How to Compute Overtime Pay in the Philippines (With Rest Day and Night Shift Rates)
Who is entitled to overtime pay, the 125% and 130% rules, rest day and night shift differential rates, and step-by-step examples from a daily rate.
Updated
The normal workday in the Philippines is 8 hours. Work beyond that is overtime, and the Labor Code requires employers to pay a premium for it. How big the premium is depends on what kind of day it is.
Step 1: find your hourly rate
Everything starts from your hourly rate: daily rate ÷ 8.
If you are paid monthly, convert to a daily rate first: monthly salary × 12 ÷ days paid a year. Most offices with a 5-day week use 261 days; a 6-day week uses 313. The Daily Rate Calculator does this for you.
Step 2: apply the overtime rate for the day
| Day | First 8 hours | Overtime, per hour |
|---|---|---|
| Ordinary workday | 100% | 125% of the hourly rate |
| Rest day or special non-working day | 130% | 169% |
| Special non-working day on a rest day | 150% | 195% |
| Regular holiday | 200% | 260% |
| Regular holiday on a rest day | 260% | 338% |
| Double holiday | 300% | 390% |
| Double holiday on a rest day | 390% | 507% |
The pattern: on an ordinary day, overtime adds 25% to the hourly rate (Article 87). On rest days and holidays, overtime adds 30% to that day’s hourly rate. On a rest day, the day rate is 130%, so overtime is 130% × 130% = 169%.
Step 3: add night shift differential if it applies
Each hour worked between 10 PM and 6 AM earns an extra 10% of the regular hourly rate for that day (Article 86). It stacks on top of any overtime or holiday premium.
Worked examples
Marco’s daily rate is ₱800, so his hourly rate is ₱800 ÷ 8 = ₱100.
Ordinary day, 2 hours of overtime. Overtime rate: ₱100 × 125% = ₱125 an hour. Two hours: ₱250. With his regular ₱800, he earns ₱1,050 that day.
Rest day, 8 hours plus 2 hours of overtime. First 8 hours: ₱800 × 130% = ₱1,040. Overtime: 2 × ₱100 × 169% = ₱338. Total: ₱1,378.
Regular holiday, 8 hours plus 2 hours of overtime. First 8 hours: ₱800 × 200% = ₱1,600. Overtime: 2 × ₱100 × 260% = ₱520. Total: ₱2,120.
Night shift on an ordinary day, 10 PM to 6 AM. Night differential: 8 hours × ₱100 × 10% = ₱80 on top of his ₱800.
Who is entitled to overtime pay?
Most rank-and-file employees in the private sector. Article 82 of the Labor Code excludes:
- managerial employees, and officers or members of the managerial staff
- field personnel whose actual hours of work can’t be determined with reasonable certainty
- members of the family of the employer who depend on them for support
- workers paid by results, such as some piece-rate workers, under the DOLE rules
Government employees follow Civil Service rules instead, and household workers are covered by the Kasambahay Law.
Rules people often get wrong
- Undertime doesn’t cancel overtime. Article 88 says undertime on one day can’t be offset by overtime on another. If you leave an hour early on Monday and stay two hours late on Tuesday, Tuesday’s two hours are still overtime.
- Most employers require overtime to be approved in advance. Follow your company’s approval process and keep a record of the hours you worked.
- A fixed allowance isn’t automatically overtime pay. Unless your contract clearly says an amount covers overtime, premiums are owed separately.
Is overtime pay taxed?
For minimum wage earners, overtime, holiday pay, night differential and hazard pay are tax-exempt. Everyone else pays tax on overtime as part of regular compensation.
Use the Overtime Pay Calculator to compute any day type, and the Holiday Pay Calculator when you also need night shift hours or unworked holiday pay.