How to compute overtime pay in the Philippines (calculate, rates, and examples)

To compute overtime pay in the Philippines, divide your daily basic wage by 8 to get your hourly rate, multiply that hourly rate by the DOLE-prescribed multiplier for the type of day worked (regular day, rest day, special non-working day, regular holiday, or night shift), then multiply by the number of overtime hours. The Labor Code (Article 87) sets overtime as any work beyond eight hours per day, and Article 89 lets the employer require it only in specific circumstances.

• Overtime is any work beyond 8 hours in a day, paid on top of the regular daily wage.
• The base overtime rate on an ordinary working day is the hourly rate plus 25%.
• On a rest day, special non-working day, or regular holiday, the overtime add-on rises to 30% of the applicable hourly rate for that day.
• Night shift work (10:00 PM to 6:00 AM) carries an additional 10% night differential, stacked on the overtime computation.
• Managers, field personnel, and other workers listed in Article 82 of the Labor Code are not entitled to overtime pay.

Source: Labor Code of the Philippines, Articles 86 to 93, and the DOLE Bureau of Working Conditions Handbook on Workers’ Statutory Monetary Benefits (2024 edition, the most recent published handbook as of May 2026).

Article 87 of the Labor Code defines overtime as work performed beyond eight hours in a day. The eight-hour reference is the statutory normal hours of work in Article 83. Anything past the eighth hour, whether scheduled or unscheduled, triggers the overtime premium.

Three points often get missed:

• Short rest periods of less than 20 minutes are counted as compensable working time, so they count toward the eight hours.
• Meal periods of at least 60 minutes are not compensable and do not count.
• Work rendered on a rest day or holiday is not automatically overtime. It becomes overtime only once it goes beyond eight hours on that same day. The first eight hours carry their own premium (rest day premium, holiday premium), and the overtime add-on layers on top of that premium hourly rate.

Article 89 lists when an employer may require overtime: national emergency, urgent work on machines, prevention of loss or damage to perishables, when work is necessary to take advantage of favorable weather, or to complete work started before the eighth hour and whose continuation is needed to avoid serious obstruction to the business. Outside these grounds, overtime requires the employee’s consent.

The starting number for every overtime computation is the hourly rate. Take the daily basic wage and divide by 8.

Formula:

Hourly rate = Daily basic wage / 8

Worked example. An employee in NCR earning the current Wage Order NCR-25 minimum of PHP 645 per day has an hourly rate of:

PHP 645 / 8 = PHP 80.625 per hour

(Use the current wage order in your region. Wage orders update annually. The figure above is illustrative.)

On an ordinary working day, overtime carries a 25% premium on top of the regular hourly rate.

Formula:

OT pay = Hourly rate x 1.25 x number of OT hours

Worked example. The same employee at PHP 80.625 per hour works 2 hours of overtime on a Wednesday:

PHP 80.625 x 1.25 x 2 = PHP 201.56

That PHP 201.56 is the overtime pay only. It sits on top of the regular daily wage for the eight hours already worked.

Work performed on the employee’s scheduled rest day, or on a special non-working day, is paid at 130% of the regular hourly rate for the first eight hours. Overtime beyond those eight hours adds a 30% premium on the rest day hourly rate.

Formula:

OT pay on rest day = Hourly rate x 1.30 x 1.30 x number of OT hours

                   = Hourly rate x 1.69 x number of OT hours

Worked example. Two hours of overtime on a rest day for the same PHP 80.625 employee:

PHP 80.625 x 1.69 x 2 = PHP 272.51

If the rest day also happens to fall on a special non-working day, the first-eight-hours premium rises to 150% and the overtime stacking becomes 1.50 x 1.30.

Regular holidays (the 12 listed in Proclamation 727, including New Year’s Day, Araw ng Kagitingan, Maundy Thursday, Good Friday, Labor Day, Independence Day, National Heroes Day, Bonifacio Day, Christmas Day, and Rizal Day, plus Eidul Fitr and Eidul Adha) pay 200% of the daily wage for the first eight hours. Overtime adds a 30% premium on the holiday hourly rate.

Formula:

OT pay on regular holiday = Hourly rate x 2.00 x 1.30 x number of OT hours

                          = Hourly rate x 2.60 x number of OT hours

Worked example. Two hours of overtime on Independence Day:

PHP 80.625 x 2.60 x 2 = PHP 419.25

If the regular holiday also falls on the employee’s rest day, the first-eight-hours premium rises to 260% and the overtime stacking becomes 2.60 x 1.30, or an effective 3.38x multiplier per overtime hour.

Night shift differential is a separate, additive premium of 10% on the hourly rate for every hour worked between 10:00 PM and 6:00 AM, under Article 86 of the Labor Code. It applies whether or not the work is overtime. When overtime falls inside the night shift window, the 10% differential is added to the overtime computation, not multiplied through it.

Formula for overtime hours worked during the night shift window on an ordinary day:

OT pay (night) = (Hourly rate x 1.25 x OT hours) + (Hourly rate x 0.10 x OT hours)

              = Hourly rate x 1.35 x OT hours

Worked example. Two hours of overtime on an ordinary day, both falling between 10:00 PM and midnight:

PHP 80.625 x 1.35 x 2 = PHP 217.69

On a rest day or holiday, the night differential layers on the same way: take the applicable rest day or holiday OT multiplier, then add 0.10 x hourly rate per OT hour worked in the night window.

