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Feb
23

OvertimePay
EmployeeWagesandBenefits20100223

Basis.

Allemployeesrequiredtoworkbeyondeighthoursinoneworkdayisentitledtoovertimepay.Thebasis
ofovertimepayisfoundinArticle87oftheLaborCode.

Article87.Overtimework.Workmaybeperformedbeyondeighthoursadayprovidedthat
theemployeeispaidfortheovertimeworkanadditionalcompensationequivalenttohis
regularwageplusatleasttwentyfivepercentthereof.Workperformedbeyondeighthours
onaholidayorrestdayshallbepaidanadditionalcompensationequivalenttotheratefor
thefirsteighthoursonaholidayorrestdayplusatleast30percentthereof.

Terminology.

OvertimePay.

Overtimepayistheadditionalcompensationpayabletoemployeeforservicesorworkrenderedbeyond
thenormaleighthoursofwork.Itiscomputedbymultiplyingtheovertimeratewiththenumberofhours
inexcessoftheregulareighthoursofwork.

OvertimeWork.

Anyworkperformedbeyondthenormal8hoursofworkinoneworkdayisconsideredasovertimework.

Workday.

Aworkdayistheconsecutive24hourperiodwhichcommencesfromthetimetheemployeestartsto
workandendsatthesametimethefollowingday.Toillustrate,iftheemployeeregularlyworksfrom
8AMto4PM,hisregularworkdayisthe24hourperiodfrom8AMto8AMofthefollowingday.
Workdaysdonotnecessarilycorrespondstocalendardays.

OvertimePayRates.

Overtimepayratesdependuponthedaytheworkisperformed,whetheritisordinaryworkingday,
specialday,holidayorrestday.

Forordinaryworkingday,anadditionalcompensationequivalenttohisregularhourlyrateplusatleast
25%thereof.

Forholiday,specialdayandrestday,anadditionalcompensationequivalenttotherateforthefirsteight
hoursonaholidayorrestdayplusatleast30%thereof.

ComputationofOvertimePay

AssumingthatthemininumwagerateisP250,howmuchistheovertimerateperhour?

Onordinaryday

Onanordinaryday,theovertimerateperhourisdeterminedasfollows:

First,computethehourlyrateoftheemployee:

Regularhourlyrate=Minumumwagerate8hours
=P2508hours
=P31.25perhour

Nowtodetermineovertimerateperhour:

Overtimerate=Regularhourlyrate+25%ofRegularhourlyrate
Overtimerate=P31.25+(25%ofP31.25)
=P31.25x1.25
=P39.06perhour

Onrestdayandspecialday

Computethehourrateoftheemployeeonarestdayorspecialday:

Hourlyrate=130%ofRegularhourlyrate
=P31.25x1.30
=P40.625perhour
(Note:Thehourlyrateonrestdayandspecialdayis130%oftheregularrate.)

Todetermineovertimerateperhour:

Overtimerate=Hourlyrateonrestday+30%Hourlyrateonrestday
=P40.625+(30%ofP40.625)
=P40.625x1.30
=P52.81perhour
Onrestdaywhichfallsonaspecialday

Computethehourlyrateoftheemployeeonarestdaywhichfallsonaspecialday:

Hourlyrate=150%ofRegularhourlyrate
=P31.25x1.50
=P46.875perhour

Todetermineovertimerateperhour:

Overtimerate=Hourlyrate+30%ofHourlyrate
=P46.875+(30%ofP46.875)
=P46.875x1.30
=P60.94perhour

Onaregularholiday

Computethehourlyrateonregularholiday:

Hourlyrate=200%ofRegularhourlyrate
=P31.25x2
=P62.5perhour

Todetermineovertimerateperhour:

Overtimerate=Hourlyrate+30%ofHourlyrate
=P62.50+(30%ofP62.50)
=P62.50x1.30
=P81.25perhour

Onarestdaywhichfallsonaregularholiday

Computethehourlyrate:

Hourlyrate=260%ofRegularhourlyrate
=P31.25x2.60
=P81.25perhour

Todetermineovertimerateperhour:

Overtimerate=Hourlyrate+30%ofHourlyrate
=P81.25+(30%ofP81.25)
=P81.25x1.30
=P105.625perhour

WorkneednotbeContinuous.

Workperformedbytheemployeeneednotbecontinuousaslongasitfallswithinthesameworkday.
Forexample,anemployeewhoworksintwoshifts,onefrom8AMto12AM(fourhours),andanother
from4PMto8PMofthesameworkday(anotherfourhours),suffersatotalof8hoursofwork.Ifheis
requiredtoworkforanotherhourwithinthesameworkday(from8AMto8AMofthefollowingday),
thensuchworkissubjecttoovertimepay.

UndertimecannotbeOffsetbyOvertime.

Someemployershasthepracticeofoffsettingundertimeandovertime.Forexample,ifanemployee
workforonly7hoursonanygivenday(onehourundertime),hewillberequiredtomakeupforhis
undertimebyrequiringhimtorenderadditionalonehourworkonanotherday.Thispracticeis
prohibitedunderArticle87oftheLaborCode,viz:

Article87.Undertimenotoffsetbyovertime.Undertimeworkonanyparticulardayshallnot
beoffsetbyovertimeworkonanyotherday.xxx

Therationaleforprovisionisquiteobvious.Offsettingundertimeagainstovertimeisimproperbecause
theemployeewouldbedeprivedoftheadditionalcompensationfortheovertimeworkhehasrendered.
Notethatundertimeiscoveredonlybytheregularhourlyratewhereasovertimeissubjecttoadditional
overtimerate.Ifthetwoaretobeoffset,theemployeelosesovertimepaytowhichheisentitled.

EmergencyOvertimeWork.

Asageneralrule,employeesmaynotbecompelledtoworkinexcessofeighthoursortorender
overtimeworkonanygivendayagainsthiswill.

TheexceptiontothisruleisfoundinArtile89oftheLaborCode.Underthesaidarticle,employeesmay
becompelledtoperformovertimeworkinanyofthefollowingcases:

1. Whenthecountryisatwarorunderanynationalorlocalemergency
2. Whenovertimeworkisnecessarytopreventlossoflifeorproperty,orincaseofimminentdanger
topublicsafety
3. Whenthereisurgentworktobeperformedonmachines,etc.,inordertoavoidseriouslossor
damagetotheemployer
4. Whentheworkisnecessarytopreventlossordamagetoperishablegoods
5. Whenthecompletionorcontinuationofworkisnecessarytopreventseriousobstructionor
prejudicetothebusinessor
6. Whenovertimeworkisnecessarytoavailoffavorableweatherorenvironmentalconditions.

ManagerialEmployeesnotEntitledtoOvertimePay.

Article82oftheLaborCodestatesthattheprovisionsoftheLaborCodeonworkingconditionsandrest
periodsshallnotapplytomanagerialemployees.Thisincludesovertimepayforovertimework.Thus
managerialemployeesarenotentitledtoovertimepayforservicesrenderedinexcessofeighthoursa
day.

Cases

1. Supervisoryemployeesareconsideredasofficersormembersofthemanagerialstaff,andhence
arenotentitledtoovertime,restdayandholidaypay.(NatlSugarRefineriesCorp.vs.NLRC,
G.R.No.101761.March24,1993)

LastEdited:Friday,August19,2011