How to compute overtime pay in the Philippines (2026)
Overtime on a regular day is 125%. On a rest day it is 130%. On a regular holiday it is 260%. And that is before night shift differential stacks on top. Every rate, every scenario, with worked examples.
In this guide
- What is overtime pay?
- Who is entitled?
- The formula
- Overtime rates by day type
- Night shift + overtime stacking
- Worked examples
- DOLE rules employers must follow
- Common mistakes
- FAQs
What is overtime pay?
Overtime pay is the additional compensation an employee receives for work performed beyond 8 hours a day — the normal workday under Article 83 of the Labor Code. It is a legally protected premium, not an optional benefit. Under Article 87, overtime work must be paid at the employee's regular wage plus at least 25% thereof on regular working days, and higher rates on rest days and holidays.
Who is entitled?
All rank-and-file employees are entitled to overtime pay. The following are specifically excluded under Article 82 of the Labor Code:
| Not entitled to OT pay | Why |
|---|---|
| Managerial employees | Primary duty is to manage; customarily directs two or more employees; has authority on employment decisions |
| Officers or members of managerial staff | Performs work directly related to management policies; exercises independent judgment |
| Field personnel | Work hours outside principal place of business are unsupervised |
| Members of the employer's family dependent for support | Exempt under Article 82 |
| Domestic workers (kasambahays) | Governed by RA 10361, which has separate OT rules |
The title does not decide it
Job title alone does not exempt an employee from overtime pay. A "supervisor" or "manager" title is not enough. The employee must actually meet the three conditions under Article 82: managing the establishment or a subdivision, customarily directing two or more employees, and having genuine hiring/firing authority. DOLE regularly finds employers liable for mislabelling employees to avoid OT obligations.
The formula
Step 1: Compute hourly rate
Hourly Rate = Monthly Basic Salary ÷ 22 days ÷ 8 hours
Step 2: Apply OT rate multiplier
OT Pay = Hourly Rate × Applicable Multiplier × OT Hours Worked
Overtime rates by day type
| Day type | OT rate | Example (₱100/hr) |
|---|---|---|
| Regular working day | × 125% | ₱125/hr OT |
| Rest day or special non-working day | × 130% (rest day rate) × 130% (OT premium) | ₱169/hr OT |
| Regular holiday | × 200% (holiday rate) × 130% (OT premium) | ₱260/hr OT |
| Regular holiday falling on rest day | × 260% (combined) × 130% (OT premium) | ₱338/hr OT |
Night shift + overtime stacking
When overtime is worked between 10 PM and 6 AM, the night shift differential (10% for private sector) is applied on top of the OT rate — multiplicatively.
| Scenario | Formula | Rate (₱100/hr base) |
|---|---|---|
| Regular day OT + night shift | × 125% × 110% | ₱137.50/hr |
| Rest day OT + night shift | × 169% × 110% | ₱185.90/hr |
| Regular holiday OT + night shift | × 260% × 110% | ₱286/hr |
Worked examples
Scenario 1
Regular working day overtime
Employee earns ₱35,000/month. Works 2 hours OT on a Tuesday.
Scenario 2
Rest day overtime
Same employee works 3 hours OT on Sunday (rest day).
Scenario 3
Regular holiday overtime with night shift
Employee works 2 hours OT during Christmas Day, from 11 PM to 1 AM.
DOLE rules employers must follow
Overtime must not be pre-scheduled as a standard part of the workday. Under Article 89, emergency overtime (more than 8 hours) may be required in cases of national emergency, threat to life or property, urgent work, or prevention of serious loss — but employers must compensate at the legal OT rate regardless.
Employers cannot compel employees to waive their right to overtime pay — any agreement to that effect is void. Payroll systems must maintain a full audit trail of actual hours worked, matched to the OT rates applied.
Common mistakes
Using the wrong divisor for the hourly rate
Some employers divide monthly salary by 26 days (all calendar working days) instead of 22 (standard working days excluding 4 rest days). This understates the hourly rate and results in underpayment of OT.
Not applying the correct day-type rate
Paying the regular-day OT rate (125%) when an employee worked OT on a rest day (169%) is a systematic underpayment. This is caught quickly in DOLE inspections.
Adding night shift differential instead of multiplying
The 10% NSD is a multiplier — apply it as × 110%, not as a flat 10% of base wage added to the OT rate. The compounding effect matters, especially on holiday scenarios.
Mislabelling rank-and-file as managerial to avoid OT
This is one of the most common DOLE findings. Liability can extend to back pay for all OT hours worked, plus legal interest.
Overtime computed correctly — from the time log to the payslip.
KAMI Attendance tracks actual hours worked against scheduled shifts. KAMI Payroll applies the correct OT rate for each scenario — rest day, holiday, night shift — automatically. No spreadsheet, no manual rate-checking.
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Frequently asked questions
Can employers require overtime work?
Yes, in specific cases — national emergencies, threats to life or property, urgent machine repairs, prevention of serious loss, or circumstances beyond the employer's control. Outside these situations, overtime must generally be voluntary.
Can employees waive their right to overtime pay?
No. Any agreement purporting to waive the right to overtime pay is void under the Labor Code. This includes "compressed work week" arrangements that push hours past 8 per day without proper DOLE approval.
Is overtime pay taxable?
Yes. Overtime pay is part of taxable compensation income. SSS, PhilHealth, and Pag-IBIG contributions are also computed on gross earnings including overtime, subject to the applicable salary ceilings.
What is the overtime rate for night shift on a rest day?
The rate is: rest day premium (130%) × OT premium (130%) × NSD (110%) = 185.9% of the regular hourly rate.
This guide reflects Philippine law and DOLE/BIR guidelines current as of May 2026. Regulations change — always verify against the latest government issuances, or consult a licensed Philippine labour lawyer for specific situations. Published by KAMI Workforce.
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