Payroll, HR & labor compliance
Overtime pay computation in the Philippines: rates for every type of day
Overtime pay rates under the Labor Code for ordinary days, rest days, special days and regular holidays, with formulas, a rate table and worked examples.
Under the Labor Code of the Philippines, work beyond eight hours a day is overtime. On an ordinary working day, overtime is paid at at least 125% of the hourly rate. On rest days, special non-working days and regular holidays, overtime is paid at an additional 30% of the hourly rate *for that day*, which is already higher than the ordinary rate.
Who is covered by overtime rules?
The hours-of-work provisions apply to most rank-and-file employees. They generally do not cover managerial employees, officers or members of the managerial staff, field personnel whose hours cannot be determined with reasonable certainty, family members dependent on the employer, domestic workers and workers paid by results under specific rules. Classify roles carefully, because misclassifying a supervisor as exempt is a common source of claims.
Overtime rate table
The table below shows the rate for each overtime hour as a percentage of the employee's ordinary hourly rate.
| Type of day | Rate for first 8 hours | Overtime rate per hour |
|---|---|---|
| Ordinary working day | 100% | 125% |
| Rest day | 130% | 169% (130% × 130%) |
| Special non-working day | 130% | 169% |
| Special non-working day falling on a rest day | 150% | 195% (150% × 130%) |
| Regular holiday | 200% | 260% (200% × 130%) |
| Regular holiday falling on a rest day | 260% | 338% (260% × 130%) |
| Double regular holiday | 300% | 390% (300% × 130%) |
Work between 10 p.m. and 6 a.m. also earns night shift differential on top of these rates. For premium pay on unworked days, see holiday pay rules.
How to compute overtime pay
Step 1: hourly rate. For monthly-paid employees, derive the daily rate from the monthly salary using your company's approved factor, then divide by 8. For daily-paid employees, divide the daily rate by 8.
Step 2: count approved overtime hours for each type of day.
Step 3: multiply hours × hourly rate × the applicable overtime rate.
Example 1: ordinary day
Hourly rate ₱200, 3 hours of overtime on a Wednesday. Overtime pay = 3 × ₱200 × 125% = ₱750.
Example 2: rest day
Same employee works 10 hours on their rest day. First 8 hours = 8 × ₱200 × 130% = ₱2,080. 2 overtime hours = 2 × ₱200 × 169% = ₱676. Total = ₱2,756.
Example 3: regular holiday
Same employee works 9 hours on a regular holiday. First 8 hours = 8 × ₱200 × 200% = ₱3,200. 1 overtime hour = 1 × ₱200 × 260% = ₱520. Total = ₱3,720.
Rules that affect overtime payroll
- Undertime cannot offset overtime. Undertime on one day does not cancel overtime on another day.
- Overtime should be authorized. Most companies require prior approval. Unapproved overtime still creates risk if the employer knew and allowed the work, so close the loop in your timekeeping process.
- Compulsory overtime is limited to situations the Labor Code allows, such as emergencies or work that would otherwise cause serious loss.
- Compressed work weeks follow separate DOLE guidance and should be set up as their own schedules.
Controlling overtime in a large workforce
Overtime is one of the largest variable labor costs in retail, manufacturing, logistics and BPO operations. The controls that work:
- Pre-approval with reasons. Employees file overtime requests that supervisors approve before or promptly after the work.
- Matching to time logs. Payroll pays the lower of approved hours and logged hours, with exceptions reviewed.
- Budgets by department. Track overtime cost per branch and compare it with plan every cutoff.
- Schedule fixes. Recurring overtime usually signals a staffing or scheduling problem; see shift scheduling.
Cirquolus Timekeeping supports overtime schedules, time overrides and employee requests with approval stages, so only approved overtime reaches payroll.
Frequently asked questions
What is the overtime rate in the Philippines?
On an ordinary working day, at least 125% of the hourly rate. On rest days, special days and holidays, overtime is the rate for that day plus 30%.
How do you compute overtime on a rest day?
Multiply the hourly rate by 130% for the first eight hours, then by 169% (130% × 130%) for each overtime hour.
Is overtime required to be approved in advance?
The law does not prescribe a form, but most companies require prior approval in their policies. If the employer knowingly allows overtime work, it is generally still payable.
Do managers get overtime pay?
Managerial employees and members of the managerial staff are generally excluded from the hours-of-work rules, unless company policy or contract provides otherwise.
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