How to Compute Overtime Pay in the Philippines

Overtime is any work beyond eight hours in a day. On an ordinary working day, each overtime hour is paid at the hourly rate plus 25%. On a rest day, special day or regular holiday, it is the hourly rate for that day plus 30%. An employee earning ₱100 an hour who works two extra hours on a normal Tuesday is owed ₱250.

Who is entitled to overtime pay?

Most private sector employees are covered by Article 87 of the Labor Code. The DOLE handbook lists the groups who are not:

• government employees;
• managerial employees, and officers or members of the managerial staff who meet the tests in the rules;
• kasambahay and persons in the personal service of another;
• workers paid by results, such as piece rate or pakyaw, under DOLE approved output rates;
• field personnel whose actual hours in the field cannot be determined with reasonable certainty.

A job title alone does not exclude anyone. A "supervisor" who does not actually manage or meet the tests is still owed overtime.

Step 1: find the hourly rate

For a daily paid employee, divide the daily wage by 8. For a monthly paid employee, convert the monthly salary to a daily rate using your payroll factor, then divide by 8.

The factor depends on how many days a year your employees are paid for, such as 261, 313 or 365. Use the same factor for overtime, holidays and deductions.

Step 2: apply the overtime rate

These are minimums. A CBA or company policy can pay more, never less.

Worked examples

Using a daily wage of ₱800, so an hourly rate of ₱100, for 2 hours of overtime:

The overtime is added to the pay for the first eight hours of that day. On a regular holiday, that is 200% of the daily wage, so the total for the day in the last example is ₱1,600 plus ₱520, or ₱2,120.

Night shift overtime

Work between 10 p.m. and 6 a.m. earns a night shift differential of at least 10% of the regular wage for each hour. When overtime falls in those hours, the differential is computed on the overtime rate. On an ordinary day, that is the hourly rate × 125% × 110%, or ₱137.50 an hour at ₱100.

Zalamea runs payroll for employers across every industry, with overtime, holiday premiums and night shift differential computed automatically from your timekeeping. See our payroll and HR solutions or talk to our team.

Sources: Articles 82, 86, 87, 88 and 93 of the Labor Code; DOLE Handbook on Workers' Statutory Monetary Benefits, 2023 edition; DOLE Labor Advisory No. 17, Series of 2026; DOLE Department Advisory No. 02, Series of 2004, on compressed workweeks; Section 24(A)(2) of the National Internal Revenue Code, as amended.