How do I compute overtime pay on a regular holiday that falls on a rest day?

The multiplier is 338% of the hourly rate. The computation stacks: 260% (regular holiday + rest day base) x 130% (overtime premium) = 338%. For an employee with a P100/hour rate, overtime on a regular holiday rest day pays P338/hour.

Is night shift differential computed before or after the overtime premium?

Night shift differential (NSD) is computed on the applicable hourly rate, which already includes the day-type multiplier. NSD adds 10% of the applicable rate for each hour worked between 10:00 PM and 6:00 AM. For example, if the applicable rate is P200/hour (regular holiday), NSD adds P20/hour for night work.

Are managers and supervisors entitled to overtime pay?

Under Article 82 of the Labor Code, managerial employees are exempt from overtime pay. However, supervisors who primarily perform non-managerial work may still be entitled. The test is whether the employee's primary duty involves setting and executing management policies, not just their job title.

What is the highest possible pay rate an employee can earn in a single shift?

The maximum multiplier is 338% plus NSD, which applies to overtime work on a regular holiday that falls on a rest day during night hours. For an employee earning P100/hour, this equals P338 base + P33.80 NSD = P371.80/hour — nearly 4x the regular rate.

Do I need to pay overtime if the employee did not get prior approval?

If the employer knowingly permitted or suffered the employee to work beyond 8 hours, overtime must be paid even without prior written approval. However, employers can enforce an overtime pre-approval policy and discipline employees who work unauthorized overtime. The safest practice is to have a clear written OT policy and enforce it consistently.

Overtime Pay and Night Shift Differential in the Philippines: Computation Guide

Overtime pay and night shift differential are among the most complex payroll computations in the Philippines. The rates stack across multiple dimensions — day type (regular, rest day, holiday), time period (regular hours, overtime), and shift (day, night) — creating dozens of possible multiplier combinations.

This guide breaks down every rate and shows you exactly how to compute them.

Standard Work Hours

Under Article 83 of the Labor Code:

Normal work hours: 8 hours per day
Normal work week: 48 hours per week (6 days) or 40 hours (5 days)
Work beyond 8 hours in a day = overtime

Overtime Pay Multipliers

Overtime is paid at a premium on top of the applicable day-type rate. The overtime premium is +25% on ordinary days and +30% on rest days and holidays.

Complete Overtime Rate Table

Day Type	Regular Hours	Overtime Hours
Ordinary day	100%	125%
Rest day	130%	169%
Special non-working holiday	130%	169%
Special non-working holiday + rest day	150%	195%
Regular holiday	200%	260%
Regular holiday + rest day	260%	338%

How Stacking Works

The overtime multiplier is calculated by applying the OT premium to the base rate:

Ordinary day OT: 100% x 1.25 = 125%
Rest day OT: 130% x 1.30 = 169%
Regular holiday OT: 200% x 1.30 = 260%
Regular holiday + rest day OT: 260% x 1.30 = 338%

The premium is +30% (multiplicative) whenever a rest day or holiday is involved, and +25% (multiplicative) on ordinary days.

Night Shift Differential (NSD)

Under Article 86 of the Labor Code, employees working between 10:00 PM and 6:00 AM are entitled to an additional 10% of their applicable hourly rate.

NSD Computation

NSD = Applicable Hourly Rate x 10% x Night Hours

The "applicable hourly rate" is the rate after applying the day-type multiplier. NSD stacks on top of overtime and holiday premiums.

NSD Stacking Examples

Scenario	Base Rate	Day Mult	NSD (10%)	Total per Hour
Ordinary night shift	P100	100%	P10	P110
Rest day night shift	P100	130%	P13	P143
Regular holiday night	P100	200%	P20	P220
Regular holiday + rest day + OT night	P100	338%	P33.80	P371.80

The maximum night hours per day is capped at 8 hours for NSD computation.

Worked Examples

Example 1: Ordinary Day Overtime

Employee hourly rate: P125 (P22,000 monthly / 22 days / 8 hours). Works 2 hours overtime on a regular Monday.

