Overtime pay laws and computation in the Philippines

October 10, 2009 by  
Filed under Employer - employees

work-overtimeMan 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:

Computing Overtime:

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.

Comments

33 Responses to “Overtime pay laws and computation in the Philippines”
  1. Rugby says:

    hi,
    thanks for sharing this post.The Government and any of its political subdivisions, including government-owned and controlled corporations, excepts those corporations operating essentially as private subsidiaries of the Government;

  2. link_icywind says:

    So the law states that the employer can require their employees to work over time in some circumstances, however it does not state how many hours the employer can require the employees to work overtime. If for example, the employee work 8 hours in a day and was required by the employer to work for additional 16 hours for maybe machine installation for that day only, so that would be a total of 24hours of work in that day. Does it violate any law stated in the labor code/law. Will that be fair for the employee or does she or he have the right refrain from working the said overtime. By the way the employee is working a total of 12 hours a day (8 hour + 4 hours overtime). . . Thank you for your reply.

  3. assenav says:

    A worker required to work for 24 hours? Yes, this may be allowed. It will not violate the law if it falls under any of these exceptions.

    The prerogative is with the employer, whether to require overtime or not. Under these emergency situations, it is the employer who is in the best position to know if the circumstances of the business operations require overtime work.

    But in this extreme situation (work for 24 hrs), an employee should be given rest periods. Again, “man is not a machine.”

    In short, the law did not fix maximum hours for overtime but it provided specific instances when this may be allowed.

    As for this question: “Will that be fair for the employee or does she or he have the right refrain from working the said overtime.”

    Of course, if the employee thinks he is not capable or does not want to work any longer, then he can refuse by justifiable reasons because that would already result to voluntary servitude. But if his skill or expertise is needed to prevent loss of life or property for example, and he refuses without justifiable excuse, the employer may have some recourse against him in damages. But these things are more specifically covered by civil law.

  4. viclogic says:

    Labor Code, Book III, Title I, Chapter 1:

    Article 84,
    Hours worked shall include (a) all time during which an employee is required to be on duty or to be at a prescribed workplace; and (b) all time during which an employee is suffered or permitted to work.

    “Rest periods of short duration during working hours shall be counted as hours worked.”

    To be realistic, the 24hour duration of work should not be construed as non-stop working for 24hours. As Vanessa said “the human body is not as durable as a machine” When the requirement to work overtime arises for the circumtances covered by the law, the employer should see to it that the employee will remain capable of doing that extended required duty or work.

    The law was created out of justice. And accordingly, justice for both the employer (avoidance of a loss) and the employee (compensation and safety) must be observed and protected. Fundamentally, when the human law is silent, we should go back to the framework of justice and equality.

  5. anna says:

    we employ 3 office staff and they receive their pay every 15th and end of the month. they are NOT entitled to OT. let us assume that their monthly pay is P15000 each. if they are not entitled to OT, can i deduct them for absences and lates? if yes, how do i compute their daily rate? i'm confused about the factor to be used. should i use 365 or 313?

  6. viclogic says:

    Welcome to our blog Anna,

    Before I can answer your question, and to protect the rights of your employees (including the the privilege of the employer), I may need some facts from you as follows:

    1. Reason for not entitling them (employees) to overtime pay.
    2. Are they monthly paid employees or daily paid employees (based on the employment of contract or CBA)?

    Monthly-paid employees are those who are paid every day of the month, including unworked rest days, special days and regular holidays.

    Daily-paid employees are those who are paid on the days they actually worked and on unworked regular holidays.

    Thank you.

  7. anna says:

    hi viclogic.

