How to Compute Overtime Pay with Illustrations Using NCR Daily Minimum Wage

Overtime work is performed beyond eight hours of work. This should be compensable at a rate provided by law. See illustration using the latest NCR PhP570.00 daily minimum here.

Under Article 83 of the Labor Code work may be performed beyond eight (8) hours a day provided that the employee is paid for the overtime work, an additional compensation equivalent to his regular wage plus at least twenty-five percent (25%) thereof. (See pp. 33-34 of re-numbered and updated Labor Code of the Philippines, 2018 Edition by Atty. Villanueva)

Work performed beyond eight hours on a holiday or rest day shall be paid an additional compensation equivalent to the rate of the first eight hours on a holiday or rest day plus at least thirty percent (30%) thereof.

In relation to overtime, undertime work shall not be offset with overtime. Under Art. 84 of the Labor Code, undertime work on any particular day shall not be offset by overtime work on any other day. Permission given to the employee to go on leave on some other day of the week shall not exempt the employer from paying the additional compensation required in the relevant Chapter of the Labor Code. (See pp. 34 of re-numbered and updated Labor Code of the Philippines, 2018 Edition by Atty. Villanueva)

However, can the employee refuse to render overtime work? The employee cannot under certain circumstances.

Art. 89 provides that:

“Article 89. Emergency Overtime Work.—Any employee may be required by the employer to perform overtime work in any of the following cases:

(a) When the country is at war or when any other national or local emergency has been declared by the National Assembly or the Chief Executive;

(b) When it is necessary to prevent loss of life or property or in case of imminent danger to public safety due to an actual or impending emergency in the locality caused by serious accidents, fire, flood, typhoon, earthquake, epidemic, or other disaster or calamity;

(c) When there is urgent work to be performed on machines, installations, or equipment, in order to avoid serious loss or damage to the employer or some other cause of similar nature;

(d) When the work is necessary to prevent loss or damage to perishable goods; and

(e) Where the completion or continuation of the work started before the eighth hour is necessary to prevent serious obstruction or prejudice to the business or operations of the employer.

Any employee required to render overtime work under this Article shall be paid the additional compensation required in this Chapter.”

Refusal to render overtime can be ground for disciplinary action. (See page. 137, Guide to Valid Dismissal of Employees, 2^nd Edition by Atty. Elvin B. Villanueva citing R.B. Michael Press vs. Galit, G.R. No. 153510, February 13, 2008)

Now, for purposes of computing overtime, every HR Practitioner, Business Owner or Manager needs to know are 1) Rates 2) Premium Days Days.

There are only two (2) rates: 1) 25% on ordinary working day and 2) 30% on rest days and holidays. The premium days are 1) rest days 2) special days 3) regular holidays (note: there is no more “legal holiday” as the term was changed to “regular holiday” under R.A. 9492 amending Section 26, Chapter 7, Book I of Executive Order No. 292, otherwise known as the Administrative Code of 1987).

Then these premium days may concur with each other such as rest day that falls on special day or regular holiday. Each of these combinations will be discussed and will be presented with sample computations here.

Assuming that Anne H. Iligsaute is a Customer Service Representative based in NCR receiving daily minimum wage of P537.00, how do we compute her OT pay on ordinary day, special day, regular holiday and rest day assuming in each of the said instances she rendered OT work for two (2) hours?

Note that the rate of PhP537.00 per day applies only to those in the Non-agriculture industry in NCR. The daily wage rate is PhP500.00 for those in Agriculture (Plantation, Non-plantation); Retail/Service Establishments (Employing 15 workers or less); Manufacturing Establishments (Regularly employing less than 10 workers) per Wage Order No. NCR-22.

Further, in applying the formula adding 25% or 30% to the base pay will yield the same result if the base rate is multiplied by 125% or 130%.

Scenario A:   OT pay for work in excess of eight (8) hours performed on ordinary working days, she must be paid an additional twenty-five percent (25%) of the hourly rate of said ordinary working day

Formula:        OT Pay = Daily rate / 8 hours x 125% x number of hours of OT work

Computation:

OT Pay           = PhP537.00 / 8 hours x 125% x 2 hours

= P67.125 x 125% x 2 hours

=PhP83.90625 x 2 hours

= PhP167.81

Draft and Formulate Your HR/Labor Forms, Notices and Contracts with Ease and Binding Force Using Atty. Villanueva’s 150+ Editable Templates in HR Forms 1 Soft Copy (Word File)

Scenario B:   OT pay for work in excess of eight (8) hours performed on a special day she must be paid an additional thirty percent (30%) of the hourly rate of said special day

Formula:        OT Pay = Daily rate / 8 hours x 130% x 130% x number of hours OT work

Computation:

OT Pay           = (([PhP537.00 / 8 hours] x 130%) x 130%) x 2 hours

= (([P67.125] x 130%) x 130%) x number of hours OT work

= ((PhP87.2625) x 130%) x 2 hours

= (PhP113.44125) x 2 hours

= PhP226.89

Scenario C:   OT pay for work in excess of eight (8) hours performed on a scheduled rest day she must be paid an additional thirty percent (30%) of the hourly rate of said rest day

Formula:        OT Pay = Daily rate / 8 hours x 130% x 130% x number of hours OT work

Computation:

OT Pay           = (([PhP537.00 / 8 hours] x 130%) x 130%) x 2 hours

= (([P67.125] x 130%) x 130%) x number of hours OT work

= ((PhP87.2625) x 130%) x 2 hours

= (PhP113.44125) x 2 hours

= PhP226.89

Scenario D:   OT pay for work in excess of eight (8) hours performed on a special day that falls on a scheduled rest day she must be paid an additional thirty percent (30%) of the hourly rate of said day

Formula:        OT Pay = Daily rate / 8 hours x 150% x 130% x number of hours OT work

Computation:

OT Pay           = (([PhP537.00 / 8 hours] x 150%) x 130%) x 2 hours

= (([P67.125] x 150%) x 130%) x number of hours OT work

= ((PhP100.6875) x 130%) x 2 hours

= (PhP130.89375) x 2 hours

= PhP261.79

Scenario E:   OT pay for work in excess of eight (8) hours performed on a regular holiday she must be paid an additional thirty percent (30%) of the hourly rate of regular holiday

Formula:        OT Pay = Daily rate / 8 hours x 200% x 130% x number of hours OT work

P537/8 x 200% x 130% = P67.125 x 200% x 130% x number of hours OT work

Computation:

OT Pay           = (([PhP537.00 / 8 hours] x 200%) x 130%) x 2 hours

= (([P67.125] x 200%) x 130%) x number of hours OT work

= ((PhP134.25) x 130%) x 2 hours

= (PhP174.525) x 2 hours

= PhP349.05

Scenario F:   OT pay for work in excess of eight (8) hours performed on a regular holiday that falls on a scheduled rest day she must be paid an additional thirty percent (30%) of the hourly rate of said day

Formula:        OT Pay = Daily rate / 8 hours x 260% x 130% x number of hours OT work

P537/8 x 260% x 130% = P67.125 x 260% x 130% x number of hours OT work

Computation:

OT Pay           = (([PhP537.00 / 8 hours] x 260%) x 130%) x 2 hours

= (([P67.125] x 260%) x 130%) x number of hours OT work

= ((PhP174.525) x 130%) x 2 hours

= (PhP226.8825) x 2 hours

= PhP453.77

Acquire Mastery of HR/Labor Rules, Doctrines and Principles with Atty. Villanueva’s HR Bundle Books (discounted package with free shipping)