OVERTIME-PAY_SG (1)

Unit 4: Salaries and Wages
Lesson 4.5.
Overtime Pay
Contents
Introduction 1
Learning Objectives 2
Quick Look 3
Learn the Basics 4

On a Regular Day 6
On a Rest Day or Special Day 8
On a Rest Day on a Special Day 10
On a Regular Holiday 12
On a Rest Day on a Regular Holiday 14
Case Study 16
Keep in Mind 18
Try This 19
Practice Your Skills 20
Challenge Yourself 22
Bibliography 24
Lesson 4.5.
Overtime Pay
Introduction
Can you recall instances when members of your household worked overtime? Were they
willing to work the extra hours? What made them do so? If they were not willing to work
overtime, what do you think was the reason?
Article 83 of the Philippine Labor Code states that employees' regular work hours must not
exceed eight hours a day. The law emphasized that work beyond the regular 8-hour period
can be arranged between the employer and the employee; however, the employee is
entitled to additional pay or overtime pay.
This lesson will introduce the different types of overtime and the process of calculating
them. This lesson will be useful whether you become an employee or employer in the
future.
4.5. Overtime Pay 1

Learning Objectives DepEd Competency

At the end of this lesson, you should be able
to do the following: Compute overtime pay (ABM_BM11SW- IIe).
● Compare the different types of overtime

and their corresponding rates.
● Demonstrate the process of computing
for the overtime pay.
● Develop a system for computing the
overtime pay.
4.5. Overtime Pay 2

Quick Look
How Much is Overtime?

Dominick is an employee who is paid ₱120 per hour or ₱960 per day. He is required to work
for 8 hours a day. He was requested to work on December 23, 2021, even though it was his
rest day. How much would he earn for that day if he worked for 10 hours?
Solution
Step 1: Identify what is required in the problem.
You are asked to compute the earnings of Dominick on December 23,2021.
Step 2: Identify the given in the problem.

The hourly rate of Dominick is ₱120, and he worked for 10 hours even
though he is only required to work for 8 hours. Since December 23 is his rest
day, his regular rate of pay is 130%, and the overtime rate is also 130%
Step 3: Write the working equation.

Since Dominick did overtime work, his earnings will be the sum of the regular
pay and the overtime pay.
Earnings = regular pay + overtime pay
Multiplying the regular rate to the regular pay to compute the regular pay.
Regular Pay = (regular rate)(regular pay)
To compute the overtime pay, it is the product of the regular rate, the hourly rate,
the number of overtime hours, and the overtime rate.
Overtime pay = (regular rate)(hourly rate)(no of hours overtime)(OT rate)
Step 4: Substitute the given values.

Overtime pay = (Hourly Rate)(no of hours overtime)(overtime rate)
Overtime pay = (130%)(₱120)(2 hours)(130%)
Overtime pay = ₱405.60
4.5. Overtime Pay 3

Regular Pay = (regular rate)(regular pay)

Regular Pay = (130%)(₱960)
Regular Pay = ₱1,248
Step 5: Find the answer.

The total earnings of Dominick for that day are ₱1,653.60.
Questions to Ponder
1. Based on the computation, what is the overtime rate of pay on a rest day?
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
2. How do you compute the total earnings of an employee who has done overtime
work?
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
3. Why do you think it is necessary to give higher regular rate for overtime pay?
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
Learn the Basics
Working or rendering service takes time and effort. An 8-hour limit on work is necessary for
an employee or worker to have time for rest, relaxation, and social interactions. However,
there are times and situations when members of the business organization need to work
extra hours. For instance, it is necessary when the firm needs to deliver the client’s order on
time or during seasons when more customers are coming in.
4.5. Overtime Pay 4

To compensate for the extra time and effort provided by the employee, over and above the
8-hour limit, employers provide them with overtime pay.
Essential Question
Is working long hours with overtime pay beneficial for both the employees
and employers?
Overtime pay or overtime premium refers to the additional pay for work hours outside the
regular hours. Overtime can sometimes be mandatory or required; in that case, the overtime
pay is still compensated with greater than or equal to 125% of the regular rate. These are the
standard rates of overtime pay:
Table. Summary of overtime rates on different types of working day.
Type of Overtime Regular Rate Overtime Rate
On a regular day 100% 125%
On a rest day or special day 130% 130%
On a rest day on a special day 150% 130%
On a regular holiday 200% 130%
On a rest day on a regular holiday 260% 130%
To calculate the overtime pay, you may use the following formula:
𝑂𝑣𝑒𝑟𝑡𝑖𝑚𝑒 𝑝𝑎𝑦 = 𝑅𝑅 × 𝑂𝐻 × 𝐻𝑅 × 𝑂𝑅
where,
RR = regular rate
OH = overtime hours
HR = hourly rate
OR = overtime rate
4.5. Overtime Pay 5

Meanwhile, to compute for the earnings for the day, the following formula will be applied:
𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠 = 𝑅𝑒𝑔𝑢𝑙𝑎𝑟 𝑝𝑎𝑦 + 𝑂𝑣𝑒𝑟𝑡𝑖𝑚𝑒 𝑝𝑎𝑦
On a Regular Day
A regular day refers to the regular working day agreed upon by the employer and the
employee. A regular day is 8 hours a day, inclusive of rest periods but exclusive of meal
breaks. The regular wage rate for a regular day is 100%, and the overtime rate for a regular
day is 125%.
Closer Look
Overtime Pay on a Regular Day

Jerico is an employee working from Thursday to Monday, being paid ₱130
per hour or ₱1040 per day. On a Saturday, he was required to render 3
hours of overtime work.