    1. we have two sets of employees; the office staff and the people who work in the selling area. the selling area people are definitely daily-paid employees who receive their take home pay weekly. if they don't go to work, they don't receive their pay. we don't have problems computing what their daily and hourly rates are.

    i am not so sure about the office staff. their “rates” are definitely higher than that of the selling area people. because their rates are higher, we made it clear to them that they are not entitled to OTs except when they work straight (open and close the store). we don't even deduct them for lates, unlike the selling area people. what we ask of them is to complete the 9 hours (including 1 hour meal break). if their official time-in is at 8 am, we don't deduct lates if they come in at 8:30 am. i think this is what you call the flexi-time schedule. but i can already see some signs of abuse by some staff. as much as possible, we would like them to start at 8 am. i don't mind not deducting their lates but what i do mind is when they are absent. since we are not giving them OTs, can i legally deduct absences? if yes, what factor should i use? by the way, we also pay them holiday pay during holidays.

    2. our business is fairly new. we have been lenient to our office staff since we still don't have fixed HR policies. i would like to know if the formula that they have been using is correct (baka mamaya naiisahan na pala kami). currently, i let one of the office staff prepare the payroll.

    thanks in advance.

  8. aivee says:

    Good evening ,

    I am health worker ( Nurse ) a Senior Officer my duty is 12 Hours/day , I have 7 days off duty in two weeks . I do not have overtime pay instead we are given additional days off . Our hospital is more than 300 bed capacities.
    Is my employer violating the labor law in the Philippines

    ( 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.

    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.)

  9. viclogic says:

    Hi Anna,

    Please be reminded that according to the Labor Code, 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.

    Thus, the office staff should be entitled to overtime pay beyond 8 hours. To be fair, 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.

    For the computation of the hourly rate, you may refer to the following suggestion from http://www.dole.gov.ph/bwc/acrobat_files/hanwag…. (please click to download the pdf file)

    A. For monthly-paid employees (those who are paid every day of the month, including unworked rest days, special days
    and regular holidays):365 days
    B. For daily-paid employees:
    1. For those who are required to work everyday including Sundays or rest days, special days and regular holidays: 391.5days
    2. For those who do not work and are not considered paid on Sundays or rest days: 314 days
    ** Factors 312 may be used instead of 314, if the two special days under EO 203 are not considered paid.
    3. For those who do not work and are not considered paid on Saturdays and Sundays or rest days: 262 days

    Please be reminded that this is only based on my research on the matter, it is still recommended to consult with a labor lawyer for a proper legal advisory on the subject.

    Thank you.

  10. viclogic says:

    Hi Aivee,

    Thank you and welcome to our blog.

    With reagard to your question whether your employer is violating the labor law, the Labor code says that…

    Overtime work by 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 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.

    Thank you.

  11. assenav says:

    nemo tenetur ad impossibile (the law does not require the impossible)

  12. assenav says:

    Aivee,

    Based on article 83 (LCP), the normal hours of work of a health personnel like you (if in a private hospital) is 40 hours or 8 hours a day for 5 days a week.

    NOTE: “five days a week” means that workdays are consecutive. This can be implied from the word “sixth” under Article 83.

    Lets say you work from Monday to Friday. But if for example, there was a sudden rise in the number of patients due to dengue outbreak, and after working for five days, you were required to work on Saturday – the “sixth day,” your employer should give you overtime pay for working on that day

    NOTE also that: workweek does not always mean Monday to Sunday, it could start on any day and ends on the 7th day (for example: Tuesday to Monday)

  13. anna says:

    thanks viclogic.

    assenav, we have one station manager. the other one is the assistant station manager. the last one is the finance person. the station manager and assistant station manager do office work (like prepare reports) and manage/supervise all the operations and the selling area people. the finance person does the accounting work (obviously :p )

    if i consider the station manager and assistant station manager as “managers” as defined by the labor code, then we should not be giving them OT when they work straight, but we decided to give them. these people also receive holiday pay. if this is the case, in terms of their pay, these 2 employees are not considered “managerial employees” as defined by DOLE because they receive holiday pay and OT. i am just confused with their classification and therefore what factors to use.

  14. aivee says:

    thank you for your reply , it will help me a lot as well as with my co officers .

  15. assenav says:

    anna said: “if this is the case, in terms of their pay, these 2 employees are not considered “managerial employees” as defined by DOLE because they receive holiday pay and OT.”

    the fact that they are given OT pay or other benefits normally for other types of employees, does not matter – what is important is the nature of their functions.

