Overtime Pay Computation in the Philippines

Ask most Filipino rank-and-file employees how their overtime pay is computed and you will get a shrug, a guess, or a half-remembered number from a co-worker. Yet the Labor Code of the Philippinesspells out overtime and premium pay rules in exact percentages, and once you know the base formula — hourly rate × multiplier × number of hours — every scenario from an ordinary weekday overtime shift to working a regular holiday that also happens to fall on your rest day becomes a straightforward calculation. This guide lays out the complete premium pay multiplier table for every day-type combination recognized under Philippine labor law, walks through the formula pattern step by step, and then works three full numeric examples using real peso figures so you can check your own payslip — or run payroll for your team — with confidence in 2026.

The Legal Foundation: What the Labor Code Actually Requires

Overtime and premium pay in the Philippines are governed primarily by the Labor Code, which distinguishes between two related but distinct concepts. Premium pay is the extra compensation owed for working on a day you would not ordinarily be required to work — a rest day, a special non-working holiday, or a regular holiday — even if you only render your normal eight hours. Overtime pay, on the other hand, is the extra compensation owed for work rendered beyond eight hours on any given day, regular or otherwise. The two stack: an employee who works overtime on a rest day is entitled to both the rest-day premium and the overtime premium calculated on top of it, which is why the combined multipliers climb quickly once multiple conditions apply simultaneously.

A separate but related premium, night shift differential (NSD), applies whenever any work — regular hours or overtime — falls within the window of 10:00 PM to 6:00 AM. The NSD rate itself is a constant 10%, but it is computed on whichever rate already applies to that specific hour — the ordinary hourly rate on a plain weekday, or the already-elevated premium rate if the same hour also falls on a rest day, special holiday, regular holiday, or overtime period. NSD does not reduce or replace those other premiums; it stacks an additional 10% on top of them.

The Universal Formula Pattern

Every overtime and premium pay computation in Philippine payroll reduces to the same basic pattern:

Pay = Hourly Rate × Multiplier × Number of Hours

The hourly rate itself is derived from the employee's daily rate, which in turn comes from the monthly rate. The standard conversion most payroll systems use is:

• Daily Rate = Monthly Rate × 12 months ÷ 261 days (a common divisor representing working days in a year, though some employers use 313 or other factors depending on whether rest days and holidays are already paid — always confirm which divisor your company policy specifies).
• Hourly Rate = Daily Rate ÷ 8 hours (the standard workday).

Once you have the hourly rate, everything else is a matter of applying the correct multiplier from the table below, based on the day-type and whether the hours worked are within the regular 8-hour shift or beyond it (overtime).

Full Premium Multiplier Table by Day-Type Combination

The table below covers every day-type scenario recognized under Philippine labor law, from an ordinary working day through the most compounded case — a regular holiday that also falls on an employee's rest day, worked beyond eight hours. Multipliers apply to the hourly rate unless otherwise noted as a daily-rate percentage for the first eight hours.

Notice that the overtime column does not use a single multiplier across every row — the derivation rule actually changes depending on the day type. On an ordinary working day, Article 87 applies the standard 25% overtime premium, so the hourly rate is simply multiplied by 1.25 (100% × 1.25 = 125%). On a rest day, special holiday, or regular holiday, however, overtime hours are governed by a different rule: DOLE applies an additional 30% on top of that day's already-elevated rate, not the ordinary 25% used for plain weekdays. That is why rest day work is 130% for the first eight hours, but overtime on a rest day is 130% × 1.30 = 169%, not 130% × 1.25. The same 30%-on-top rule carries through every compounded scenario: special holiday + rest day is 150% for the first eight hours, so its overtime rate is 150% × 1.30 = 195%. Regular holiday + rest day is 260% for the first eight hours, so its overtime rate is 260% × 1.30 = 338%. These figures match DOLE's Handbook on Workers' Statutory Monetary Benefits and the multipliers used throughout this guide — there is no compliant alternative computation that produces a lower figure, so a payroll system that applies the ordinary 25% premium to rest-day or holiday overtime hours will underpay employees.

