How to Compute Overtime Pay in the Philippines

It's 11 PM and you're staring at a payslip draft. One of your baristas stayed three extra hours on Rizal Day, which also happened to be her rest day. You know she's owed more than regular overtime, but how much more? The rates stack, and you're not sure you're stacking them right.

Overtime computation in the Philippines is not a flat rate. The amount changes depending on when the extra hours happen, and getting it wrong means either overpaying (which hurts your cash flow) or underpaying (which violates the Labor Code). Here's how it actually works.

The base rule

Under Article 87 of the Labor Code, any work beyond eight hours in a day is considered overtime. The employee earns their regular hourly rate plus 25%.

Regular OT rate = hourly rate x 1.25

To get the hourly rate, divide the daily rate by 8.

Say a team member earns ₱500/day. Their hourly rate is ₱62.50. One hour of regular overtime pays ₱62.50 x 1.25 = ₱78.13.

That's the simplest scenario. It gets more interesting when rest days and holidays are involved.

How rates stack on rest days and holidays

The Labor Code assigns premium rates for rest days, special non-working holidays, and regular holidays. When overtime happens on those days, the premium applies first, and then the 30% overtime surcharge is added on top.

This is where most payroll errors happen. You don't pick the higher rate. You multiply them together.

Rest day overtime

The rest day premium is 130%. Overtime adds another 30% on top of that.

Rest day OT = hourly rate x 1.30 x 1.30 = hourly rate x 1.69

For the ₱500/day team member: ₱62.50 x 1.69 = ₱105.63 per overtime hour.

Special non-working holiday overtime

Special holidays (like Ninoy Aquino Day or Black Saturday) also carry a 130% base, with the same 30% overtime premium on top.

Special holiday OT = hourly rate x 1.30 x 1.30 = hourly rate x 1.69

The multiplier matches rest day OT, but the legal basis is different. One is triggered by the rest day, the other by the holiday type.

Regular holiday overtime

Regular holidays (Christmas Day, Independence Day, Rizal Day) carry the highest base rate at 200%. Overtime adds 30%.

Regular holiday OT = hourly rate x 2.00 x 1.30 = hourly rate x 2.60

For the ₱500/day team member: ₱62.50 x 2.60 = ₱162.50 per overtime hour.

Rest day + special holiday overtime

When a special holiday falls on a rest day, the base rate is 150%. Overtime adds 30%.

Rest day + special holiday OT = hourly rate x 1.50 x 1.30 = hourly rate x 1.95

For the ₱500/day team member: ₱62.50 x 1.95 = ₱121.88 per overtime hour.

Rest day + regular holiday overtime

This is the highest overtime rate in the Labor Code. A regular holiday on a rest day pays 260% for the first eight hours, and overtime adds 30% on top.

Rest day + regular holiday OT = hourly rate x 2.60 x 1.30 = hourly rate x 3.38

For the ₱500/day team member: ₱62.50 x 3.38 = ₱211.25 per overtime hour.

Quick reference table

Scenario	OT Multiplier
Regular workday	1.25x
Rest day	1.69x
Special non-working holiday	1.69x
Regular holiday	2.60x
Rest day + special holiday	1.95x
Rest day + regular holiday	3.38x

Full example

Pedro earns ₱500/day. He works a regular shift on Independence Day (a regular holiday), then stays 3 extra hours.

Regular pay for the day: ₱500 x 2.00 = ₱1,000 Overtime rate: ₱62.50 x 2.60 = ₱162.50/hour Overtime pay: ₱162.50 x 3 = ₱487.50 Total for the day: ₱1,000 + ₱487.50 = ₱1,487.50

How Timekeep handles overtime

Timekeep computes all overtime rates automatically based on actual clock-in and clock-out times, the team member's assigned schedule, and the holiday calendar. It identifies the type of day, applies the correct stacking multiplier, and shows the full breakdown in payroll. You review the numbers and approve.

No more midnight math

That barista who stayed late on Rizal Day? With the right system, her overtime is computed before you finish your morning coffee. No stacking errors, no second-guessing multipliers.

Try it free for 30 days at timekeep.ph. No credit card required.