Overtime pay laws and computation in the Philippines
Man is not a machine. At the end of the day, he has to rest to rejuvenate and prepare himself for tomorrow’s work. That is why labor standard laws in many countries set up maximum hours of work for employees. In the Philippines, our Labor Code fixed the maximum at eight (8) hours a day (see Article 83, Labor Code of the Philippines) for six consecutive work days (Article 91, LCP). If the employee works beyond eight hours, the employer is required to pay an additional compensation equivalent to the employee’s regular wage plus at least twenty-five percent (25%) of such regular wage. The rate is increased to thirty percent (30%) if the worker renders overtime on a holiday or rest day. (Article 87, LCP).
Who are covered?
All employees in all establishments and undertakings whether for profit or not are entitled to overtime pay for work rendered beyond eight (8) hours. But this does not apply to managerial employees, field personnel, members of the family of the employer who are dependent on him for support, domestic helpers, persons in the personal service of another, and workers who are paid by results. Employees in the government are also entitled to overtime pay but they are governed by Civil Service laws and rules. Only employees in the private sector are covered by the Labor Code.
Special rules for health personnel
For health personnel in (1)cities and municipalities with a population of at least one million (1,000,000) or in (2)hospitals and clinics with a bed capacity of at least one hundred (100), their normal hours of work are eight (8) hours a day, for five (5) days a week, exclusive of time for meals. (Article 83, LCP)
Health personnel includes resident physicians, nurses, nutritionists, dietitians, pharmacists, social workers, laboratory technicians, paramedical technicians, psychologists, midwives, attendants and all other hospital or clinic personnel.
Overtime work by health personnel included in the two abovementioned instances is, as a rule, not allowed since it involves strenuous physical work considering the number of patients or clients they must attend to. However, they may be compelled to work beyond such hours where the exigencies of the service require that they work for six (6) days or forty-eight (48) hours. But the employer is required to pay an additional compensation of at least thirty percent (30%) of their regular wage for work on the sixth day.
Can an employee be compelled to render overtime?
When an employee spends additional time for work, he puts in more physical and mental effort. It is but proper that he be compensated for that. He is also delayed in going home and cannot spend time with family and enjoy the comforts of his home. As such, the law discourages employers to require employees to work overtime. Generally, he cannot compel the employee to render overtime, except in certain instances (Sec 10, Rule I, Bk. III, IRR) to wit:
1) When the country is at war or when any other national or local emergency has been declared by the National Assembly 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 machineries, 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;
6) When overtime work is necessary to avail of favorable weather or environmental conditions where performance or quality of work is dependent thereon.
Can an employee insist on working overtime?
The employee cannot compel his employer to allow him to work overtime when the circumstances does not require him to do so as when there is actually no work to be performed.
Under time cannot be offset by overtime
Under time work on any particular day shall not be offset by overtime work on any other day (Article 88, LCP). The reason behind this is fairness. If the employee works for less than eight hours, he will be paid only for the corresponding number of hours he had actually worked. If on another day he works beyond the maximum hours, he should be given additional compensation.
Non-payment of overtime pay is not only illegal but also contrary to public policy. The employer cannot use the overtime to offset the under time because payment of overtime pay is mandatory. However, he may either deduct the under time from the wage of the employee, or through other approaches. Although these methods are not provided by law, these may be found in company policies or established by company practices.
Computation of wages
The computation of overtime pay, pay for work done on holidays, premium on nightshift and 13th month pay are set out by the following rules:
On Ordinary Days
Number of hours in excess of 8 hours (125% x hourly rate)
On a rest day, special day or regular holiday
Number of hours in excess of 8 hours (130% x hourly rate)
Computing pay for work done on:
A special day (130% x basic pay)
A special day, which is also a scheduled rest day (150% x basic pay)
A regular holiday (200% x basic pay)
A regular holiday, which is also a scheduled rest day (260% x basic pay)
Computing Night Shift Premium Where Night Shift is a Regular Work:
On Ordinary day (110% x basic hourly rate)
On a rest day, special day, regular holiday (110% of regular hourly rate for a rest day, special day, regular holiday)
Computing Overtime on Night Shift:
On ordinary day (110%) x overtime hourly rate)
On rest day, special day or regular holiday (110% x overtime hourly rate for rest days, special days, regular holidays)
Computing 13th Month Pay:
Total basic salary earned for the year exclusive of overtime, holiday, and night shift differential pay divided by 12 = 13th month pay.