Quick Reference: Multiplier Summary

• Ordinary day, regular hours: 100%
• Ordinary day, overtime: 125%
• Rest day, regular hours: 130%
• Rest day, overtime: 169%
• Special holiday, regular hours: 130%
• Special holiday, overtime: 169%
• Special holiday + rest day, regular hours: 150%
• Special holiday + rest day, overtime: 195%
• Regular holiday, regular hours: 200%
• Regular holiday, overtime: 260%
• Regular holiday + rest day, regular hours: 260%
• Regular holiday + rest day, overtime: 338%
• Night shift differential (any day): +10% of hourly rate

Worked Example 1: Ordinary Overtime on a Weekday

Maria works in Metro Manila earning a monthly salary of ₱18,000. Using the standard divisor of 261 working days per year:

• Daily Rate = ₱18,000 × 12 ÷ 261 = ₱827.59 (rounded)
• Hourly Rate = ₱827.59 ÷ 8 = ₱103.45 (rounded)

On a Tuesday, Maria stays two hours past her normal 8-hour shift to finish a report. This is ordinary overtime — a regular working day, hours beyond eight — so the multiplier is 125%.

Overtime Pay = ₱103.45 × 125% × 2 hours = ₱103.45 × 1.25 × 2 = ₱258.63

Added to her regular day's pay of ₱827.59, Maria's total pay for that day is ₱827.59 + ₱258.63 = ₱1,086.22. This is the simplest overtime scenario and the one most employees encounter most often: no holiday, no rest day, just extra hours worked on top of a normal shift.

Worked Example 2: Rest Day Work with Overtime and Night Shift Differential

Jun earns a monthly salary of ₱22,000 and works in a BPO account that requires him to come in on his scheduled rest day (Sunday), covering a 10-hour shift that runs from 10:00 PM to 8:00 AM the next morning. His first eight hours (10:00 PM to 6:00 AM) fall entirely within the night shift differential window, while his two overtime hours (6:00 AM to 8:00 AM) fall entirely outside it.

• Daily Rate = ₱22,000 × 12 ÷ 261 = ₱1,011.49 (rounded)
• Hourly Rate = ₱1,011.49 ÷ 8 = ₱126.44 (rounded)

Jun's shift breaks down as follows: the first 8 hours are rest-day work (130% of daily rate, equivalent to 130% of the hourly rate for computation purposes) and also happen to be the 8 hours that fall within the NSD window, so they receive both the rest-day premium and night shift differential. The remaining 2 hours are rest-day overtime (169% of hourly rate) but occur after 6:00 AM, so no NSD applies to them. Crucially, night shift differential is not a flat 10% of the plain base hourly rate — it is 10% of whichever premium-adjusted rate already applies to that hour, so on a rest day the NSD add-on is computed on top of the 130% rest-day rate:

• First 8 hours (rest day, regular): ₱126.44 × 130% × 8 = ₱1,314.98
• Next 2 hours (rest day, overtime): ₱126.44 × 169% × 2 = ₱427.37
• Night shift differential (8 hours within the 10 PM–6 AM window, on the 130% rest-day rate): ₱126.44 × 10% × 130% × 8 = ₱131.50

Total Pay for the Shift = ₱1,314.98 + ₱427.37 + ₱131.50 = ₱1,873.85

This example illustrates how NSD stacks on top of whatever day-type premium already applies to the specific hour worked — it is computed as 10% of the premium-adjusted rate (here, 130% of the hourly rate, not the plain ₱126.44 base figure), and it only applies to hours that actually fall within the 10:00 PM–6:00 AM window. If any of the NSD-eligible hours had instead fallen inside the overtime portion of a shift, that portion would be computed at 10% of the overtime rate (169% in Jun's case) instead of the regular day-type rate.

Worked Example 3: Regular Holiday Falling on a Rest Day, with Overtime

Analyn earns ₱25,000 per month and is required to work on Rizal Day (December 30), which this year happens to fall on her scheduled rest day. She works a full 10-hour shift — 8 regular hours plus 2 hours of overtime — entirely during daytime, so no NSD applies.

• Daily Rate = ₱25,000 × 12 ÷ 261 = ₱1,149.43 (rounded)
• Hourly Rate = ₱1,149.43 ÷ 8 = ₱143.68 (rounded)

Because the day is both a regular holiday and her rest day, the first 8 hours are paid at 260% of the daily rate (equivalent to 260% of the hourly rate for the 8 hours), and the overtime hours are paid at the corresponding overtime multiplier for regular holiday + rest day. Regular holiday and rest-day overtime is not governed by the ordinary 25% overtime premium — it carries a 30% premium on top of the 260% base instead, so the correct multiplier is 260% × 1.30 = 338%, matching the table above.

