HR’s Guide to Working Hours and Overtime Pay Rules in the Philippines

Categories: Advice for Doing Business in the Philippines, Advice for HR Professionals, Infographics

Overtime work, while often taxing, is sometimes unavoidable. Unexpected events may crop up now and then, requiring you and your staff to remain at work even after working hours.

That said, overtime labor in the Philippines, or keeping employees for longer than the standard 40 hours per week, shouldn’t happen a lot. When it does, you must compensate them according to the overtime pay rules stipulated by the Department of Labor and Employment’s (DOLE) Conditions of Employment. Overtime work is an essential consideration. However, determining overtime pay in the Philippines can be complicated, with various factors to consider. Manila Recruitment‘s guide below covers the basics of DOLE’s policies on working hours and overtime pay.

Understanding working hours and overtime pay rules can be tricky. Here's a quick guide to help you nail them down!

Working Hours

As per Article 83 of the Labor Code, regular working hours in the Philippines should not exceed eight hours a day. “Working hours” include the time employees spend on duty or are permitted to work at the prescribed workplace. Short rest periods during work time also count as hours worked.

Employers must provide at least 60 minutes of break for regular meals, which don’t count as hours worked. This means that a workday of nine hours includes eight work hours and an hour for a meal break.

These provisions cover all for-profit and nonprofit establishments and undertakings, except for:

  • Government employees
  • Managerial staff
  • Field personnel
  • The employer’s family members dependent on them for support
  • Domestic helpers
  • People providing personal service
  • Workers paid by results as determined by the Secretary of Labor

Overtime Work and Night Shift Differential

Work done at night compensates differently from work during the day. Night shift work is subject to a night shift differential of not less than 10% of the employee’s regular wage for each hour of work performed between 10 PM and 6 AM.

According to the Philippine labor law on overtime, particularly Article 87, work performed beyond the daily eight-hour standard is subject to additional compensation of at least 25% of the regular wage. Furthermore, overtime work during a holiday or rest day is subject to an extra 30%.

When workers fail to meet their standard work hours (undertime), the employer can’t offset the time lost with overtime work on a different day. Moreover, the employer can’t deduct days spent on leave from the employee’s overtime compensation. 

Lastly, your company may sometimes need emergency overtime, subject to overtime pay. As per the rules on overtime in the Philippine Labor Code, these instances may occur due to any of the following reasons:

  • When the country is at war or undergoes national or local emergencies
  • When necessary to prevent deaths, property damage, or public danger
  • When machines and equipment require urgent work to prevent loss or damage
  • When necessary to prevent loss or damage to perishable goods
  • When necessary to prevent damage to the business or its operations

Weekly Rest Days

Article 91 states that all employers must give their staff a rest day of at least 24 hours for every six consecutive regular workdays. Employers must compensate employees required or permitted to work during rest days with an additional 30% of their regular wage. Moreover, employers only need to provide additional compensation on Sundays if it’s the worker’s scheduled rest day.

If employees don’t have regular workdays, hence no specific rest days, they shall receive an additional 30% of their regular wage for work during Sundays and holidays.

The employers must follow applicable employment contracts, such as collective bargaining agreements, stipulating greater compensations for rest days, holidays, and leaves than the Labor Code provides.

Holidays and Leaves

Holidays are special days when workers can enjoy time off work outside their typical rest days. The Official Gazette lists the following as holidays:

  • New Year’s Day
  • Maundy Thursday
  • Good Friday
  • April 9 – Day of Valor
  • June 12 – Independence Day
  • November 30 – Bonifacio Day
  • December 25Christmas Day
  • December 30 – Rizal Day
  • General Election Day, as designated by law

Employers requiring workers to report on holidays must pay twice the workers’ regular wages, except for retail and service establishments with fewer than 10 workers.

Employers must also provide five days of paid service incentive leaves for workers who have rendered at least one year of service. However, this provision doesn’t apply to all workers, particularly to those who:

  • Are already enjoying the benefit of paid incentive leaves
  • Are receiving paid vacation leaves of at least five days
  • Are employed in establishments with less than 10 employees or exempted by the Secretary of Labor of Employment, with consideration to their financial conditions

Employers must also pay at least 30% of the regular wage for holiday work. Meanwhile, workers shall receive additional compensation of at least 50% of their regular wage if they work during holidays falling on rest days.

6 Actionable Ways to Avoid Overworking Your Employees

Avoiding overwork is critical for a healthy and productive workforce, as it prevents fatigue, depression, and various health risks, among other problems. To nurture a robust work-life balance among your staff, here are some proactive steps you can take.

Promote a focus on productivity, not hours

Time spent working is generally an ineffective metric for performance. Working for eight hours straight doesn’t necessarily indicate productivity. 

So, overhaul your KPIs by gauging your employees’ productivity based on output quality and if they meet the deadline instead of focusing on how long it takes to accomplish. Doing so can help train their time management skills and prevent burnout.

Encourage socialization

Your employees dedicate a significant portion of their daily lives working, so the workplace should be a place where they can nurture good working relationships. These relationships are integral in developing a sense of teamwork and loyalty to the company. 

