How to Calculate Overtime Pay in the Philippines [Latest: 2025]
Calculating overtime pay is crucial for ensuring fair compensation for employees who work beyond their regular hours.
In the Philippines, the Labor Code establishes specific guidelines that employers must follow when determining overtime pay.
This article provides a comprehensive overview of overtime pay calculations in the Philippines as of 2025, detailing eligibility, computation methods, and frequently asked questions.
What is Overtime Pay?
Overtime pay (OT pay) refers to the additional compensation given to employees who work beyond the standard eight-hour workday.
According to the Labor Code of the Philippines, the OT pay rate is set at 25% above the employee’s hourly rate for regular working days.
This rate can be more generous if stipulated in a collective bargaining agreement. For overtime worked on rest days or holidays, employees are entitled to 30% more of their hourly rate.
Employers are required to provide overtime compensation even in work-from-home setups.
Who Isn’t Eligible for OT Pay?
Certain categories of employees are exempt from receiving overtime pay under Philippine labor laws. These include:
- Government Employees: This includes workers in government-owned and controlled companies.
- Managerial Staff: Employees who manage or supervise others, make significant decisions, or perform specialized tasks may not be entitled to OT pay.
- Domestic Helpers: Individuals employed in private households.
- Field Personnel: Employees who work outside their company’s location without fixed working hours.
- Results-Based Compensation Workers: Those paid based on output rather than time worked.
These exemptions recognize the nature of specific roles and responsibilities within various employment contexts.
When Can Employers Require OT Work?
Employers may require employees to work overtime under specific circumstances:
- During national emergencies or calamities.
- For urgent repairs on machinery or equipment.
- To prevent loss or damage to perishable goods.
- To ensure continuity of business operations.
In these cases, employers must compensate workers according to the additional rates specified in the Labor Code.
How Do Companies Compute Overtime Pay?
Calculating overtime pay involves several steps depending on whether the work is performed on regular days, rest days, special holidays, or regular holidays.
Regular Work Days
Determine Hourly Rate:
Calculate Overtime Rate:
Overtime Hourly Rate = Hourly Rate × 1.25
Compute Total Overtime Pay:
Total Overtime Pay = Overtime Hourly Rate × Number of Overtime Hours
For example, if an employee earns ₱800 per day and works 3 hours of overtime:
Hourly Rate = ₱800 ÷ 8 = ₱100
Overtime Hourly Rate = ₱100 x 125% = ₱125
Total Overtime Pay = ₱125 x 3 = ₱375
Thus, their total daily wage would be:
Total Daily Wage = ₱375 + ₱800 = ₱1,175
Rest Days or Special Non-Working Holidays
For overtime worked on rest days or special non-working holidays:
Calculate Overtime Rate:
Overtime Hourly Rate = Hourly Rate × 1.30 (130%)
Compute Total Overtime Pay:
OT Pay (Special Non-Working Holidays) = Hourly rate x 130% (1.3) x 130% (1.3) x number of hours worked
If an employee works two hours on a special holiday at an hourly rate of ₱100:
₱100 x 130% x 130% x 2 = ₱338 (₱100 x 1.3 x 1.3 x 2 = ₱338)
OT Pay (Special Non-Working Holidays) = ₱338
If it coincides with a rest day, an employee gets an extra 50% of their hourly rate:
OT Pay (Special Non-Working Holidays & Rest Day) = Hourly rate x 150% (1.5) x 130% (1.3) x number of hours worked
₱100 x 150% x 130% x 2 = ₱390 (₱100 x 1.5 x 1.3 x 2 = ₱390)
OT Pay (Special Non-Working Holidays & Rest Day) = ₱390
Regular Holidays
For work performed on regular holidays employees receive double their basic rate (200%) and are entitled to 30% more of their existing hourly rate.
Compute Total Overtime Pay:
If an employee earns ₱300 per hour and works three hours on a holiday:
OT Pay (Regular Holidays) = Hourly rate x 200% (2) x 130% (1.3) x number of hours worked
₱300 × 2 × 1.3 × 3 = ₱2,340
If it falls on their rest day, an employee gets an extra 30% of their hourly rate:
OT Pay (Regular Holidays & Rest Day) = Hourly rate x 200% (2) x 130% (1.3) x 130% (1.3) x number of hours worked
₱300 x 200% x 130% x 130% x 3 = ₱3,042 (₱300 x 2 x 1.3 x 1.3 x 3 = ₱3,042)
OT Pay (Regular Holidays & Rest Day) = ₱3,042
Sample Overtime Pay calculations – (2) Hours of Extra Work
For instance, an employee receiving a minimum wage of ₱537 will have varying overtime pay rates for working an additional two (2) hours on different days.
| Overtime Day | Basic Pay | Overtime Pay | Usual Pay | Overtime Pay Amount |
|---|---|---|---|---|
| Ordinary working days | ₱537 | 125% | 100% | ₱167.81 |
| Scheduled rest day or special day | ₱537 | 130% | 130% | ₱226.88 |
| Rest day and special | ₱537 | 130% | 150% | ₱261.79 |
| Regular holiday | ₱537 | 130% | 200% | ₱349.05 |
| A regular holiday that falls on a rest day | ₱537 | 130% | 260% | ₱453.77 |
FAQs About Overtime Pay in the Philippines
Do I need to include the cost of living allowance when calculating OT pay?
No, the cost of living allowance (COLA) is excluded from overtime pay calculations.
How do I compute overtime pay for night shift employees?
Night shift employees have different rates for overtime:
- Regular days: 137.5% for OT rendered
- Rest days or Special Non-Working Holidays: 185.9% for OT rendered
- Regular Holidays: 286% for OT rendered
How many hours can employees render for OT work?
Employees can work up to four to eight hours of overtime depending on their tasks.
The maximum allowable working hours vary by industry as set by the Department of Labor and Employment (DOLE).
Do Philippine labor laws require employees to work overtime?
No, labor laws do not mandate that employees must work overtime, it should be voluntary unless specified in their employment contract or required due to emergencies.
Is Overtime Pay Taxable In the Philippines?
Yes, overtime pay is taxable in the Philippines if it exceeds ₱250 per month. Check this guide “Why is overtime pay taxable in the Philippines” for more information.
Can an employee ask their employer to let them work overtime?
Yes, employees can request to work overtime, however, it is up to the employer’s discretion to approve such requests based on business needs and legal compliance.
Understanding these guidelines helps ensure that both employers and employees adhere to Philippine labor laws while fostering a fair working environment in today’s evolving workplace dynamics.