Your barista asks for overtime pay after staying an extra two hours on a holiday. You know you owe them something, but how much exactly? Is it 125%? 200%? Does the rest day matter? You open Google, and three different blog posts give you three different numbers.

The Philippine Labor Code is a thick document. Most of it covers situations that won't apply to a team of 10 or 15 people. But some parts kick in the day you hire your first staff member. Here are the essentials that affect your payroll directly.

Minimum wage

Minimum wage in the Philippines is not a single national rate. It varies by region and is set by Regional Tripartite Wages and Productivity Boards. Metro Manila has the highest rate. Provinces have lower rates, sometimes with separate tiers for agricultural and non-agricultural workers.

Check the current rate for your region at the DOLE or NWPC website. When a new wage order is issued, it takes effect on the date specified with no grace period.

Standard work hours

The standard workday is 8 hours. The standard workweek is 48 hours. Anything beyond 8 hours in a day counts as overtime.

Meal breaks of at least 60 minutes are not compensable and don't count toward the 8 hours. But if your staff must remain on the premises and available during their break, that break becomes compensable.

Overtime rules

Overtime is compensated at 125% of the hourly rate on ordinary days. The premium changes depending on the day type:

Day type	Overtime rate
Ordinary day	125% of hourly rate
Rest day or special non-working day	130% of the applicable daily rate
Regular holiday	130% of the holiday rate (already 200%)

These rates stack. Night work (10 PM to 6 AM) adds a 10% night differential premium on top. The combinations get complex, which is why computing overtime by hand is one of the most common sources of payroll errors.

Rest day requirements

Every staff member is entitled to at least one rest day for every six consecutive working days. The employer determines which day.

Work performed on a rest day is compensated at 130% of the daily rate. Overtime on a rest day applies the overtime premium to the rest day rate, not the regular rate.

Holiday pay

The Philippines has two categories of holidays, and they pay differently.

Regular holidays. If the person does not work, they still receive 100% of their daily rate, provided they were present or on approved leave the day before. If they work, the rate is 200%.

Special non-working days. If the person does not work, no pay is required under the "no work, no pay" principle, unless your company policy is more generous. If they work, the rate is 130%.

When holidays fall on rest days, the rates increase further. The combinations create a matrix that's easy to get wrong by hand. A regular holiday on a rest day with overtime rendered? That's 338% of the hourly rate.

Timekeep staff list showing team member profiles and positions

13th month pay

All rank-and-file staff who have worked at least one month during the calendar year are entitled to 13th month pay. The formula is straightforward: total basic salary earned during the year divided by 12. The deadline for payment is December 24.

Resigned, terminated, and separated staff are entitled to pro-rated 13th month pay. This is easy to forget during final pay computation, but it's mandatory. The first ₱90,000 of 13th month pay is tax-exempt.

Types of employment

Regular (permanent). Someone who has completed a probationary period, or who performs tasks necessary and desirable to the usual business. Regular staff have the strongest protection against termination.

Probationary. Hired on a trial basis for up to six months. At the end, you either regularize or terminate with a valid reason. If they continue working past six months without formal termination, they're considered regular by operation of law.

Project-based. Hired for a specific project with a defined scope and end date. Report the termination to DOLE within 30 days of completion.

Fixed-term. Hired for a specific duration. Courts scrutinize these contracts to ensure they're not used to avoid regularization.

Termination rules

You cannot terminate someone without cause. The Labor Code recognizes two categories.

Just causes (the person's fault): serious misconduct, willful disobedience, gross neglect of duty, fraud, commission of a crime. No separation pay is required, but due process is mandatory, meaning two written notices and a hearing.

Authorized causes (business reasons): redundancy, retrenchment, closure, disease. Separation pay is required, typically half a month to one month per year of service. Due process means a 30-day written notice to both the person and DOLE.

Terminating without proper cause or due process exposes you to an illegal dismissal complaint with consequences including reinstatement and back wages.

How Timekeep handles the computation side

Timekeep applies the correct overtime multiplier, holiday premium, and rest day adjustment based on actual attendance records. It tracks 13th month pay accrual throughout the year and deducts government contributions in the right order before computing tax. The rules from the Labor Code become computation rules in the system, so you're reviewing numbers instead of building them from scratch each cutoff.

Focus on the business, not the formulas

That barista's overtime on a holiday? It's a specific rate in a specific table. Getting it right matters for compliance and for trust. But looking it up and computing it every cutoff is time you could spend on your actual business.

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