Regular overtime (more than 8 hours on a regular workday) is paid at 125% of the hourly rate. Rest day overtime: 169% of the regular hourly rate. Special non-working holiday overtime: 169%. Regular holiday overtime: 260%. Managerial employees and field personnel are generally exempt from overtime pay under the Labor Code.
The Legal Basis: Labor Code Article 87
Overtime pay in the Philippines is governed by Article 87 of the Labor Code (Presidential Decree 442). Any work performed beyond 8 hours in a single workday entitles the employee to additional compensation — the rate depends on what type of day it is.
The 8-hour limit is per workday, not per week. An employee can work 8 hours on Sunday and 8 hours on Monday without triggering overtime on either day. But if they work 10 hours on Monday, 2 hours of that day are overtime.
Overtime Pay Rates by Day Type
| Day Type | Regular Hours Rate | Overtime Rate (per hour beyond 8) |
|---|---|---|
| Regular workday | 100% | 125% of regular hourly rate |
| Rest day / Special non-working day | 130% | 169% (130% × 130%) |
| Special non-working holiday | 130% | 169% (130% × 130%) |
| Regular holiday (no work = 100%) | 200% | 260% (200% × 130%) |
| Regular holiday falling on rest day | 260% | 338% (260% × 130%) |
The overtime premium on any non-regular day is always +30% of that day's regular rate, not +30% of the base daily rate.
How to Compute the Hourly Rate
The hourly rate is derived from the employee's daily rate:
- Daily rate = Monthly basic salary ÷ number of working days in the month
- Hourly rate = Daily rate ÷ 8
For employees on a standard 22 working days per month schedule:
- Monthly salary: ₱20,000
- Daily rate: ₱20,000 ÷ 22 = ₱909.09
- Hourly rate: ₱909.09 ÷ 8 = ₱113.64
Example 1: Regular Workday Overtime
Employee works 10 hours on a Tuesday (regular workday). 2 hours are overtime:
- Overtime rate: 125% × ₱113.64 = ₱142.05/hour
- Overtime pay for 2 hours: 2 × ₱142.05 = ₱284.10
Example 2: Regular Holiday Overtime
Employee works 10 hours on a regular holiday (e.g., Rizal Day). 2 hours are overtime:
- Regular holiday rate: 200% × ₱113.64 = ₱227.28/hour (for the first 8 hours)
- OT premium: 30% of ₱227.28 = ₱68.18 extra per hour
- OT hourly rate: ₱227.28 + ₱68.18 = ₱295.46/hour
- Overtime pay for 2 hours: 2 × ₱295.46 = ₱590.92
Who Is Exempt from Overtime Pay?
Under Article 82 of the Labor Code, the following employees are NOT entitled to overtime pay:
- Managerial employees — those who manage a business or a department and have authority to hire/fire/recommend employment actions
- Officers or members of a managerial staff — employees whose primary duty is to assist a managerial employee, and who regularly exercise discretion and judgment
- Field personnel — employees whose work is performed away from the principal place of business and whose actual working hours cannot be determined with reasonable certainty (e.g., salespeople, delivery drivers with no fixed routes)
- Domestic workers and personal service providers
- Members of the employer's family dependent for support
Compressed Workweek Arrangements
Under DOLE Department Order 02 Series of 2009, some employers implement a compressed workweek — typically 4 days × 10 hours, or similar arrangements. In a valid compressed workweek, the additional hours per day (beyond 8) are NOT paid as overtime if the arrangement is covered by a written agreement and DOLE-compliant CBA or company policy.
The key requirement: the total number of work hours per week must not exceed the maximum allowed by law, and the arrangement must be voluntary (employees cannot be compelled to agree).
Frequently Asked Questions
Overtime pay is based on the employee's regular hourly rate, which is derived from the basic salary. Allowances (COLA, rice allowance, transportation) are generally excluded from the overtime base unless the employment contract specifies otherwise.
Yes, under certain conditions. DOLE allows a compensatory time-off (CTO) arrangement where overtime work is offset by equivalent rest time, rather than cash payment — but only if there is a written agreement between the employer and employee (or CBA), and only for employees not covered by a mandatory overtime requirement in their employment contract.
It depends on the company policy. Common standards are 22 days (for a 5-day work week, excluding Sundays and most Saturdays), 26 days (for a 6-day work week), or the actual number of working days in the payroll period. The BIR and DOLE do not prescribe a single standard — consistency within the company is what matters.
No. Night shift differential (NSD) is an additional 10% premium on work performed between 10:00 PM and 6:00 AM — separate from overtime. An employee working overtime at night earns both the overtime premium AND the night shift differential, applied cumulatively.
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