The release has to go out tonight, so you stay until 9. On the next cutoff, overtime shows up as a few hundred pesos. You recompute it on your phone because it feels short.
Most of the time the gap has a boring cause. Someone used the wrong daily rate, paid a regular holiday like a special non-working day, or skipped the add-on for hours between 10 PM and 6 AM. The Labor Code rates themselves are fixed. Once you can price one hour, you can check the whole payslip.
Every example below uses a monthly basic salary of P22,000.
Get the Hourly Rate First
Premium pay is computed by the hour, so the daily rate has to be right before the percentage matters.
Hourly rate = Monthly basic salary ÷ paid days per month ÷ 8
A Monday-to-Friday schedule is often divided by 22, which is the factor the overtime calculator on this site uses.
Some companies use the DOLE annual factors instead of a flat 22. A five-day week is often 261 days a year (about 21.75 days a month). A six-day week is often 313 days a year (about 26.08 days a month). The divisor belongs in your contract or handbook.
A larger divisor produces a smaller hourly rate, and a smaller hourly rate produces smaller overtime. If your payslip looks light, check this number before you argue about the percentage.
Cost of living allowance is part of the regular wage when premium pay is computed. A fixed allowance that was never folded into basic pay usually stays out. If your COLA is real money every cutoff, ask HR whether it is inside the rate they use for overtime.
Ordinary Day: 25% on Top of Your Hour
Article 87 of the Labor Code allows work beyond eight hours if you are paid your regular wage plus at least 25%. That is 125% of your hourly rate for every overtime hour.
Ordinary-day OT per hour = Hourly rate × 1.25
Two extra hours at P125:
That P312.50 is the whole payment for those two hours. Your daily rate already covered the first eight. The lunch hour is unpaid and is not one of the eight, as long as you were actually free to leave your post. A one-hour break on a 9 AM to 6 PM shift is a normal day with zero overtime.
The law says at least 25%. An employer can pay more. Paying 30% after several hours is allowed. It is not the legal floor. The floor is 25% on every ordinary overtime hour, the first one and the sixth one alike.
The Rates, in One Table
These are percentages of your hourly rate. Hours after the first eight already include the overtime premium.
| When you work | First 8 hours | Each hour after 8 |
|---|---|---|
| Ordinary day | 100% | 125% |
| Rest day, or special non-working day | 130% | 169% |
| Special non-working day that is also your rest day | 150% | 195% |
| Regular holiday | 200% | 260% |
| Regular holiday that is also your rest day | 260% | 338% |
At P125 an hour, two overtime hours on a rest day or special non-working day are P125 × 1.69 × 2 = P422.50. Two overtime hours on a regular holiday are P125 × 2.60 × 2 = P650.
A regular holiday and a special non-working day are different legal animals. Christmas Day, New Year's Day, Maundy Thursday, Good Friday, Labor Day, Independence Day, National Heroes Day, Bonifacio Day, Araw ng Kagitingan, and Rizal Day are regular holidays, along with Eid'l Fitr and Eid'l Adha once Malacañang dates them. Ninoy Aquino Day, All Saints' Day, and the last day of the year are the usual special non-working days. The year's proclamation can move dates and add more. Read the proclamation, not last year's group chat.
Rest Day: Why Two Coworkers See Different Lines
The rate is 130% either way. The payslip line depends on how you are paid.
Daily-paid. You are paid for days you work. A rest day you actually work is worth 130% of your daily rate. At P1,000, that day is P1,300, before any hour past eight.
Monthly-paid. Your monthly salary already covers the days in the month, including rest days you did not work. Working on the rest day adds the premium, which is 30% of the daily rate — P300 in this example. The day is still worth 130%. The first 100% was already inside your monthly pay, so payroll shows the extra 30%.
Same statute. Different line on the stub. Comparing your Saturday premium with a daily-paid teammate's full Saturday pay will make one of you think the other got robbed.
