Computing Overtime Payment in the Philippines : Business Mathematics

Computing Overtime Payment for Business Mathematics

Key Concepts:

• Overtime: Additional compensation for work exceeding the normal 8-hour workday.
• Overtime Rate: The multiplier applied to the regular hourly rate for overtime hours.
• Regular Hourly Rate: The employee's standard hourly wage.
• Ordinary Day Overtime
• Rest Day/Special Day Overtime
• Rest Day Falling on a Special Day Overtime
• Regular Holiday Overtime
• Rest Day Falling on a Regular Holiday Overtime

1. Legal Basis (Article 87 of the Labor Code):

• Employees working beyond 8 hours/day are entitled to overtime pay.
• Overtime pay is calculated as the regular wage plus at least 25% thereof.
• Work beyond 8 hours on a holiday or rest day: additional compensation equivalent to the rate for the first eight hours on holiday or rest day plus at least 30% thereof.

2. Conditions for Overtime Payment:

• Ordinary Day: Most common type of overtime.
• Rest Day or Special Day: Work performed on an employee's rest day (e.g., Saturday/Sunday for a Monday-Friday worker) or a local special holiday.
• Rest Day Falling on a Special Day: When an employee's rest day coincides with a special holiday.
• Regular Holiday: Overtime work performed on a nationally recognized holiday.
• Rest Day Falling on a Regular Holiday: When an employee's rest day coincides with a regular holiday.

3. Ordinary Day Overtime:

• Overtime Rate: Regular Hourly Rate x 125% (or 1.25).
• Example: Manny works 8 hours/day, daily wage is 800 pesos. He worked 10 hours last Monday.
  • Hourly Rate: 800 pesos / 8 hours = 100 pesos/hour.
  • Overtime Hours: 10 hours - 8 hours = 2 hours.
  • Overtime Rate: 100 pesos/hour x 1.25 = 125 pesos/hour.
  • Overtime Payment: 2 hours x 125 pesos/hour = 250 pesos.
  • Total Wage: 800 pesos (regular) + 250 pesos (overtime) = 1050 pesos.

4. Rest Day or Special Day Overtime:

• Rest Day Rate: Regular Hourly Rate x 130% (or 1.30).
• Overtime Rate: Rest Day Rate x 130% (or 1.30).
• Example: Yuri, a government worker (Monday-Friday), worked on Saturday from 8 AM to 10 PM (14 hours). Daily rate is 900 pesos.
  • Hourly Rate: 900 pesos / 8 hours = 112.50 pesos/hour.
  • Rest Day Rate: 112.50 pesos/hour x 1.30 = 146.25 pesos/hour.
  • Regular Working Hours: 8 hours
  • Rest Day Rate Payment: 900 pesos * 1.30 = 1170 pesos
  • Overtime Hours: 5 hours (14 total hours - 1 hour rest - 8 regular hours)
  • Overtime Rate: 146.25 pesos/hour x 1.30 = 190.125 pesos/hour (rounded to 190.13 pesos/hour).
  • Overtime Payment: 5 hours x 190.13 pesos/hour = 950.63 pesos.
  • Total Wage: 1170 pesos (rest day) + 950.63 pesos (overtime) = 2120.63 pesos.

5. Rest Day Falling on a Special Day Overtime:

• Rest Day/Special Day Rate: Regular Hourly Rate x 150% (or 1.50).
• Overtime Rate: Rest Day/Special Day Rate x 130% (or 1.30).
• Example: Michelle works 8 AM to 5 PM regularly. On February 9 (Mandaluyong Day, a special day), she worked 8 AM to 8 PM, coinciding with her rest day. Daily rate is 1200 pesos.
  • Hourly Rate: 1200 pesos / 8 hours = 150 pesos/hour.
  • Rest Day/Special Day Rate: 150 pesos/hour x 1.50 = 225 pesos/hour.
  • Regular Working Hours: 8 hours
  • Rest Day Falling on Special Day Rate Payment: 1200 pesos * 1.50 = 1800 pesos
  • Overtime Hours: 3 hours (12 total hours - 1 hour rest - 8 regular hours)
  • Overtime Rate: 225 pesos/hour x 1.30 = 292.50 pesos/hour.
  • Overtime Payment: 3 hours x 292.50 pesos/hour = 877.50 pesos.
  • Total Wage: 1800 pesos (rest day/special day) + 877.50 pesos (overtime) = 2677.50 pesos.

6. Regular Holiday Overtime:

• Regular Holiday Rate: Regular Hourly Rate x 200% (or 2.00) - "Double Pay".
• Overtime Rate: Regular Holiday Rate x 130% (or 1.30).
• Example: Textbook editor works 8 hours/day, daily wage is 1600 pesos. Worked 10 hours on Philippine Independence Day (regular holiday).
  • Hourly Rate: 1600 pesos / 8 hours = 200 pesos/hour.
  • Regular Holiday Rate: 200 pesos/hour x 2.00 = 400 pesos/hour.
  • Regular Holiday Rate Payment: 1600 pesos * 2.00 = 3200 pesos
  • Overtime Hours: 2 hours.
  • Overtime Rate: 400 pesos/hour x 1.30 = 520 pesos/hour.
  • Overtime Payment: 2 hours x 520 pesos/hour = 1040 pesos.
  • Total Wage: 3200 pesos (holiday) + 1040 pesos (overtime) = 4240 pesos.

7. Rest Day Falling on a Regular Holiday Overtime:

• Rest Day/Regular Holiday Rate: Regular Hourly Rate x 260% (or 2.60).
• Overtime Rate: Rest Day/Regular Holiday Rate x 130% (or 1.30).
• Example: Greg, a security guard, worked 8 AM to 10 PM on New Year's Day (regular holiday), which was also his rest day. Daily rate is 600 pesos.
  • Hourly Rate: 600 pesos / 8 hours = 75 pesos/hour.
  • Rest Day/Regular Holiday Rate: 75 pesos/hour x 2.60 = 195 pesos/hour.
  • Regular Working Hours: 8 hours
  • Rest Day Falling on Regular Holiday Rate Payment: 600 pesos * 2.60 = 1560 pesos
  • Overtime Hours: 7 hours (16 total hours - 1 hour rest - 8 regular hours).
  • Overtime Rate: 195 pesos/hour x 1.30 = 253.50 pesos/hour.
  • Overtime Payment: 7 hours x 253.50 pesos/hour = 1774.50 pesos.
  • Total Wage: 1560 pesos (rest day/holiday) + 1774.50 pesos (overtime) = 3334.50 pesos.

8. Synthesis/Conclusion:

The video provides a detailed explanation of how to calculate overtime pay in the Philippines under various conditions, based on the Labor Code. It covers five specific scenarios: ordinary days, rest days/special days, rest days falling on special days, regular holidays, and rest days falling on regular holidays. Each scenario has a different formula for calculating the overtime rate, which is then used to determine the total overtime payment. The examples provided illustrate the practical application of these formulas, enabling viewers to accurately compute overtime pay for their employees or themselves.