2.

3 COMPUTATION OF OVERTIME PAY

Article 83 of the Labor Code enunciates that the normal hours of work of any employee shall
not exceed eight (8) hours a day. This is exclusive of the one (1) hour lunch break. Article 85
provides that subject to such regulations as the Secretary of Labor may prescribe, it shall be
the duty of every employer to give his or her employees not less than sixty (60) minutes
time-off for their regular meals.
Employees who work more than the required number of hours are entitled to overtime pay.
Overtime premium refers to the excess payment over the regular rate. The following are the
different articles of the Labor Code relevant to normal hours and overtime work:

2.3.1 Overtime Premium on an Ordinary Day

Article 87 of the Labor Code provides that 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 25% thereof.

Example 5: The regular daily rate of Jennie is ₱340.00. If she works 11 hours on a regular
day, what is her total earnings?
Solution:
i. Compute the regular hourly rate.
Regular hourly rate = Daily wage rate ÷ 8 hours
= 340 ÷ 8 hours
= 42.50 per hour
ii. Compute the overtime premium.
Overtime Premium = 42.50 × 0.25 = 10.625
iii. Compute the overtime rate.
Overtime rate = Regular hourly rate + Overtime Premium
= 42.50 + 10.625
= 53.125 per hour
iv. Compute the overtime pay.
Overtime pay = Overtime rate
× Excess hours over the regular working hours
= 53.125 × 3 hours
= 159.375
 v. Compute the total pay for the day.
Total pay = Daily Wage Rate + Overtime pay
= 340 + 159.375
= 499.375
Conclusion: Jennie will receive a total of ₱499.375 for that day.

2.3.2 Overtime Premium on Rest Day and Special Day

Article 93 of the Labor Code provides that when an employee is made or permitted to work
on his or her scheduled rest day, he or she shall be paid an additional compensation of at
least 30% of his or her regular wage. An employee shall be entitled to such additional
compensation for work performed on Sunday only when it is his or her established rest day.
The employee is entitled the same additional compensation if he/she is made to work on a
special day like Maundy Thursday or Good Friday.
In addition, Article 87 of the Labor Code provides that 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.

Example 6: Rose’s regular rate is ₱340, which is ₱42.50 per hour. She was requested to
work on Saturday, her rest day. Compute for her total earnings if she worked
for a) 8 hours and b) 10 hours.
Solution: a) For 8 hours
i. Compute the hourly rate on rest day or special day.
Hourly rate = Regular hourly rate × 1.30
= 42.50 × 1.30
= 55.25 per hour
ii. Compute the total earnings.
Total earnings = Hourly rate × 8 hours
= 55.25 × 8
= 442
Conclusion: Rose’s total earnings is ₱442.
 b) For 10 hours
i. Compute the overtime rate.
Overtime rate = Hourly rate on rest day or special day × 1.30
= 55.25 × 1.30
= 71.825 per hour
ii. Compute the overtime pay.
Overtime pay = Overtime rate × 2 hours
= 71.825 × 2
= 143.65
iii. Compute the total earnings.
Total earnings = Earnings for the first 8 hours + Overtime pay
= 442 + 143.65
= 585.65
Conclusion: Rose’s total earnings is ₱585.65.

2.3.3 Overtime Premium on Rest Day which falls on a Special Day

Article 94 of the Labor Code provides that work on a rest day which falls on a special day
shall be paid 150% of the regular hourly rate.

Example 7: Zenaida earns the regular daily rate of ₱340, giving her an hourly rate of
₱42.50. She was requested by her boss to work on her rest day, which falls on
Maundy Thursday. Compute her total earnings if a) she worked for 8 hours,
and b) she worked for 10 hours.

Solution: a) For 8 hours

i. Compute the hourly rate on rest day which falls on a special day.
Hourly rate on rest day which falls on a special day
= Regular hourly rate × 1.50
= 42.50 × 1.50
= 63.75 per hour
 ii. Compute the total earnings.
Total earnings
= Hourly rate on rest day which falls on a special day
× 8 hours
= 63.75 × 8
= 510
Conclusion: Zenaida’s total earnings is ₱510.

b) For 10 hours
i. Compute the overtime rate.
Overtime rate = Hourly rate on rest day which falls on special day × 1.30
= 63.75 × 1.30
= 82.875 per hour
ii. Compute the overtime pay.
Overtime pay = Overtime rate × 2 hours
= 82.875 × 2
= 165.75
iii. Compute the total earnings.
Total earnings = Earnings for the first 8 hours + Overtime pay
= 510 + 165.75
= 675.75
Conclusion: Zenaida’s total earnings is ₱675.75.

2.3.4 Overtime Premium on a Regular Holiday

Article 94 of the Labor Code provides that work on a regular holiday shall be paid 200% of
regular hourly rate.

Example 8: Eastern earns the regular daily rate of ₱340 giving her an hourly rate of
₱42.50. She was requested by her boss to work on May 1, Labor Day. Computer
her total earnings if a) she worked for 8 hours, and b) she worked for 10 hours.
Solution: a) For 8 hours
i. Compute the hourly rate on regular holiday.
Hourly rate on regular holiday = Regular hourly rate × 2.00
= 42.50 × 2.00
= 85 per hour
ii. Compute the total earnings.
Total earnings = Hourly rate on regular holiday × 8 hours
= 85 × 8
= 680
Conclusion: Easter’s total earnings is ₱680.

b) For 10 hours
i. Compute the overtime rate.
Overtime rate = Hourly rate on regular holiday × 1.30
= 85 × 1.30
= 110.50 per hour
ii. Compute the overtime pay.
Overtime pay = Overtime rate × 2 hours
= 110.50 × 2
= 221
iii. Compute the total earnings.
Total earnings = Earnings for the first 8 hours + Overtime pay
= 680 + 221
= 901
Conclusion: Easter’s total earnings is ₱901.

2.3.5 Overtime Premium on a Rest Day which falls on a Regular Holiday

Article 94 of the Labor Code provides that work on a rest day which falls on a regular holiday
shall be paid 260% of regular hourly rate.

Example 9: Arnee earns the regular daily rate of P340.00 giving her an hourly rate of
P42.50. She was requested by her boss to work on December 30, Rizal Day,
which is a regular holiday. However, Rizal Day fell on Monday, which was
 Arnee’s rest day. Compute for her total earnings if a) she worked for 8 hours,
and b) she worked for 10 hours.

Solution: a) For 8 hours

i. Compute the hourly rate on rest day which falls on a regular holiday.
Hourly rate on rest day which falls on a regular holiday
= Regular hourly rate × 2.60
= 42.50 × 2.60
= 110.50 per hour
ii. Compute the total earnings.
Total earnings
= Hourly rate on a rest day which falls on a regular holiday × 8 hours
= 110.50 × 8
= 884
Conclusion: Arnee’s total earnings is ₱884.

b) For 10 hours
i. Compute the overtime rate.
Overtime rate = Hourly rate on a rest day which falls on regular holiday
× 1.30
= 110.50 × 1.30
= 143.65 per hour
ii. Compute the overtime pay.
Overtime pay = Overtime rate × 2 hours
= 143.65 × 2
= 287.30
iii. Compute the total earnings.
Total earnings = Earnings for the first 8 hours + Overtime pay
= 884 + 287.30
= 1171.30
Conclusion: Arnee’s total earnings is ₱1171.30.