x (number of hours OT work) |
Case 5: Overtime Work on a regular holiday which falls on a scheduled rest day
Workers shall receive an additional compensation of 30% of the basic pay per hour.
Sector/ Industry |
Rate |
Overtime Pay Computation |
| Non-agriculture | P481.00/day or P60.13/hour | = P60.13 x (OT factor) x (regular holiday on a rest day factor) x (number of hours OT work)
= P60.13 x 130% x 260% x (number of hours OT work) |
| Retail/Service Establishment | P444.00/day or P55.5/hour | Not covered by the rule on holiday pay, please see Holiday Pay |
To understand more on the used rest day factor, special day factor and the holiday factors, you may read more on our articles on Holiday Pay and Premium Pays.