    “managerial employees” are not always called “managers,” they can be designated in many names but what makes them managerial is the kind of work they perform in the establishment.

    Managerial employees, as defined by law are those:
    1) whose primary duty consists of the management of the establishment in which they are employed or of a department or subdivision thereof; [they formulate policies]
    2) who customarily and regularly direct the work of two or more employees therein; [they execute management policies]
    3) who have the authority to hire and fire employees of lower rank, or their suggestions and recommendations to hiring and firing and as to the promotion or any other change of status of other employees, are given particular weight. [they can impose disciplinary actions]

    Your office staff may fall under any of these categories.

    anna said: “i am just confused with their classification and therefore what factors to use.”

    Whether your office staff is monthly paid or daily paid will depend on your company policy or what is stipulated in their employment contracts.

    Managerial employees are not covered by the Labor Code provisions on hours of work, holidays, overtime, etc. (Book III, Title I, Labor COde). This is because the nature of their work and the skills, knowledge or expertise they use justly requires higher rates of compensation.

    Assuming you consider your managerial employees as monthly paid (which is usual for high-paying jobs), Monthly paid are those paid every day of the month including unworked rest days, special days and regular holidays. BUT NOTE of the words UNWORKED REST DAYS and HOLIDAYS. This does not include UNWORKED WORKING DAYS.

    The basic principle governing compensation in the Philippines is “NO WORK NO PAY.” Thus, if they are absent on any WORKING day, then they should not be paid. This is based on the 2004 Supreme Court case of Odango vs. NLRC which says that the principle of “no work, no pay also applies to monthly-paid employees. Otherwise, it would be unfair for the employer to be paying for something which the employee did not work for.

  16. assenav says:

    Just adding some info:

    Since this article is for private establishments or employers in the private sector, for those who are government employees, for your rights and benefits, you have to refer to the Revised Administrative Code and corresponding rules and regulations applicable to your respective offices, also the Civil Service Rules and other regulations issued by the branch of the government you are connected with.

    For overtime pay, this provision in the Revised Administrative Code could be useful:

    Sec. 63 (Book VI, Chapter VII) Additional Compensation for Overtime Service. – Officials and employees of the National Government, when required to work overtime after regular working hours during ordinary days, during half-day sessions, or on Saturdays, Sundays and holidays, by the heads of departments concerned, to finish work that must be completed within a specified time, may be paid overtime compensation from any unexpected balance of the appropriation for salaries and wages authorized in the General Appropriations Act and under such guidelines as may be issued by the President.

  17. lawyerphilippines says:

    “Man is not a machine!” that's why we need to rest after our working hours,even though the machine they need also a gasoline or electricity to gain energy to start again. I think this law will help a lot of workers who's still working after their working hours.

  18. assenav says:

    Yes, you are right. Thank you for visiting this blog.

  19. simonpineda says:

    hi! just want to know if my understanding of the computation of OT is correct:
    example, daily rate is P400 and his rest day is sunday.
    if he works on Christmas day, his rate for the first 8 hrs will be P800? and for the excess is P130/hr? assuming, Christmas falls on a sunday and he was asked to work, his rate for the 1st 8 hrs will be P1,040? and P169/hr in excess of 8 hrs? thanks….

  20. marge_1211 says:

    hi i would like to ask how can we better handle this situation…we have employees who are required to do field work outside the company premises..they do service at our clients' location…and sometimes they finished their jobs there after regular office hours. the company has ruling that if they are within metro manila, their travel time are not paid. so whats only paid is the time they worked at the location, until the time they time out there. but the time they have to travel home which is usually longer than if they were working at our own office site. also, our probationary employees are not allowed to go overtime but they are also required to go out and do service in clients..and sometimes they are forced to went home later than the regular hours. still they are not paid the overtime pay..our management concerns is we hope that our employees will learn to maximise their time outside and avoid working overtime…are we violating some rules here? thanks in advance…i appreciate any advice you can give

  21. sobresaliente says:

    Hi everyone.