Stacking overtime, rest day, holiday, and night shift premiums by hand is where most payroll errors creep in. You can let payroll software handle it for you.

Most rank-and-file employees in the private sector are entitled to overtime pay under Article 87. Coverage applies whether the employee is paid daily, monthly, or by piece rate, and whether the role is in retail, services, manufacturing, BPO, or any other industry covered by the Labor Code.

Article 82 carves out the workers who are NOT entitled to overtime pay:

• Government employees (covered by Civil Service rules, not the Labor Code)
• Managerial employees, defined as those whose primary duty is to manage the establishment or a department, who customarily direct the work of at least two other employees, and who have the authority to hire, fire, or recommend such actions
• Officers and members of a managerial staff who meet the criteria above
• Field personnel who perform their work away from the principal place of business and whose actual hours of work cannot be determined with reasonable certainty
• Members of the employer’s family who depend on the employer for support
• Domestic helpers and persons in the personal service of another (now covered separately by the Kasambahay Law)
• Workers paid by results, including piece workers, where the output rate has been determined in accordance with DOLE regulations

The manager and supervisor question is the most litigated. The test is functional, not titular. If a “supervisor” spends the bulk of their time on routine work and does not have hire/fire authority, DOLE and the courts have ruled they are rank-and-file for overtime purposes regardless of the title on their contract.

Misclassification of supervisors and team leads is one of the most common findings in HR audits, and it quietly adds to the real cost of running HR.

Overtime pay is taxable income for most employees. Minimum wage earners are an exception. Under Republic Act 9504, statutory minimum wage earners are exempt from income tax on their basic wage, holiday pay, overtime pay, night shift differential, and hazard pay. Once an employee earns above the regional minimum wage, all of those premiums become subject to withholding tax under the regular graduated rates.

Layered premiums, statutory exemptions, and minimum wage rules add complexity to every payroll cycle. If managing all of this feels heavy, here is a guide on choosing the right payroll partner.

Overtime is one piece of a larger payroll picture that also covers statutory contributions, leave balances, holiday rules, and audit-ready reporting. If spreadsheets are slowing your team down, talk to us about how Sprout handles overtime and the rest of your payroll in one place. For the bigger picture, here is our guide on buying HR and payroll software.

The base formula is hourly rate multiplied by the DOLE overtime multiplier multiplied by the number of overtime hours. Hourly rate is the daily basic wage divided by 8. The multiplier is 1.25 on an ordinary day, 1.69 on a rest day or special non-working day, and 2.60 on a regular holiday. Night shift hours add 10% of the hourly rate per OT hour worked between 10 PM and 6 AM.

Overtime adds 25% to the regular hourly rate on an ordinary working day. On a rest day or special non-working day, the premium on top of the rest day hourly rate is 30%, which works out to an effective 69% above the ordinary hourly rate. On a regular holiday, the overtime premium on top of the holiday hourly rate is also 30%, for an effective 160% above the ordinary hourly rate.

If you are paid monthly, first convert to a daily rate. Most employers use the formula monthly basic salary x 12 divided by the applicable number of working days per year in your contract (typically 261 days for a 5-day workweek or 313 days for a 6-day workweek, depending on what your employment contract specifies). Divide that daily rate by 8 to get the hourly rate, then apply the overtime multiplier from the rate table above.

Yes. Any work rendered beyond the eighth hour is overtime, regardless of duration. Thirty minutes of work past the end of the regular shift counts as half an hour of overtime, paid at the applicable overtime multiplier. Some employers round overtime in 15-minute or 30-minute increments under company policy, but they cannot round in a way that pays less than the actual time worked.

DOLE follows Articles 87 to 90 of the Labor Code. Overtime is work beyond eight hours per day, paid at the prescribed multipliers. An employer can require overtime only on the grounds listed in Article 89 (national emergency, urgent machine repairs, perishable goods, favorable weather, or continuation of work started before the eighth hour). Outside those grounds, overtime needs the employee’s consent. Overtime pay cannot be waived by the employee, and any agreement to do so is void under Article 88.

It depends on the employee’s hourly rate and the type of day worked. For an NCR minimum-wage earner at PHP 645 per day (hourly rate of PHP 80.625), one hour of ordinary-day overtime pays PHP 100.78. One hour of rest day overtime pays PHP 136.26. One hour of regular holiday overtime pays PHP 209.63. Higher-paid employees scale linearly from the same multipliers.

Managers in the Article 82 sense are not entitled. A manager is defined functionally: primary duty is management, customarily directs the work of two or more employees, and has the authority to hire, fire, or recommend such actions. Supervisors and team leads who do not meet all three criteria are rank-and-file for overtime purposes, and they ARE entitled to overtime pay, even if their job title says “supervisor.”

The first eight hours are paid at 150% of the regular hourly rate. Overtime beyond those eight hours stacks the 30% overtime premium on the 150% rate. The resulting formula is hourly rate x 1.50 x 1.30 x OT hours, or an effective 1.95x per overtime hour.

Yes, unless one of the Article 89 grounds applies. National emergency, urgent machine repairs, prevention of loss of perishables, favorable weather, or continuation of work started before the eighth hour are the only grounds on which an employer can require overtime. Outside these, the employee can decline without penalty.