Overtime rate: P125 x 125% = P156.25/hour
OT pay: P156.25 x 2 hours = P312.50

Example 2: Rest Day + Overtime

Same employee. Works 10 hours on their rest day (Sunday).

Regular 8 hours: P125 x 130% = P162.50/hour → P162.50 x 8 = P1,300.00
Overtime 2 hours: P125 x 169% = P211.25/hour → P211.25 x 2 = P422.50
Total: P1,722.50

Example 3: Regular Holiday + Night Shift

Same employee. Works 8 hours on Christmas Day (regular holiday), from 10 PM to 6 AM.

Holiday rate: P125 x 200% = P250.00/hour
Regular pay: P250.00 x 8 = P2,000.00
NSD: P250.00 x 10% x 8 hours = P200.00
Total: P2,200.00

Example 4: The Maximum Rate Scenario

Same employee. Works 10 hours on a regular holiday that falls on their rest day, all during night shift.

Regular 8 hours: P125 x 260% = P325.00/hour → P325.00 x 8 = P2,600.00
NSD (8 hours): P325.00 x 10% x 8 = P260.00
Overtime 2 hours: P125 x 338% = P422.50/hour → P422.50 x 2 = P845.00
OT NSD (2 hours): P422.50 x 10% x 2 = P84.50
Total: P3,789.50 (vs. P1,000 for a regular 8-hour shift — nearly 4x)

"No Work, Pay" Rule for Regular Holidays

For regular holidays, the "no work, pay" rule applies:

Scenario	Pay
Regular holiday, employee did not work	100% daily rate (paid)
Special non-working holiday, employee did not work	0% (no pay)
Special working day, employee did not work	0% (no pay)

Day-Before-Holiday Rule (Article 94)

An important exception: if an employee is absent on the workday immediately before a regular holiday (and the absence is not on approved leave), they lose the holiday pay for that regular holiday.

This means an employee who goes AWOL on a Friday before a Monday regular holiday forfeits the holiday pay.

Who Is Exempt from Overtime and NSD

Under Article 82 of the Labor Code, the following are exempt:

Managerial employees — Those who set and execute management policies
Field personnel — Those who perform work away from the employer's premises and whose hours cannot be determined with certainty
Members of the employer's family who depend on them for support
Domestic workers (covered by separate rules under RA 10361)

Supervisory employees are generally entitled to overtime unless they fall under the managerial exemption.

Common Overtime Mistakes

Using flat multipliers instead of stacking — Rest day OT is not 130% + 25% = 155%. It's 130% x 130% = 169%. The multipliers are multiplicative, not additive.
Applying NSD to the base rate instead of the applicable rate — NSD should be computed on the day-type-adjusted rate. On a regular holiday, NSD is 10% of the 200% rate, not 10% of the base rate.
Forgetting the day-before-holiday rule — An employee absent without approved leave the day before a regular holiday loses the holiday pay. This is a common payroll error.
Not requiring OT approval — While unauthorized OT must still be paid if the employer allowed it, not having a pre-approval policy invites abuse. Implement a written OT request process.
Rounding OT hours incorrectly — If your policy rounds to 15-minute increments, apply this consistently. Always round down (floor) to avoid overpayment disputes.

How TalinoHR Computes Overtime and NSD

TalinoHR's payroll engine handles the full complexity of Philippine overtime and NSD:

17-step computation — Overtime (Step 5), holiday pay (Step 6), and NSD (Step 7) are computed with proper stacking and multiplier logic
Day-type awareness — The engine checks the holiday calendar for each work date, including whether it falls on the employee's rest day
NSD stacking — Night differential is applied on the applicable rate (after day-type and OT multipliers), not the base rate
Day-before-holiday rule — Article 94 compliance is built in — employees absent without leave the day before a regular holiday automatically lose the holiday pay
OT approval integration — Only APPROVED overtime applications are included in payroll computation
Location-scoped holidays — National holidays apply to all employees; local holidays apply only to employees at that work location

No manual rate lookups. No stacking errors. Book a demo to see TalinoHR's payroll engine in action.