    Just want to throw some questions concerning overtime (OT) pay. If an employee is on a half-day leave (vacation/sick/authorized leave with pay), may the company forbid him from rendering OT after the regular work echedule? Let us say, work schedule is from 8-5. He is on leave during morning. He reports for work 1-5pm. He is required to render OT due to pressing workloads but management says he may render OT work after 5pm but he shall not be paid OT premium of 25%. For OT rendered, he will just be paid an amount equivalent to his hourly rate but without 25% OT premium as per company policy.practice. May I know the legality of this practice? Thank you.

  22. vincent27 says:

    Good morning I only have ample knowledge with LCP.I just like to know if I have the right Not to render Mandatory overtime If i have already 3days plotted overtime in 5 days? It means 3days of my working day are 12 hours( 9 to 6pm plus 2 hours Ot plotted) and inbetween my OT days they want me to render mandatory aswell.Is too much? Im already tired.I want to escalate my consern to our HR.But I dont have the idea regarding that overtime matter.Im hoping for your reply Mr.Viclogic

    You can also send your answeror anylinks wherein I can read all the information regarding my consern at my email account ami_savion@yahoo.com..Thank You and Godbless

  23. twing says:

    Hi,

    I am a medical transcriptionist. Our normal shift is 8 hours a day. But sometimes I extend a few minutes to an hour because our the nature of our job is “production base” thus requiring us to finish 450 lines a day.

    Even though we exceeded already the normal 8 hours, still, they don't consider our excess work hours as an OT because of the “production base” rule and we are NOT PAID for it.

    Is this legal of some sort. Because our contract requires us to finish 450 lines a day. But sometimes, I extend because have not yet met the stated 450 lines. Can you help me out.

    They are not paying me of my excess hours.. I really think that it is unfair… please help me out on this.

  24. babes_4ever123 says:

    hi. my call center company is forcing us to go on MANDATORY OT often. these OT's are not paid if we do not meet certain number of contacts. for example we are required to complete 8 emails per hour, if we do not meet that we don't get paid. please advise if we can file a complaint about this. tnks

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  26. bdicponz says:

    can i ask some question if my employer is violating any law.

    we always render 2 to 4 hours over time daily and unfortunately they always cancel our day off every sunday and then sometimes we also render 1 to 2 hours overtime in sunday, does they violating any law?

    we are a BPO Company but not a call center company.

    Thank You!

  27. daffodils says:

    Good day. Where can I find in the Labor Code that workers paid by results are not entitled to holiday pays of 200% + 30% for overtime?

  28. rebbeccah says:

    hi my name is rebecca. I'm working in a manpower agency and earning Php 14000 a month. Regular working days is from Monday to Saturday. Sayurday is oly half day. We only do OT if is necessary. For example, if we have employer from other country. I do come late to work. Call time is 9:00AM, I arrive at work like before 10, most of the time. We usually goes home at past 7:00AM. Just last month, March, one of our big time employer conducted an interview. We come to work at 8:00Am and ends up like 10:00PM. For two consecutive saturdays and sundays, we worked the whole day. As per log I hve 243 hours of OT but I'm only paid Php1000.00.

    Can you help me on this? I'm really poor at knowledge when it comes to this. But I know this is wrong. Cause as per the payroll staff, my total OT pay is Php 7000 but it came out to Php 1000 only.

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  30. Hi over time is the more beneficial for every company and also all employ all is very nice sharing i agree with your blog thanks for nice sharing.

  31. Car Battery says:

    I know how you feel. I worked at a animation studio where overtime was the norm. After working a full night shift, it's hard to endure a few more hours, especially as the stress is highest during those hours since you can't leave till the shot for that day is completed. I had a talk with management in restructuring the work load since the targets they set were repeatedly unachievable by any of the teams, not just ours, but they didn't listen or care.

  32. Workers should be valued because they are the most important assets of a business. Thus, they should be given even more than what they deserve.

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