Overtime Pay in the Philippines

What Is Overtime Pay?

Overtime pay is the premium compensation an employee receives for work performed beyond the normal workday. Under the Philippine Labor Code, the standard workday for most employees is eight hours. Any authorized or necessary work beyond that threshold triggers an overtime premium — not straight hourly pay, but a percentage of the hourly rate that depends on the type of day worked.

Unlike your regular salary, which is fixed in your contract, overtime pay varies shift by shift. Two hours of OT on a Tuesday might pay differently from two hours on a Sunday that happens to be a regular holiday. That variability is exactly why employees — and sometimes payroll departments — get the computation wrong.

SweldoSense models these premiums using the same day-type multipliers DOLE publishes for labor standards enforcement. You can plug your own numbers into our overtime calculator to see how a specific shift translates into pesos before you compare it against your payslip.

Legal Basis: Labor Code and DOLE Rules

Articles 87 and 93 of the Labor Code of the Philippines establish the framework for overtime and holiday work. The Department of Labor and Employment (DOLE) issues implementing rules and handbook guidance that translate those articles into the percentage rates employers must apply.

These rates are minimum standards. A company may offer higher OT pay through its own policy or a collective bargaining agreement, but it cannot pay less than the statutory floor. An employer also cannot substitute comp time or a flat "OT allowance" for the legal premium unless a valid compressed workweek arrangement or similar DOLE-approved scheme explicitly applies — and even then, the employee's total compensation must not fall below what the law requires.

When disputes reach DOLE's Single Entry Approach (SEnA) program, mediators typically reference the same rate table used in this guide and in the SweldoSense overtime and holiday pay calculator.

DOLE Overtime Rates at a Glance

The following are the core overtime premiums SweldoSense applies, aligned with DOLE Labor Code guidance:

• Regular working day: 125% of the hourly rate for each OT hour beyond eight hours.
• Rest day or special non-working holiday: 169% of the hourly rate for OT hours (130% day premium × 130% OT factor).
• Regular holiday — first eight hours: 200% of the hourly rate (no separate OT yet).
• Regular holiday — beyond eight hours: 260% of the hourly rate for each OT hour (200% × 130%).

Rest days combined with holidays carry higher day multipliers before the OT factor is applied. For example, work on a rest day that is also a regular holiday uses a 260% day rate, and overtime on that day stacks an additional 130% OT factor on top — producing a combined OT rate of 338% of the base hourly rate.

Daily and Hourly Rate: The 21.75 Factor

Before you can apply any OT percentage, you need the employee's hourly rate. Philippine payroll practice — and DOLE handbook examples — derive this from monthly basic salary using a factor of 21.75 days per month, established under Republic Act 9292 and consistent with Labor Code guidance on computing daily rates.

The formulas are straightforward:

• Daily rate = monthly basic salary ÷ 21.75
• Hourly rate = daily rate ÷ 8

For example, an employee earning ₱30,000 monthly basic salary has a daily rate of roughly ₱1,379.31 and an hourly rate of about ₱172.41. Two hours of regular-day OT at 125% would pay approximately ₱431.03 before any night differential or tax withholding.

Important: overtime is computed on basic salary, not gross pay that includes allowances, commissions, or the cash equivalent of benefits — unless your contract or CBA explicitly states otherwise. If HR uses a different divisor (such as 22 or 26 days), your OT may be systematically understated or overstated compared to the DOLE standard.

How Overtime Is Computed

SweldoSense and DOLE handbook examples follow the same stacking order:

1. Identify the day type — regular day, special non-working holiday, regular holiday, rest day, or a combination.
2. Compute the hourly rate from monthly basic salary using the 21.75 factor.
3. Apply the day multiplier to regular (non-OT) hours worked that day.
4. For OT hours, multiply hourly rate × day multiplier × OT factor (125% on a regular day, 130% on most other day types).
5. If any hours fall between 10:00 PM and 6:00 AM, add night differential — an extra 10% on the applicable rate — on top of the OT computation.

On a regular day, the OT formula simplifies to: OT pay = hourly rate × 1.25 × OT hours. On a rest day or special holiday, it becomes: OT pay = hourly rate × 1.30 × 1.30 × OT hours, which equals 169% of the hourly rate.

