Overtime Calculation in the Philippines | Calculator Included

What HR Professionals Need to Understand Upfront

In the fast-paced rhythm of Filipino workplaces, where 9-to-5 often stretches beyond, overtime pay isn't just a formality. It’s a legal obligation and a cultural expectation. From night shifts in Pasay call centers to weekend crews in Davao warehouses, overtime is part of everyday life. The Philippine Labor Code (Article 87) outlines clear rules for paying employees who go beyond the standard eight hours a day. But knowing the law is only half the battle, HR professionals must also apply it correctly in payroll systems, approvals, and reporting.

Here’s what you need to know: employees who render overtime should be compensated based on specific rates that vary by day and occasion. A regular weekday calls for a 125% hourly rate. But if that OT falls on a Sunday or a declared holiday, expect the rate to rise to 260% or more. HR’s role is to ensure this computation is accurate, timely, and compliant. That’s exactly what we’re unpacking in this guide law, logic, and local context included.

Getting Familiar with Overtime Basics in the Philippines

What Qualifies as Overtime in the Local Work Setting

Overtime isn’t just “extra hours.” Legally, it refers to any work performed beyond eight hours a day, according to Article 87 of the Labor Code. This law aims to protect workers' rights, especially those who might otherwise be pressured to stretch their shifts without fair pay.

It’s common in places like Quezon City or Cebu for employees to volunteer for OT, especially in retail or logistics, but remember, OT must be authorized by the employer. So even if someone stays late willingly, it doesn’t guarantee OT pay unless management signs off.

Not everyone qualifies. Managerial staff, field personnel, and freelancers typically don’t get OT, unless their contracts specifically say so. On the other hand, rank-and-file workers, clerical staff, and contractuals are entitled to OT pay, and skipping it can land employers in hot water.

Also, let’s be clear: lunch breaks and rest periods don’t count toward the eight hours. So, working 9 AM to 6 PM with a one-hour break means no OT unless work goes beyond 6 PM.

Local Breakdown of Overtime Pay Rates (2025 Edition)

Let’s put some numbers to it. The Department of Labor and Employment (DOLE) sets out specific multipliers for different situations. Understanding them is key to getting the payroll right.

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For example, if your BGC-based team works two hours past 6 PM on a normal weekday, each hour is paid at 1.25x the regular hourly rate. But if they work on a declared special non-working holiday, like Ninoy Aquino Day, the multiplier goes up to 1.69x. A regular holiday like Bonifacio Day? That’s 2.6x. And if someone works on a regular holiday that’s also their rest day, you’re looking at 3.38x their hourly pay.

So yes, working on a holiday Sunday in the Philippines is both financially rewarding for the employee and a hefty payroll item for the employer. These multipliers aren’t just guidelines that they’re non-negotiable rates.

How to Calculate Overtime in the philippines

Understanding the Formula in Real-World Terms

Now, the math behind OT isn't rocket science, but it does require precision. HR teams across Makati and beyond rely on this formula:

Overtime Pay = Hourly Rate × OT Multiplier × Number of OT Hours

To get that hourly rate, you divide the monthly salary by 26 working days, then divide again by 8 hours. This accounts for government guidelines that treat 26 as the average number of working days in a month.

For example, if someone earns ₱30,000/month, the computation looks like this:

• Daily Rate = ₱30,000 ÷ 26 = ₱1,153.85
• Hourly Rate = ₱1,153.85 ÷ 8 = ₱144.23

That ₱144.23 becomes the foundation for any OT pay they’ll receive.

Example: Weekday Overtime at a Metro Manila Office

Imagine Ana, a payroll clerk based in Ortigas, stays an extra two hours to finish month-end reports. Her salary is ₱30,000 monthly.

Her hourly rate is ₱144.23. Multiply that by 1.25 (for weekday OT), then multiply by 2 hours:

₱144.23 × 1.25 × 2 = ₱360.58

This is what Ana should receive as OT pay for that day. While the amount may seem small in isolation, over a pay cycle—and across multiple employees—these figures add up quickly.

Example: Rest Day and Holiday Overtime for Shift Workers

Now let’s talk about Dante, a warehouse assistant in Laguna. He’s called in on a Sunday that’s also a regular holiday, and he works a 3-hour shift.

Using the same hourly rate of ₱144.23, here’s how the math works:

₱144.23 × 3.38 × 3 hours = ₱1,460.15

That’s ₱1,460.15 in OT pay just for those 3 hours. This is common in businesses like logistics, customer service, and food production, where operations don’t stop for weekends or holidays.

