The Philippines recognizes the importance of regulating overtime to prevent exploitation and promote the well-being of workers. The Philippine overtime laws set forth provisions concerning the maximum number of hours an employee can work in a day or week, the overtime rate pay, and the conditions under which overtime may be required or voluntary.
This article provides a comprehensive overview of overtime laws in the Philippines, including their legal framework, provisions, and implications for both employers and employees.
This article covers:
- Philippines Overtime Rates
- Overtime Entitlement in the Philippines
- Overtime Exceptions and Exemptions in the Philippines
- Calculating Overtime Pay for Rest Days, Special Days, and Holidays
- Compensatory Time in the Philippines
- Emergency Overtime in the Philippines
- Penalties for Unpaid Overtime in the Philippines
- Statute of Limitations for Unpaid Overtime in the Philipines
- Legal Cases Relating to Overtime Compensation in the Philippines
Philippines Overtime Rates
Overtime rates in the Philippines are governed by Presidential Decree No. 442 or the Labor Code of the Philippines, which outlines provisions regarding overtime work, including the computation of overtime pay and the conditions under which it applies.
According to the Labor Code, employees are entitled to additional compensation for work performed beyond the regular eight hours of work in a day. The rate for overtime work is computed as an additional percentage of the employee’s regular rate. The overtime rate is generally computed as follows:
- For work performed on regular days: An additional 25% of the regular daily wage.
- For work performed on rest days, special days, or regular holidays: An additional 30% of the regular daily wage.
The standard work hours in the Philippines are eight hours a day, not exceeding 48 hours a week. Any work performed beyond these regular hours is considered overtime.
Overtime Entitlement in the Philippines
Eligibility of employees for overtime pay in the Philippines is determined by the provisions outlined in the Labor Code. Most non-exempt employees, including rank-and-file workers, are entitled to overtime pay for work performed beyond the standard eight hours per day or 48 hours per week.
Employees covered by a Collective Bargaining Agreement (CBA) negotiated between their employers and labor unions may be entitled to overtime pay based on the terms and conditions specified in the agreement.
Furthermore, some salaried employees may also be eligible for overtime pay if they do not fall under exemptions outlined in the Labor Code.
Overtime Exceptions and Exemptions in the Philippines
In the Philippines, these exceptions and exemptions define certain categories of employees who may be exempt from receiving overtime pay or who may have different rules applied to their overtime compensation. This includes:
- Government employees: Individuals employed by the National Government or any of its political divisions are exempt from overtime pay, including those serving in government-owned and/or controlled corporations with original charters or established under special legislation. Overtime hours worked by government employees are compensated through compensatory time off (CTO).
- Managerial employees: The following three criteria need to be satisfied for managerial employees to be exempt from overtime pay – they should have the primary responsibility of managing their establishment or a specific department within it; they should routinely supervise the work of two or more employees; and they should possess the authority to hire or terminate employees of lower rank (or their recommendations regarding hiring, firing, promoting, or any other changes in staff employment status should hold significant weight).
- Managerial staff: Officers or members of a managerial team may be exempt from overtime pay, provided their primary duties are directly related to the employer’s managerial policies; they consistently exercise discretion and independent judgment; they aid managerial employees in overseeing the establishment; they undertake general supervision, special assignments, and tasks; and they spend no more than 20% of their weekly working hours on activities unrelated to their designated responsibilities.
- Kasambahay and persons in the personal service of another: Individuals engaged in domestic labor within an employment framework, such as household helpers, caretakers, cooks, gardeners, or laundry attendants may be exempt. This excludes those who perform domestic tasks sporadically or occasionally, rather than on a regular occupational basis.
- Field personnel: Employees, including those hired on a task or contract basis, purely commission basis, or receiving a fixed compensation regardless of the time invested, whose activities and performance are not directly supervised by the employer may be considered exempt from overtime pay.
Calculating Overtime Pay for Rest Days, Special Days, and Holidays
Rest Days
Employers must provide a rest period of not less than 24 consecutive hours after every six consecutive normal work days. An employee who is made or permitted to work on their scheduled rest day must be paid with an additional compensation of at least 30% of their regular wage.
If an employee’s work nature has no scheduled regular work days and rest days, the employee must be paid an additional compensation of at least 30% of their regular wage for work performed on Sundays and holidays.
If an employee’s scheduled rest day falls on a holiday and they are required to work, the employee is entitled to an additional compensation of at least 50% of their regular wage.