• First 8 hours (regular holiday + rest day): ₱143.68 × 260% × 8 = ₱2,988.54
• Overtime, hours 9–10 (regular holiday + rest day OT): ₱143.68 × 338% × 2 = ₱971.28

Total Pay for the Shift = ₱2,988.54 + ₱971.28 = ₱3,959.82

Compare this to what Analyn would have earned working an ordinary 10-hour day — roughly ₱1,149.43 for the first 8 hours plus ₱359.20 for 2 hours of ordinary overtime (₱143.68 × 125% × 2), totaling about ₱1,508.63. The regular holiday + rest day premium more than doubles her earnings for the same number of hours worked, which is exactly the point of the Labor Code's premium pay structure: it compensates employees for sacrificing a day that would otherwise be a paid rest day or holiday off.

Practical Notes for Employers and Employees

Divisor Choice Matters

The 261-day divisor used throughout these examples assumes rest days and regular holidays are already factored into an employee's paid leave structure. Some companies use a 365-day divisor (for monthly-paid employees whose salary already covers all days including rest days and holidays) or a 313-day divisor (261 working days plus 52 rest days, excluding holidays). Always check your specific employment contract or company payroll policy, since the resulting hourly rate — and therefore every peso of computed overtime — shifts depending on which divisor is used.

Minimum Wage as a Floor

Regardless of how overtime and premium pay are computed, the base daily rate used in the formula must never fall below the applicable regional minimum wage. Minimum wages are set independently by each Regional Tripartite Wages and Productivity Board (RTWPB) and are not uniform nationwide — as of early August 2026 the non-agriculture daily minimum wage floor runs from roughly ₱411 (most of BARMM, rising to ₱436 in Cotabato City after Wage Order BARMM-05's first tranche took effect August 6, 2026) up toward a currently contested ₱755 in the National Capital Region. That NCR figure comes from Wage Order NCR-27's first tranche — a ₱60 increase from ₱695, which took effect July 25, 2026 — but a Pasig City court issued a 20-day temporary restraining order on July 30, 2026 halting its implementation, so as of this writing the enforced NCR non-agriculture floor has reverted to ₱695 while the case remains pending. These figures shift whenever a region issues a new wage order or a court resolves a pending legal challenge, so employers computing overtime for minimum-wage earners must confirm both their region's current wage order and its current legal status before applying any of the multipliers above.

Overtime Pay and Statutory Deductions

Overtime and premium pay are part of an employee's gross taxable compensation and factor into withholding tax calculations under the TRAIN Law (RA 10963), though they are generally not included in the base used for SSS, PhilHealth, or Pag-IBIG contributions, which are typically computed on basic monthly salary rather than variable overtime earnings. However, since overtime pay does count toward gross taxable income for BIR withholding purposes, a month with substantial overtime can push an employee's withholding tax up for that pay period, even though it does not affect 13th month pay computation (which is based strictly on basic salary earned in the calendar year, divided by 12).

Frequently Asked Questions

Is overtime pay mandatory in the Philippines?

Yes. Under the Labor Code, rank-and-file employees who work beyond eight hours in a day are legally entitled to overtime pay at the applicable multiplier, unless they fall under a recognized exemption such as managerial employees, field personnel, or other categories explicitly excluded from Book Three, Title I of the Labor Code. Employers cannot waive this requirement through company policy alone.

Can my employer average out my overtime pay instead of computing it per day?

No. Overtime pay must be computed based on the actual hours worked and the actual day-type conditions (ordinary day, rest day, special holiday, regular holiday) that applied on each specific day. Averaging overtime across a pay period to arrive at a flat rate understates what is legally owed whenever premium day-types are involved, and is not a compliant substitute for per-day computation.

Does night shift differential apply on top of holiday pay?

Yes. Night shift differential adds 10% for every hour worked between 10:00 PM and 6:00 AM, computed on top of whichever day-type premium (ordinary, rest day, special holiday, or regular holiday) already applies to that specific hour — not 10% of the plain base hourly rate. In other words, NSD is 10% of the premium-adjusted rate, so it grows larger on a holiday or rest-day shift than it would on an ordinary day, as shown in Worked Example 2 above.

What divisor should I use to get my daily and hourly rate from my monthly salary?

The most common divisor is 261 working days per year, but 313-day and 365-day divisors are also used depending on how an employer structures paid rest days and holidays into the monthly salary. Since this directly changes the hourly rate — and therefore every overtime peso figure — always confirm the divisor stated in your employment contract or company payroll policy before computing overtime pay yourself.

Does overtime pay affect my 13th month pay?

No. Under PD 851, 13th month pay is computed strictly from the total basic salary actually earned within the calendar year, divided by 12. Overtime pay, holiday premiums, and other supplementary earnings are excluded from this computation, even though they do count toward your gross taxable income for withholding tax purposes during the pay periods in which they were earned.