Scenarios That HR Professionals Frequently Handle

Warehouse Delays and Special Day Overtime

Picture this: It’s a Saturday in Cavite. Your warehouse team is finishing up a delivery schedule. But a truck arrives late, and one of the workers stays back for two more hours. Since it’s a special non-working day, the overtime must be calculated at 1.69x.

Most HR professionals use automated time-tracking software that logs clock-in and clock-out details. In this case, the system detects the extended shift, applies the appropriate multiplier, and prompts payroll to adjust the employee’s payslip.

It’s small moments like these where digital tools help prevent manual errors and reduce the risk of non-compliance.

Handling Unauthorized Overtime in a Professional Manner

Another common situation is unauthorized OT. Maybe an employee in Taguig decides to extend their hours, hoping to get extra pay, even though their manager didn’t approve it.

Here’s where HR must step in. Technically, under labor laws, overtime must be authorized. But if the employer knew and didn’t object, they may still be liable. That’s why companies must clearly define OT procedures.

Best practice? Implement a formal OT request process, digital if possible. Encourage department heads to monitor time logs actively. And educate employees that OT needs to be pre-approved to be valid.

Staying on the Right Side of Labor Compliance

Practical Reminders from DOLE for HR Teams

Compliance is about more than avoiding penalties. It reflects how seriously a company takes its responsibilities to its people.

DOLE inspectors won’t hesitate to request documentation time logs, OT requests, and payroll records. That’s why HR must ensure all records are complete, updated, and stored securely.

Some core practices to follow include:

• Using biometric or app-based timekeeping tools to avoid disputes.
• Making sure payroll systems reflect actual OT worked, not approximations.
• Keeping written approvals for all overtime rendered.
• Outlining clear OT provisions in employee contracts and handbooks.

With these safeguards in place, your organization is less likely to run into legal trouble or employee dissatisfaction.

Why Automating Overtime Is No Longer Optional

If your company is still doing OT computations on Excel sheets, now might be the time to upgrade. Especially for medium to large teams, the risk of manual errors grows fast.

Modern HR platforms like peopleHum allow you to:

• Automatically apply the correct multipliers based on date and shift
• Integrate with attendance and approval systems
• Generate audit-ready reports with a single click

The result? Less stress for your HR team, faster processing, and improved trust among employees.

The All-in-One Overtime Reference for HR

Your Cheat Sheet for Quick Payroll Checks

When things get hectic—especially around cutoff periods—this quick guide will help you stay on track:

• Weekday Overtime = 1.25x the hourly rate
• Rest Day or Special Holiday = 1.69x
• Regular Holiday = 2.60x
• Holiday + Rest Day = 3.38x

Formula to remember:

Hourly Rate = Monthly Salary ÷ 26 ÷ 8

OT Pay = Hourly Rate × Multiplier × Hours Worked

Also, revisit your internal checklist:

• Is your OT policy up-to-date and distributed?
• Are manager approvals consistent and logged?
• Is your timekeeping system reliable and auditable?
• Does your payroll platform support DOLE compliance?

If you checked yes to all, you’re in good shape.

Wrapping It Up: Why This Isn’t Just About Numbers

Overtime is more than extra hours and multipliers. In the Philippine work culture, it’s about respect for effort, fair compensation, and trust between employer and employee.

For HR leaders, it’s a balancing act. You need to stay compliant, protect the company’s interests, and ensure employees are recognized for their hard work. By understanding the law, applying the correct formulas, and using technology to streamline the process, you build a workplace that’s not just efficient, but also fair and future-ready.

As the way we work continues to evolve with hybrid schedules, remote teams, and flexible hours ,HR’s role in overtime management becomes even more vital.

Want to Take the Manual Work Out of Overtime?

From OT approvals to payroll integration, peopleHum offers a smart, customizable platform that aligns with Philippine labor regulations. It helps HR teams simplify calculations, reduce errors, and stay compliant effortlessly.

Book a free demo now and explore how easy it is to manage overtime the right way.

FAQ's

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FAQs

1. What is the overtime pay rate after 6 PM in the Philippines?

If an employee works beyond 6 PM on a regular workday, overtime is usually paid at 1.25 times the regular hourly rate.

2. How is pay computed on special non-working holidays like Ninoy Aquino Day?

Employees working on a special non-working holiday typically receive 1.69x their regular hourly rate.

3. What is the pay multiplier for working on regular holidays like Bonifacio Day?

Employees are entitled to 2.6x their regular hourly rate if they work on a declared regular holiday.

4. How much is paid if an employee works on a regular holiday that is also their rest day?

The pay goes up to 3.38x the regular hourly rate for work done on a regular holiday that also falls on their scheduled rest day.

5. Are these pay rates mandated by Philippine labor law?

Yes, these multipliers align with guidelines from the Philippine Department of Labor and Employment (DOLE), though specific policies may vary by company.

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