The overtime calculator handles all day types and optional night differential hours automatically, so you do not need to memorize every multiplier combination.

Worked Examples

Example 1 — Regular day OT: Maria earns ₱24,000 monthly basic. Her hourly rate is (24,000 ÷ 21.75) ÷ 8 ≈ ₱137.93. She works two OT hours on a regular Tuesday. OT pay = 137.93 × 1.25 × 2 ≈ ₱344.83.

Example 2 — Special non-working holiday OT: Using the same salary, Juan works three OT hours on Bonifacio Day (a special non-working holiday). OT pay = 137.93 × 1.30 × 1.30 × 3 ≈ ₱698.85. The first eight regular hours that day would be paid at 130% even without OT.

Example 3 — Regular holiday OT: Ana works ten hours on New Year's Day (a regular holiday). The first eight hours pay at 200%: 137.93 × 2.00 × 8 ≈ ₱2,206.88. The two OT hours pay at 260%: 137.93 × 2.00 × 1.30 × 2 ≈ ₱717.33. Total holiday shift pay for those ten hours ≈ ₱2,924.21, before night differential or tax.

These examples assume no night differential. If any of those hours fall between 10 PM and 6 AM, add 10% on the rate that already includes the day and OT premiums. Use the overtime calculator to model your exact shift pattern.

Who Is Covered — and Who Is Not

Overtime pay applies to rank-and-file employees covered by the Labor Code's wage and hour provisions. Categories generally exempt from mandatory OT include:

• Managerial employees whose primary duty is managing the enterprise or a department, with authority to hire, fire, and assign work.
• Field personnel whose time cannot be determined with reasonable certainty.
• Domestic workers and certain categories governed by separate statutes.
• Employees covered by valid compressed workweek or flexitime arrangements approved by DOLE, where OT rules may differ.

A job title alone does not determine exemption. Many "team leads" or "supervisors" who still perform production work alongside staff — without genuine hiring or disciplinary authority — remain entitled to overtime. If you are unsure which category applies, document your actual duties and compare your payslip against a computation from the overtime calculator.

Common Payroll Mistakes

These errors show up repeatedly in DOLE wage complaints:

• Wrong divisor: Using 22 or 26 days instead of 21.75 lowers the hourly rate and every OT hour with it.
• Including non-basic pay in the OT base: Allowances should not inflate OT unless contractually required — but excluding mandatory basic components that should be included has the opposite effect.
• Flat OT rate regardless of day type: Paying 125% for all OT, even on holidays and rest days, underpays on premium days.
• Ignoring rest-day status: A Sunday shift is not the same as a Monday shift for rate purposes.
• Night differential applied to base rate only: ND must stack on the rate that already includes day-type and OT premiums for those hours.
• Unauthorized OT used to deny payment: If the employer benefited from the work or required it, "not approved" is not always a valid defense.

What to Do If Your OT Is Underpaid

1. Compute your expected OT using the overtime calculator with your monthly basic salary, day type, and hours worked.
2. Compare against your payslip line by line. Request a breakdown from HR if OT is bundled into a lump sum.
3. Put your concern in writing to HR or payroll, citing the day type and hours in dispute.
4. File a DOLE SEnA Request for Assistance if internal resolution fails. The process is free and does not require a lawyer to start.
5. Call DOLE Hotline 1349 for guidance on which regional office has jurisdiction over your employer.

Keep time records, schedule screenshots, and biometric logs if available. DOLE mediators weigh documented hours heavily when an employer's records are incomplete.

Overtime Pay sa Pilipinas — Paliwanag

Ang overtime pay ay dagdag na sahod para sa trabaho na lampas sa walong oras sa isang araw. Sa regular na araw, ang OT rate ay 125% ng oras-oras na sahod. Sa rest day o special non-working holiday, 169% naman ang OT rate. Sa regular holiday, 200% ang unang walong oras at 260% ang mga oras na lampas dito.

Para makuha ang oras-oras na rate, hatiin ang buwanang basic salary sa 21.75, pagkatapos hatiin sa 8. Halimbawa, kung ₱30,000 ang basic mo, ang hourly rate ay mga ₱172.41. Gamitin ang overtime calculator ng SweldoSense para makita ang eksaktong halaga batay sa iyong shift.