Special Days
In the Philippines, special holidays refer to non-working days declared by law or proclamation that are distinct from regular holidays. During special days, employees who are required or permitted to work are entitled to overtime pay of not less than 30% of their regular wage. Further, for any hours worked exceeding eight hours conducted on special holidays or rest days not falling on regular holidays, the employee should receive extra compensation for overtime equivalent to their rate for the initial eight hours of work, plus at least 30% of that amount.
Holidays
Any employee who is made or permitted to work on any regular holiday, not exceeding eight hours, is entitled to at least 200% of his regular daily wage. If the holiday falls on the scheduled rest day of an employee, the employee is entitled to an additional premium pay of at least 30% of their 200% wage. Regular holidays in the Philippines are the following days:
- New Year’s Day (January 1st)
- Maundy Thursday (Tentative Date)
- Good Friday (Tentative Date)
- Day of Valor (April 9th)
- Eid Al Fitr (Tentative Date)
- Labor Day (May 1st)
- Independence Day (June 12th)
- National Heroes Day (August 26th)
- Bonifacio Day (November 30th)
- Christmas Day (December 25th)
- Rizal Day (December 30)
Compensatory Time in the Philippines
Administrative Order No. 103, issued by the Civil Service Commission (CSC), allows government agencies to implement a Compensatory Time-Off (CTO) scheme as an alternative to the payment of overtime compensation, subject to certain conditions and limitations.
However, it is important to note that the implementation of CTO is subject to the approval of the head of the agency and should follow the guidelines outlined in AO No. 103. It is not a universal practice across all government offices and is subject to specific conditions and limitations outlined in the order.
Emergency Overtime in the Philippines
In the Philippines, emergency overtime work may be required of any employee by an employer due to the following circumstances:
- During times of war, or when a national or local emergency has been declared by the National Assembly or the Chief Executive;
- When necessary to prevent loss of life, property, or imminent danger to public safety due to emergencies such as serious accidents, fires, floods, typhoons, earthquakes, epidemics, or other disasters;
- In cases where urgent work on machines, installations, or equipment is essential to avoid significant loss or damage to the employer or other similar causes;
- When work is needed to prevent loss or damage to perishable goods; and
- When the completion or continuation of work initiated before the eighth hour is crucial to prevent obstruction or harm to the employer’s business or operations.
Any employee required to render overtime work under these circumstances is entitled to additional compensation.
Penalties for Unpaid Overtime in the Philippines
Employers who fail to properly compensate their employees for overtime work may be subject to penalties and liabilities under the Labor Code. Any person who violates provisions of the Labor Code shall be punished by a fine of not less than PHP 1,000 no more than PHP 10,000 and/or imprisonment at the discretion of the court.
Statute of Limitations for Unpaid Overtime in the Philippines
Under the Labor Code, Article 291 states that the statute of limitations for unpaid overtime claims in the Philippines is three years. This means that employees have three years to file a claim or request assistance with the Philippine Department of Labor and Employment (DOLE).
Legal Cases Relating to Overtime Compensation in the Philippines
Baked Goods Company Agrees to Pay Employees Over PHP 193,000
In the case of Marby Food Ventures Corporation et al. v. Roland dela Cruz et al., the domestic baked goods company in the Philippines faced legal action from its drivers and salesmen for underpayment of wages, overtime pay, and other benefits. The employees alleged they were not receiving proper compensation, including their 13th month pay, holiday pay, and service incentive leave pay. The National Labor Relations Commission (NLRC) partially ruled in favor of the employees, ordering the company to pay wage differentials, 13th month pay, and attorneys’ fees.
Court Decision: The Court of Appeals (CA) upheld the NLRC decision, ordering Marby Food Ventures Corporation to pay the employees a total of PHP 193,392.28 in back wages, wage differentials, and damages. The court also mandated reimbursement for illegal deductions made from the employees’ salaries. Furthermore, the CA affirmed that the employees were entitled to overtime pay, holiday pay, and service incentive leave pay as regular employees of the company.
Key lessons from this case:
- Employers must ensure the proper classification of employees to avoid labor law violations.
- Employers must ensure compliance with labor laws regarding overtime pay, holiday pay, and other benefits owed to employees.
- Deductions from employees’ salaries must be authorized by law or with the written consent of employees.
- Employers should maintain accurate records of employees’ work hours and payments to avoid disputes over unpaid benefits.
Learn about Labor Laws in the Philippines through our detailed guide.
Important Cautionary Note
This content is provided for informational purposes only. While we make every effort to ensure the accuracy of the information presented, we cannot guarantee that it is free of errors or omissions. Users are advised to independently verify any critical information and should not solely rely on the content provided.
