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Overtime Pay Formula:
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Overtime computation in the Philippines follows specific labor regulations that require employers to pay additional compensation for work performed beyond regular working hours. The standard overtime rate is 125% of the hourly rate for work performed on ordinary days.
The calculator uses the standard overtime formula:
Where:
Explanation: This calculation follows the Philippine Labor Code provisions for overtime pay on ordinary working days.
Details: Proper overtime calculation ensures compliance with Philippine labor laws, protects workers' rights, and helps employers maintain fair compensation practices while avoiding legal penalties.
Tips: Enter the employee's regular hourly rate in PHP and the number of overtime hours worked. Ensure both values are positive numbers for accurate calculation.
Q1: What is the overtime rate for rest days and holidays?
A: Overtime rates vary: 130% for rest days, 169% for special holidays, and 260% for regular holidays under Philippine labor laws.
Q2: Is there a daily limit on overtime hours?
A: Yes, the Labor Code limits overtime work to 4 hours per day, but collective bargaining agreements may provide different terms.
Q3: Are all employees entitled to overtime pay?
A: Most rank-and-file employees are entitled, but managerial staff and those in specific positions may be exempt from overtime provisions.
Q4: How is the hourly rate calculated for monthly-paid employees?
A: For monthly-paid employees, the hourly rate is typically calculated as (Monthly Basic Salary × 12) ÷ (52 weeks × 40 hours).
Q5: What documentation is required for overtime work?
A: Employers should maintain proper records of overtime authorization, hours worked, and corresponding payments to ensure compliance.