Holidays: Double Pay Is Only Half the Story
On a regular holiday, you get 100% of your daily basic wage even if the office is closed, provided you worked or were on paid leave on the workday right before it. If you work the holiday, the day is paid at 200%. At P1,000, staying home is worth P1,000. Coming in for eight hours is worth P2,000.
On a special non-working day, no work means no statutory pay, unless your contract, company practice, or CBA says otherwise. Monthly-paid employees still receive their usual monthly salary, because that salary is not built one day at a time. If you work, the day is 130%.
The mix-up that shorts a whole day's pay
Christmas Day worked is 200%. December 31 worked is 130%, and December 31 unworked can be zero for a daily-paid employee. Treating every red date on the calendar as "double pay" is how both underpayment and overpayment happen.
If that regular holiday is also your rest day, the first eight hours go to 260% (200% × 130%), and each hour after eight goes to 338%. A special non-working day on your rest day is 150% for the first eight, then 195%.
Night Differential: 10 PM to 6 AM
Article 86 requires at least 10% on top of the regular wage for each hour between 10:00 PM and 6:00 AM. It covers every night hour, including hours inside your normal eight. It is not an overtime-only benefit.
The 10% sits on the rate that hour already earns.
Two ordinary hours from 10 PM to midnight, still inside your eight:
Two overtime hours in that same window are ordinary-day OT and night work at once:
P125 × 1.25 × 1.10 × 2 hours = P343.75
That is 137.5% of your hourly rate, not 125% with a separate 10% of the basic rate pasted on. The same stacking applies to the other rows in the table. A rest-day hour at 1 AM is 130% × 1.10 = 143% if it is inside the first eight, and 169% × 1.10 = 185.9% if it is overtime.
A 10 PM to 6 AM shift is eight hours, all of them inside the night window. With a one-hour meal break outside those paid hours, the night differential still follows the hours you actually worked between 10 and 6.
What Overtime Does Not Become
Overtime, night differential, and holiday premium are excluded from basic salary when 13th month pay is computed. A huge December of night shifts does not raise the 13th month, unless the company has a practice of folding those premiums into basic pay.
Those same premiums are taxable compensation. They are not de minimis benefits. They land in the income your employer withholds on, which is why a heavy overtime month can also show a higher withholding tax.
Who Can Be Told They Have No Overtime
Article 82 draws a short list. Managerial employees, members of the managerial staff, and field personnel whose actual hours cannot be determined with reasonable certainty are outside the overtime and premium-pay chapters. Household workers follow the Kasambahay Law. Government employees follow Civil Service rules, which may pay overtime or grant compensatory time off depending on the agency and its budget.
"Monthly-paid" is not on that list. A rank-and-file employee on a monthly salary is still entitled to overtime after eight hours.
Hours the employer suffered or permitted still count. A policy that says "no overtime without a signed form" can organize the approval. It does not erase a shift your supervisor watched you finish. Bring the time records if the cutoff ignores them.
Five Checks Before You Argue With Payroll
- Divisor. Confirm 22, 21.75, 26, or whatever your handbook names. Recompute the hourly rate before the percentage.
- Eight paid hours, then the premium. A 9 AM to 8 PM shift with a one-hour lunch is two overtime hours. The lunch hour comes out before you count anything past eight.
- Holiday type. Regular holiday at 200%. Special non-working day at 130%. The proclamation for that year is the list that counts.
- Night hours on top of the rate already due. Every hour from 10 PM to 6 AM carries 10% of that hour's rate, including hours that are also overtime, rest day, or holiday.
- COLA inside the base. If it is part of your regular wage, it belongs in the hourly rate. Leaving it out discounts every premium on the stub.
Price the shift you actually worked
Enter your salary, your start and end time, and the kind of day. It prices ordinary days, rest days, regular holidays, special holidays, and hours between 10 PM and 6 AM.
You do not need a payroll degree to know whether 9 PM was worth it. Hourly rate, the row in the table, then 10% if the hour sat between 10 PM and 6 AM. The rest is arithmetic your payslip should be able to survive.