How to Compute for Salaries, Wages and Benefits Part 2: Overtime Pay
In a labor code based on the principle of an 8-hour working period, an overtime pay would just mean to refer to the additional compensation to any worker for having to work in excess of eight (8) hours as mandated by law.
But as not all working days are regular days of work, there are instances when some workers require working past the 8-hour period during periods of day of rest or special non-working holidays.
Given the importance of rest days and special non-working holidays to any individual, working overtime on any of these circumstances require a greater-than-average bonus albeit not much in comparison to what you get when you work overtime during a regular day of work.
For example:
A minimum wage earner whose monthly income is 11,000 pesos including deductions who goes to work at an average of 24 days a month without any absences.
Overtime Pay (Rate):
- Regular Day of Work
Dayshift: 125% per hour based on the hourly rate of the 8-hour working period or 25% more of the hourly rate.
Nightshift: 110% * number of hours in excess of 8 hours (130% x hourly rate)
Daily rate = 11000 / 24 = 458.33
Hourly rate = 458.33 / 8 = 57.3
DAYSHIFT
Overtime pay rate (per hour) = Hourly rate * 125%
= 57.3 * 1.25
= 71.63
NIGHTSHIFT
Overtime pay rate (per hour) = 110% * (Hourly rate * 125%)
= 1.1 * (57.3 * 1.25)
= 1.1 * 71.63
= 78.79
- Rest Day OR Special Holiday (not at the same time)
Dayshift: 169% per hour based on the hourly rate of the 8-hour working period or 30% of the hourly rate of 130%.
Nightshift: Same as above.
Using the same sample as above:
Daily rate = 11000 / 24 = 458.33
Hourly rate = 458.33 / 8 = 57.3
DAYSHIFT
Overtime pay rate (per hour) = Hourly rate * 169%
= 57.3 * 1.69
= 96.84
- Rest Day AND Special Holiday (both at the same time)
Dayshift: 195% per hour based on the hourly rate of the 8-hour working period or 30% of the hourly rate of 150%.
Using the same sample as above:
Daily rate = 11000 / 24 = 458.33
Hourly rate = 458.33 / 8 = 57.3
DAYSHIFT
Overtime pay rate (per hour) = Hourly rate * 195%
= 57.3 * 1.95
= 111.74
- Regular Holiday
Dayshift: 260% per hour based on the hourly rate of the 8-hour working period or 30% of the hourly rate of 200%
Using the same sample as above:
Daily rate = 11000 / 24 = 458.33
Hourly rate = 458.33 / 8 = 57.3
DAYSHIFT
Overtime pay rate (per hour) = Hourly rate * 260%
= 57.3 * 2.6
= 148.98
- Rest day AND Regular Holiday
338% per hour based on the hourly rate of the 8-hour working period.
Using the same sample as above:
Daily rate = 11000 / 24 = 458.33
Hourly rate = 458.33 / 8 = 57.3
DAYSHIFT
Overtime pay rate (per hour) = Hourly rate * 338%
= 57.3 * 3.38
= 193.67
- Double Holiday – Double holiday happens when 2 regular holidays fall on the same day. For instance Araw ng Kagitingan (April 9) falls at the same day as Maundy Thursday. For overtime work rendered on a double holiday, the formula is as follows:
390% per hour based on the hourly rate of the 8-hour working period.
- Rest day AND Double Holiday
507% per hour based on the hourly rate of the 8-hour working period.
Need help on computation on these ? Ask our friendly accountant.
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