When waiver of overtime pay is allowed. (3.

) The DOLE regional office is duty notified

When the alleged waiver of overtime pay is in (1.) Unless there is a more favorable practice
consideration of benefit and privileges which existing in the firm
may be more than what will accrue to them in work beyond eight hours will not be
overtime pay, the waiver may be permitted. compensable by overtime premium,
provided the total number of hours worked per
Employer and employee stipulate that the basic day shall not exceed twelve
salary already includes the overtime (12) hours. In any case, any work performed
beyond 12 hours a day or 48
This arrangement, called in hours a week shall be subject to overtime
practice “composite” or “package” pay or “all- premium.
inclusive salary,” is not per se
illegal. (2.) Consistent with Articles 85 of the Labor
Code, employees under
The requisites therefore of “base pay with a CWW scheme are entitled to meal periods of
integrated overtime pay” are not less than sixty (60)
firstly, a clear written agreement knowingly and minutes. The right of employees to rest day as
freely entered into by the well as to holiday pay, rest
employee, and, secondly, the mathematical result day pay or leaves in accordance with law or
shows that the agreed legal applicable collective bargaining
wage rate and the overtime pay, computed agreement or company practice, shall not be
separately, are equal to or higher than impaired.
the separate amounts legally due. (Damasco vs (3.) Adoption of the CWW scheme shall in no
NLRC) case result in
diminution of existing benefits. Reversion to the
Another instance of waiver of overtime pay is the normal eight-hour
compressed workweek workday shall not constitute a diminution of
(CWW) arrangement. The normal benefits. The reversion shall
workday is increased to more than eight hours be considered a legitimate exercise of
without corresponding overtime management prerogative, provided
premium. that the employer shall give the employees prior
notice of such reversion
But, although encouraged, adoption within a reasonable period of time.
of the CWW scheme is valid only if the conditions For purposes of administering or enforcing
stated in the Advisory are existing law and rules on
observed; otherwise, overtime pay may still be work hours, overtime compensation and other
claimed. relevant labor standards,
The conditions are: DOLE shall recognize only those CWW schemes
(1.) The scheme is expressly and voluntarily that have been entered into
supported by majority consistent with the Advisory.
of the employees affected.
(2.) In firms using substances, or operating in As explained in Department Advisory No. 2,
conditions that are Series of
hazardous to health, a certification is needed 2009 (dated January 29, 2009), adoption of
from an accredited safety flexible work arrangements (FWA)
organization or the firm’s safety committee that is considered as a better alternative than the
work beyond eight hours outright termination of the services
is within the limits or levels of exposure set by of employees or the closure of the establishment.
DOLE’s occupational safety
and health standards.
refer to alternative arrangements or schedules are not only offset against the overtime hours
other than the traditional or but are also charged against the
standard work hours, workdays or workweek. accrued leave of the employee, for under this
Employers may adopt them after method the employee is made to
due consultation with employees, taking into pay twice for his undertime hours because his
account the adverse consequence leave is reduced to that extent
of the situation on the performance and financial while he is made to pay for the undertime hours
condition of the company. with work beyond the regular
The effectivity and implementation of FWA shall working hours. The proper method should be to
be temporary. In addition to deduct the undertime hours
compressed workweek, the FWAs include: from the accrued leave but to pay the employee
(1) the overtime compensation to
Reduction of workdays where the normal which he is entitled. Where the employee has
workdays per week exhausted his leave credits, his
are reduced but should not last for more than six undertime hours may simply be deducted from
months. his day’s wage, but he should
(2) still be paid his overtime compensation for work
Rotation of workers where the employees are in excess of eight hours a day
rotated or .1
alternately provided work within the workweek.
(3) This ruling in NWSA forbids offsetting the
Forced leave where the employees are overtime work on the same day,
requrequired to go on leave although what Article 88 prohibits is offsetting
for several days or weeks, utilizing their leave on another day. It may be said
credits if there are any. therefore that the offsetting of undertime work
(4) by overtime work, whether on
Broken-time schedule where the work schedule the same or on another day, is prohibited by
is not jurisprudence and by statute.
continuous but the number of work hours within
the day or week is not In addition to the instances mentioned in Article
reduced. 89, the Rules
(5) Implementing the Labor Code authorizes
Flexi-holiday schedule where the employees compulsory overtime work when it
agree to avail is necessary “to avail of favorable weather or
themselves of the holidays at some other days, environmental conditions where
provided that there is no performance or quality of work is dependent
diminution of existing benefits as a result of such thereon.
arrangement. ”1
In cases not falling within any of the enumerated
undertime hours instances, no employee
represent only the employee’s hourly rate of pay may be made to work beyond eight (8) hours a
while the overtime hours reflec day against his will.2 In the
both the employee’s hourly rate of pay and the 2
appropriate overtime premium enumerated instances, therefore, overtime work
such that, not being of equal value, offsetting the is an obligation. Outside of
undertime hours against the these instances, overtime work is optional.
overtime hours would result in the undue
deprivation of the employees’ overtime ART. 90
premium.