Consider starting after-work gatherings such as sports, social clubs, or the usual trip to a café or bar. You can also establish communication channels for non-work conversations to encourage socialization, especially for remote employees.

Impose a policy on communication hours beyond work

Research shows that after-work correspondence furthers emotional exhaustion, impacting work-life balance. Promote a healthy workplace by setting up a policy for communication hours. For instance, you can discourage employees from calling or sending messages after work hours and during weekends, holidays, and leaves.

Allow employees to set boundaries

Some employees need uninterrupted work time to remain productive, so allow them to set personal boundaries. Doing so gives them control of their work environment and can help improve their workload and time management skills. For instance, managers can delegate work when needed to avoid overworking team members or make attendance at social gatherings optional.

Encourage management to lead by example

As a workplace leader, it’s important to walk the talk. Observing habits for healthy work-life balance (starting and ending your workday on time, taking short breaks throughout the workday, etc.) can encourage your employees to do the same. 

Conduct regular check-ins

Regularly conducting check-ins will help build a culture of connection and openness about mental wellness. You can use the insights you’ve gathered from these check-ins to inform what measures to take to create a better work-life balance in the company.

Protect Your Employees’ Well-Being Through Fair Compensation

Like cells that comprise the body, your employees are the company’s building blocks. So, it’s crucial to express how much you value them. An effective way to do so is to discourage overworking, which can negatively impact their physical, mental, and social well-being.

DOLE’s provisions establish a foundation to help your employees foster work-life balance. However, you can elaborate on it by creating a flexible workplace where they can be productive without unnecessary pressure.

Check out and read through the Manila Recruitment blog to learn more tips on how you can help create a harmonious working environment for your employees. Need recruitment solutions for your organization? Contact one of the top recruitment agencies in the Philippines to find quality candidates that will take your business to new heights. 

Frequently Asked Questions

Is overtime mandatory in the Philippines?

Overtime is not mandatory but is compensated when worked.

Who is exempted from overtime pay in the Philippines?

Per Article 82 of the Labor Code, managers and field personnel are exempt from overtime pay. Other exempted employees include:

  • Government employees
  • Domestic helpers
  • Workers hired for personal services
  • Members of the employer’s family 
  • Workers who receive results-based compensation 

Is working for more than 12 hours a day in the Philippines legal?

Employees must only work up to eight hours daily, but work hours can vary based on tasks that the employer sets. Employees who exceed this limit for authorized reasons are entitled to overtime pay.

How is overtime pay calculated in the Philippines?

Overtime pay is calculated based on the employee’s regular rate plus additional compensation for specific conditions:

  • Regular work day

For overtime pay on a regular day, compute first the employee’s hourly rate:
Hourly rate = Daily basic wage / 8 hours

Then, calculate total overtime pay using this formula:
Total overtime pay = Hourly rate x 125% (1.25) x Number of overtime hours

Say an employee’s daily rate is ₱1,200, and they rendered two hours of overtime. If their regular hourly rate is ₱150, their overtime pay would be ₱375.

  • Rest days and special non-working holidays

To calculate overtime pay on rest days and special non-working holidays, use this formula:
Total overtime pay = Hourly rate x 130% (1.3) x 130% (1.3) x Number of hours worked

However, if the rest day falls on a special non-working holiday, the computation should be as follows:
Total overtime pay = Hourly rate x 150% (1.5) x 130% (1.3) x Number of hours worked

Using the earlier example, if the regular hourly rate is ₱150 and the employee rendered two hours of overtime, their overtime pay on a rest day or special non-working holiday is ₱507. However, if they worked on a rest day that’s also a special non-working holiday, they should receive ₱585 on top of their regular wage.

  • Regular holidays

If an employee worked overtime on a regular holiday, compute their pay as follows:
Total overtime pay = Hourly rate x 200% (2) x 130% (1.3) x 130% (1.3) x Number of hours worked

With a ₱150 hourly rate and two hours of overtime work, the employee’s pay on a regular holiday is ₱1,014.

  • OT with night differential

Employees working between 10:00 PM and 6:00 AM are entitled to a night shift differential of at least 10% of their regular hourly wage. 

You can compute overtime pay using the following:

Total overtime pay = Hourly rate x 125% (1.25) x 110% (1.1) x Number of overtime hours

With a ₱150 hourly rate and two hours of overtime work, your employee’s overtime pay is ₱412.5‬.

How much is one hour of overtime in the Philippines?

In the Philippines, employers are required to compensate employees for one hour of overtime at the regular wage plus an additional 25% of the regular hourly rate.

Is 30 minutes considered overtime in the Philippines?

The Labor Code only specifies that employers should compensate employees for working beyond regular hours for authorized purposes. Employers can decide whether to count 30 minutes or full hours beyond regular work hours as eligible for proper compensation.

DISCLAIMER: The information in this webpage / blog / article / infographic we have published and the associated commentary are presented as general information and is not a substitute for obtaining legal advice in this area. Manila Recruitment does not accept liability for any action taken based on the information presented or for any loss suffered as a result of reliance on the information provided.