Working beyond regular hours? You may be entitled to overtime pay. But how exactly is it computed in the Philippines? If you’re new to the workforce or just want to ensure you’re being fairly compensated, this guide will walk you through the basics.
What is Overtime Pay?
Overtime pay refers to additional compensation for employees who work more than eight hours a day. The Philippine Labor Code mandates it, and it applies to covered employees who work extra time beyond their regular working hours.
Who is Entitled to Overtime Pay?
Most rank-and-file employees are eligible, but there are exceptions. Exemptions usually include:
- Managerial staff
- Government employees
- Field personnel (those whose working hours cannot be determined)
- Workers paid by results (e.g., piece-rate workers)
Standard Overtime Rate
The Department of Labor and Employment (DOLE) mandates the following:
- Regular Overtime (Work on an ordinary day beyond 8 hours): 125% of the employee’s regular hourly rate
Formula:
Hourly Rate x 125% x No. of Overtime Hours Worked
Example:
If your monthly salary is PHP 20,000, here’s how to compute your hourly rate and overtime pay:
- Daily Rate = PHP 20,000 X 12 (TOTAL MONTHS IN A YEAR) / 261 (TOTAL WORKING DAYS IN A YEAR) = PHP 919.54
- Hourly Rate = PHP 919.54 / 8 = PHP 114.94
- Overtime Pay per Hour = PHP 114.94 x 1.25 = PHP 143.68
- For 2 hours OT: PHP 143.68 x 2 = PHP 287.36
Overtime on Holidays and Rest Days
When employees work overtime on special days, the rate is higher. Here are the rates of the said special days, and the total compensation you should receive if you render overtime hours.
- On Rest Days/Special Non-Working Holidays: 130% of hourly rate
- Overtime on a Rest Day/Special Holiday: 130% x 130% = 169%
- On Regular Holidays: 200% of the daily rate
- Overtime on Regular Holidays: 200% x 130% = 260%
Calculating compensation ensures that companies properly reward employees for giving up their rest or holiday hours.
Are there Other Allowances?
Yes. Night shift differentials (10% additional for work between 10 PM and 6 AM) may also apply. Additionally, some companies offer hazard pay or other incentives depending on work conditions or industry policies.
How to Keep Track of Overtime
- Use a timekeeping app or physical logbook
- Confirm HR policies in your company handbook
- Review payslips to ensure OT is accurately recorded
Employees can file a labor complaint with DOLE for assistance if they cannot resolve discrepancies with the company’s HR.
Final Thoughts
Knowing how to compute overtime pay is essential to protecting your rights as a Filipino worker. Stay informed, keep records, and don’t hesitate to ask your HR department or DOLE if you think your pay is inaccurate.
Your time is valuable, so make sure you’re being paid fairly for every hour you work.
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