Overtime Pay in the Philippines: Rates and Formulas

TL;DR: Overtime in the Philippines is work beyond 8 hours in a day, paid at +25% of the hourly rate on an ordinary working day (125% total). On rest days and holidays the 30% overtime premium stacks on top of that day’s premium rate, from 169% on a rest day up to 260% on a regular holiday that is also a rest day. Night hours add a further 10% differential. Managerial employees, managerial staff, and field personnel are exempt.

When overtime starts

The Labor Code sets the ordinary workweek at 8 hours per day. Work beyond 8 hours in a single day triggers Article 87’s overtime premium, regardless of how many hours the employee works the rest of the week. There is no weekly-hours overtime threshold like the US system: a 10-hour Monday followed by four 8-hour days owes 2 overtime hours, even at 42 weekly hours.

Overtime must ordinarily be something the employee agrees to. The Code lets employers require it without consent in defined situations: national emergencies, urgent work needed on machinery, infrastructure, or to prevent loss or damage to perishable goods, and other comparable cases. Outside those, treating repeated refusal as misconduct is risky; DOLE case practice scrutinises discipline built on overtime refusal.

How to compute overtime pay

The formulas below follow the DOLE-BWC Handbook on Workers’ Statutory Monetary Benefits:

1. Hourly rate: daily rate ÷ 8.
2. Overtime hourly rate (ordinary day): hourly rate × 125%.
3. Overtime pay: overtime hourly rate × overtime hours.

A worked example

An employee earns ₱700 per day and works 2 hours of overtime on an ordinary Wednesday:

• Hourly rate: 700 ÷ 8 = ₱87.50
• Overtime hourly rate: 87.50 × 125% = ₱109.38
• 2 overtime hours: 109.38 × 2 = ₱218.75

The rate table: overtime on top of premiums

The 30% overtime premium applies on top of whatever rate the day already carries. The holiday pay guide covers the holiday layer in full; here is the combined table for overtime hours:

A worked example on a holiday

The same ₱700 employee works 2 overtime hours on a regular holiday:

• Hourly rate: 700 ÷ 8 = ₱87.50
• Holiday overtime hourly rate: 87.50 × 200% × 130% = ₱227.50
• 2 overtime hours: 227.50 × 2 = ₱455

That single hour of holiday overtime costs more than three ordinary hours of work. Multiplied across a support team covering a US holiday that Manila does not observe, holiday overtime is one of the most under-budgeted line items in foreign-owned payrolls.

Overtime and night shift differential

When overtime hours fall between 10:00pm and 6:00am, the night shift differential applies on top, computed at 10% of the overtime hourly rate rather than the base hourly rate. At the ₱700 example: an overtime hour at night earns ₱109.38 plus ₱10.94, or ₱120.32. The full rules are in night shift differential pay.

Who is exempt from overtime pay

The Article 82 exclusions apply, and they are the same ones that govern holiday pay and NSD:

• Government employees, covered by civil service rules instead.
• Managerial employees, meeting all three tests: primary duty of managing the establishment or a department, customarily and regularly directing two or more employees, and real authority over hiring, firing, or similarly significant recommendations.
• Managerial staff, meeting the four-part policy-level test, capped at 20% of hours on non-managerial work.
• Field personnel, whose hours away from the principal place of business the employer cannot determine with reasonable certainty.
• Members of the employer’s family dependent on them for support, kasambahay, and workers paid by results such as pakyaw or piece-rate arrangements.

The “manager in name only” problem is the most common failure. A supervisor on an hourly schedule doing substantially the same work as their team does not meet the three-part managerial test, and back-pay awards for misclassified overtime are routine in DOLE and NLRC practice.

The COLA question

Whether cost-of-living allowance enters the overtime computation is genuinely unsettled at the edges. The 2022 DOLE-BWC Handbook stated that COLA is excluded from overtime computations; the 2023 edition removed that statement and is silent. Employers have historically excluded COLA, and the premium is computed on the basic hourly wage in prevailing practice, but if your pay structure includes a COLA component, confirm the treatment with your payroll provider and document it. The same caution applies to the night shift differential.

Rules that catch employers out

1. No offsetting. Undertime on one day cannot be deducted from overtime hours on another. Each day is computed on its own.
2. Overtime follows the day, not the schedule. Two extra hours tacked onto a holiday shift are holiday overtime even if the weekly total stays at 40.
3. Compressed weeks still owe daily overtime. A 4×10 schedule agreed with staff owes overtime on the extra 2 hours each day unless a formal compressed-workweek arrangement has been properly adopted, and even those are construed strictly.
4. Approval does not change the rate. Unauthorised overtime is still overtime if the employer benefits from the work; the remedy for unapproved work is management action, not paying straight time.

Our payroll calculator models employer cost including premium hours, and payroll processing applies the full formula table in one system. For the hiring context around these costs, see hiring employees in the Philippines and independent contractor vs employee.

This guide is general information, not legal advice on your specific facts. Book a consultation if you want a fixed-scope review of your overtime setup before your next pay cycle.