Ordinary-day overtime
For covered employees, work beyond eight hours on an ordinary working day is generally paid at the regular hourly wage plus at least 25%.
A simplified ordinary-day formula is Hourly Rate × 125% × Overtime Hours.
Example
At an hourly rate of ₱150, two overtime hours on an ordinary working day produce ₱150 × 1.25 × 2 = ₱375.
Rest-day and holiday overtime
Do not use 125% for every overtime situation. Work on rest days and holidays has its own applicable base rate. Overtime beyond eight hours is then calculated using the premium applicable to that rate.
Finding an hourly rate
For a daily-paid employee, a simplified illustration is Daily Rate ÷ 8. The appropriate conversion for a monthly-paid employee depends on the applicable payroll arrangement and work schedule.
Coverage matters
Not every worker is necessarily covered by the same hours-of-work rules. Legal entitlement can depend on duties, position, classification and other circumstances.
Undertime and overtime
The Labor Code provides that undertime on one day should not simply be offset by overtime on another day.
Official reference
For authoritative rules, consult DOLE and Book III of the Labor Code.
Frequently asked questions
How much is ordinary-day overtime?
For covered employees it is generally the regular hourly wage plus at least 25% for hours beyond eight.
When does overtime generally start?
Under the general rule for covered employees, overtime refers to work beyond eight hours in a day.
Is holiday overtime higher?
It can be, because the applicable holiday or rest-day rate is determined before the overtime premium is applied.
Can undertime be offset against overtime?
The Labor Code states that undertime on one day should not be offset by overtime work on another day.
Worked comparison: why the day type matters
Suppose the basic daily rate is ₱1,200, so the simplified basic hourly rate is ₱150. On an ordinary workday, two overtime hours at 125% produce ₱375. The same two extra hours on a rest day or holiday should not be calculated with the ordinary-day formula because the premium-day base changes first.
Practical check: identify the calendar day and whether it is the employee's scheduled rest day before choosing an overtime multiplier. A correct hourly rate with the wrong day type can still produce the wrong result.
Common payroll mistakes
- Applying 125% to every overtime situation.
- Using gross monthly salary as an hourly rate without an appropriate conversion.
- Ignoring whether the worker is covered by the hours-of-work provisions.
- Netting undertime against overtime as though the two were interchangeable.
- Forgetting that a contract or collective bargaining agreement may provide a higher benefit than the statutory minimum.
A payslip review checklist
When checking an overtime line on a payslip, write down the basic daily or hourly rate, the date worked, the day classification, the number of hours beyond the normal workday, and the multiplier used. Recomputing those five items separately is usually more informative than comparing only the final peso amount.
When this simple formula is not enough
Compressed workweeks, unusual schedules, exemptions, piece-rate arrangements, company policies and collective agreements can require a different analysis. Treat the calculator as a transparent estimate, not a substitute for the payroll records and legal rules that apply to a specific employee.
Important note
PaycheckPH provides general educational information and estimates. Verify important calculations against current official government guidance and your actual employment circumstances.