In 2021, ADP Research Institute surveyed more than 32,000 working-age adults across 17 countries to gauge employee sentiment in the face of the pandemic. One of the most notable findings of the research as published by Forbes was that workers, on average, are logging 9.2 hours of unpaid overtime pay weekly.
While we navigate the transition to the new normal of hybrid work and remote working, work and life integration continue to rise. As the line between work and personal life continues to blur, more and more professionals are putting on overtime work.
In the Philippines, “OTy” has become a colloquial term that refers to unpaid overtime. “OTy” is an abbreviation of the phrase “Overtime Thank You” which means that they only get thanks for the overtime work put in and no monetary compensation. Not only is this against the law but having this term only shows that some Filipinos have normalized not being paid for the extra hours they work. Most of the time, however, this issue comes down to correct filing of overtime work and proper coordination with HR.
So how do you make sure that you’re paid correctly for all the work you put in as overtime work stays a norm with the current work setup in the country? In this article, we’ll walk you through the following topics:
- What is Overtime Pay?
- Who is Eligible to Receive Overtime Pay?
- How to Compute your Hourly Pay Rate?
- How to Calculate Overtime Pay?
- Ordinary Work Day Overtime
- Rest Day or Special Holiday Overtime
- Rest Day and Special Holiday Overtime
- Regular Holiday Overtime
- Regular Holiday and Rest Day Overtime
- Double Holiday Overtime
What is Overtime Pay?
Overtime Pay in the Philippines is given to any employee who performs work beyond the usual 8 hours. This overtime payment that employees receive also has different computation schemes based on the hours and days that the overtime work is performed.
Article 87 of the Labor Code of the Philippines defines overtime work as
“ 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. 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. ”
What about workers that are on alternative work arrangements? Under Republic Act No. 11165 or the “Telecommuting Act,” overtime must still be paid under work-from-home arrangements. Under the law, the terms and conditions offered to workers that are telecommuting should not be less than the minimum labor standards set by law and should still include compensable work hours, a minimum number of work hours, overtime benefits, rest days, and entitlement to leave benefits
Entitlement to Overtime Pay
All working professionals are entitled to overtime pay unless specifically excluded from the overtime benefit. Although the Labor Code covers overtime pay for most professionals, there are certain professions that are exempted from receiving overtime pay.
What does this mean?
According to Article 82 of the Philippine Labor Code, only the following are not eligible to receive compensation for overtime work:
- Government Employees or those employed by the National Government or any of its political sub-divisions including those who are employed by government-owned or controlled institutions
- Managerial Employees if they meet all of the following criteria:
- Their primary duty consists of the management of the establishment in which they are employed or of a department or subdivision thereof;
- They manage or direct the work of two or more employees;
- They have the authority to hire or fire employees or their suggestions or recommendations as to hiring, firing, promotion, or any change in employment status of other employees are given particular weight in the company.
- Members of the family of the employer who is dependent on the employer for support
- Domestic Helpers or employees in the personal service of another who covered by the Kasambahay Law
- Workers who receive results-based compensation including those who are paid on a piece-work or task basis
- Non-agricultural field personnel that perform their duties outside of the principal branch or office and with no fixed hours of work
Know your Hourly Pay Rate
Before we get into the specific overtime pay rates and computations, it’s important to note that overtime pay is calculated on an hourly basis. So how do you compute your hourly rate?
For monthly paid employees:
If an employee earns ₱ 15,000 monthly, let’s first compute their hourly rate by using this computation:
Hourly Rate = (Monthly Rate X 12) / Total work days in a year/ Total daily working hours
With the example above, that’s:
Hourly Rate = (15,000 x 12) / 313 (work days in a year) / 8 (hours)
Hourly Rate = ₱ 71.88
For daily paid employees:
If an employee earns ₱ 575 per day, let’s use compute this computation:
Hourly rate = (Daily rate / total working hours per day)
With the example above, the employee’s hourly rate is:
Hourly Rate = (575 / 8)
Hourly Rate = ₱ 71.88
The Different Types of Overtime Pay
(and how to calculate how much you should be receiving!)
With a better understanding of how overtime pay works, let’s now get into how the different types of overtime pay are calculated.
Ordinary Work Day Overtime
On ordinary work days, the overtime pay rate per hour in excess of the regular 8 hours of work is as follows:
(Employee’s Hourly Rate x 125%) x number of overtime hours worked
Rest Day or Special Holiday Overtime
If an employee renders work during his/her designated rest day or on a Special Holiday, the computation will be as follows:
(Employee’s Hourly Rate x 130% ) x number of overtime hours worked
If the employee renders work beyond 8 hours during his/her designated rest day or a Special Holiday, the computation will then be as follows:
(Employee’s Hourly Rate x 130% x 130%) x number of hours worked in excess of 8hrs
Rest Day and Special Holiday Overtime
If an employee renders work during a Special Holiday that also happens to be his/her designated rest day, the computation will be as follows:
(Employee’s Hourly Rate x 150%) x number of overtime hours worked
If the employee renders work beyond 8 hours during a Special Holiday that also happens to be his/her designated rest day, the computation will then be as follows:
(Employee’s Hourly Rate x 150% x 130%) x number of hours worked in excess of 8hrs
Regular Holiday Overtime
If an employee renders work during a Regular Holiday, the computation will be as follows:
(Employee’s Hourly Rate x 200%) x number of overtime hours worked
If the employee renders work beyond 8 hours during a Regular Holiday, the computation will then be as follows:
(Employee’s Hourly Rate x 200% x 130%) x number of hours worked in excess of 8hrs
Regular Holiday and Rest Day Overtime
If an employee renders work during a Regular Holiday that also happens to be his/her designated rest day, the computation will be as follows:
(Employee’s Hourly Rate x 200% x 130% x 130%) x number of overtime hours worked
Double Holiday Overtime
A double holiday happens when two holidays fall on the same day. For example, if Day of Valor falls on the same day as Maundy Thursday or Good Friday. If an employee renders work during a double holiday, the computation will be as follows:
(Employee’s Hourly Rate x 300%) x number of overtime hours worked
Want more informational content?
Follow us on our official social media accounts @SourcefitPH!
WE’RE ALWAYS HIRING!
Check out our latest job openings at https://sourcefit.com/careers/
