How overtime pay is computed
Overtime on an ordinary working day is paid at the hourly rate plus 25%. On a rest day or holiday, the overtime premium is 30% on top of the rate for that day.
The rule
Work beyond eight hours a day is overtime. Article 87 of the Labor Code sets the premium:
- Ordinary working day: the hourly rate plus at least 25%.
- Rest day or holiday: the hourly rate for that day plus at least 30%.
Rates at a glance
Based on a regular hourly rate of ₱100:
| Day | How it is built | Per overtime hour |
|---|---|---|
| Ordinary day | 100 × 125% | ₱125.00 |
| Rest day or special non-working day | 100 × 130% × 130% | ₱169.00 |
| Regular holiday | 100 × 200% × 130% | ₱260.00 |
Example
An employee with a ₱100 hourly rate works 2 hours of overtime on an ordinary day. Overtime pay is ₱125 × 2 = ₱250.
Practical points
- Require pre-approved overtime so payroll only pays what was authorized.
- Keep the actual time-in and time-out records. They are the basis of the computation.
- Overtime and night differential can apply to the same hours. See how night differential is computed.
Questions people ask
What is the overtime rate on an ordinary day?
125% of the regular hourly rate.
What is the overtime rate on a rest day or special day?
The overtime premium is 30% added to the hourly rate for that day. On a rest day or special non-working day that is 130% × 130% = 169% of the regular hourly rate.
Sources
- Labor Code of the Philippines, Article 87 (overtime work)