This provision should be clarified or modified.
The “regular wage”
includes the cash wage plus the value of facilities.
Regular wage is therefore But to receive the holiday pay, certain conditions
bigger than cash wage. The OT rate should be should be met. One is
based on the regular wage that the employee should not have been absent
(cash plus value of facilities), not on the cash without pay on the working day
wage only. preceding the regular holiday. If he was absent
without pay, the assumption is that
Holiday has reference to a day set apart he would have been absent also on the following
for worship, reverence to the memory of a great day if it were not a holiday. The
leader and benefactor, to other conditions, which are self-explanatory, are
rejoice over some great national or historical specified in the Implementing
event, or rekindle the flames of Rules (Part Two of this volume).
an ideal.
Again, if the minimum wage is defined (e.g., W.O.
If a daily-paid employee does not work on a No. NCR-14) as inclusive
special no-work holiday, he gets no of ECOLA, then ECOLA should be included as
pay; if he works he gets his daily basic rate plus basis for computing night shift
30 percent. Article 93 applies. differential (Article 86), overtime pay (Article
Second, the holiday may be “regular” of which at 87), premium pay (Article 93),
present there are twelve and thirteenth-month pay (P.D. No. 851)
in a year. A daily-paid or monthly-paid employee,
even if he does not work on a “Every employee covered by the Holiday Pay
regular holiday, gets 100% of his usual pay; if he Rule is entitled to the Minimum
does work on that day he gets wage rate (daily basic wage and COLA)
200%. Article 94, with the implementing rules,
applies. Is a monthly-paid employee entitled to the 12-
day holiday pay? A monthly
Holiday pay is a one-day pay given by law to an paid
employee even if he does not employee is one whose salary covers all days of a
work on a regular holiday month including unworked
rest days, special days and regular holidays. In
The COLA shall not be included in the contrast, a daily-paid employee
computation of premium pay is paid only for days actually worked except that
by law he is paid for the 12
Every employee covered by the holiday pay rule regular holidays although unworked. Does this
is entitled to the minimum holiday pay privilege apply to a
wage rate (daily basic wage and COLA). This monthly-paid employee?
means that the employee is entitled
to at least 100% of his/her minimum wage rate holiday falling on a Sunday creates no legal
even if he/she did not report obligation for the employer to pay
for work, provided he/she is present or is on extra, aside from the usual holiday pay, to its
leave of absence with pay on the monthly-paid employees
work day immediately preceding the holiday.
are entitled to at least two
to prevent diminution of hundred percent (200%) of their basic wage
the monthly income of the workers on account of even if said holiday is unworked.
work interruptions declared The first one hundred percent (100%)
by the State. In other words, although the worker represents holiday pay for April
is forced by law to take a rest, 9, 1993 as Good Friday and the second one
he is not deprived of what he should earn. hundred percent (100%) is holiday
1 pay for the same date as Araw ng Kagitingan
If worked. — In situations where the employee is In an advisory opinion, the Bureau of Working
permitted or suffered Conditions holds that part
to work on April 9, 1993, he is entitled to time
compensation equivalent to at least workers are entitled to the full benefit of the
300% of his basic wage. The 100% in addition to yearly five (5) days service
200% stated above represents incentive leave with pay. The reason is that the
the basic pay for working not more than eight provisions of Article 95 of the
hours in consonance with the Labor Code and its implementing rules speak of
requirement of wage legislations. Meanwhile, if the number of months in a
April 9, 1993, a Friday, happens year for entitlement to said benefit.
to be the employee’s scheduled rest day, and he Consequently, part-time employees are also
is permitted or suffered to work, entitled to the full five days service incentive
he is entitled to an additional 30 leave benefit and not on a pro-rata
basis
If the work is partial, the pay should also be .3
partial. This is a fair principle
that applies to the entitlement to holiday pay of a Teachers of private schools on contract basis are
part-time worker. He works entitled to service incentive
part only of the normal eight-hour shift, hence he leave.
should not expect a full day’s
pay on a holiday Leave credits are normally converted
into their cash equivalent based on the last
The basis is any of the following, whichever prevailing salary received by the
yields the employee.
highest amount: (1) the regular wage per day; 1
(2) the basic wage on the working
day preceding the regular holiday if the In case the service charge is abolished, the share
employee is present or on leave with of covered employees
pay on the last working day immediately prior to shall be considered integrated in their wages.
the regular holiday; (3) the The basis of the amount to be
average of his basic wages for the last seven integrated shall be the average monthly share of
working days for employees who are each employee for the past
paid by results; or (4) the basic wage on the twelve (12) months immediately preceding the
particular holiday, if worked. abolition or withdrawal of such
charges.
The phrase “one year of service” means service 2
within twelve (12) months,
whether continuous or broken, reckoned from
the date the employee started
working. The period includes authorized
absences, unworked weekly rest days,
and paid regular holidays. If through individual
or collective bargaining, company
practice or policy, the period of working days is
less than twelve (12) months,
said period shall be considered as one year for
the purpose of determining the
entitlement to the service incentive leave.
2