You are asked to compute Jerico’s overtime pay.

His hourly rate is ₱130, and he worked 3 hours of overtime. The
regular rate is 100%, and the overtime rate is 125%.

Step 4: Substitute the given.

𝑂𝑣𝑒𝑟𝑡𝑖𝑚𝑒 𝑝𝑎𝑦 = 100% × 3 ℎ𝑜𝑢𝑟𝑠 × ₱130 × 125%

𝑂𝑣𝑒𝑟𝑡𝑖𝑚𝑒 𝑝𝑎𝑦 = ₱487. 50
Jerico earned ₱487.50 worth of overtime pay for that day.
4.5. Overtime Pay 6

Earnings for Overtime on a Regular Day

If his regular work hours are 8 hours, how much would his total earnings
be for that day?

You are asked to compute Jerico’s total earnings.

His regular rate is ₱130. The regular rate is 100%.

Step 4: Substitute the given.

𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠 = ₱1, 040 + ₱487. 50

𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠 = ₱1, 527. 50
Jerico’s total earnings for that day are ₱1,527.50.
Check Your Progress
An employee is paid ₱65 per hour of work and was requested to render 2
hours of overtime work regularly. How much overtime pay would they earn?
4.5. Overtime Pay 7

On a Rest Day or Special Day

Rest day is a day or days when a person is not required to work, as agreed upon by the
employer and the employee. On the other hand, a special day is mandated as a Special
Working Holiday or a Special Non-working Holiday. The national or local government has the
mandate to announce a special day. An employee receives a 130% regular rate on both rest
days and special days. On top of that, the overtime rate during rest days or special days is
also 130%.
Closer Look
Overtime Pay on a Rest Day or Special Day

Connie is an employee working from Monday to Friday, being paid ₱145
per hour or ₱1,160 per day. On a Saturday, her rest day, she was required
to render 2 hours of overtime work. How much overtime pay would he
earn for that day?
Solution:
You are asked to compute Connie’s overtime pay.

Her hourly rate is ₱145, and she worked overtime for 2 hours.
The regular rate is 130%, and the overtime rate is 130%.


Overtime Pay = (130%)(2 hours)(₱145)(130%)

Overtime Pay = ₱490.10
Connie earned ₱490.10 worth of overtime pay for that day.
4.5. Overtime Pay 8

Earnings for Overtime on a Rest Day or Special Holiday

If her regular working hours are 8 hours for that day, how much would
her total earnings be?
Solution:
You are asked to compute Connie’s total earnings. Before adding
the total earnings, calculate the regular pay first.

Her hourly rate is ₱145. The regular rate is 130%.

𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠 = 𝑅𝑒𝑔𝑢𝑙𝑎𝑟 𝑃𝑎𝑦 + 𝑂𝑣𝑒𝑟𝑡𝑖𝑚𝑒 𝑝𝑎𝑦
𝑅𝑒𝑔𝑢𝑙𝑎𝑟 𝑃𝑎𝑦 = 𝑅𝑒𝑔𝑢𝑙𝑎𝑟 𝑟𝑎𝑡𝑒 × 𝐷𝑎𝑖𝑙𝑦 𝑟𝑎𝑡𝑒
Step 4: Substitute the given values and then solve.

Solve for regular pay first:
Regular Pay = (regular rate)(daily rate)
Regular Pay = (130%)(₱1,160)
Solve the total earnings.

Earnings = reg pay + OT pay
Earnings = ₱1,508 + ₱490.10
Step 5: State the answer.

Earnings = 1,998.10
Connie’s total earnings for that day are ₱1,998.10.
4.5. Overtime Pay 9

Check Your Progress
A mason is paid ₱75 per hour of work. He rendered 2 hours of overtime

work after the regular hours on a rest day that is also a special working
holiday. How much overtime pay would he earn?
On a Rest Day on a Special Day

If an employee were required to work on a rest day that falls on a special day or vice versa,
they would receive a 150% regular rate and a 130% overtime rate.
Closer Look
Overtime Pay on a Rest Day on a Special Day

Jed is an employee working from Tuesday to Saturday, being paid ₱135
per hour or ₱1,080 per day. On November 2, his rest day that falls on a
special holiday, he was required to work and render 1.5 hours of
overtime work. How much overtime pay would he earn for that day?
Solution:
You are asked to compute Jed’s overtime pay.

His hourly rate is ₱135, and he worked overtime for 1.5 hours.
The regular rate is 150%, and the overtime rate is 130%.

4.5. Overtime Pay 10


Overtime Pay = (150%)(1.5 hours)(₱135)(130%)

Jed earned ₱394.88 worth of overtime pay for that day.
Earnings for Overtime on a Rest Day on a Special Holiday

Given the information above, how much would his total earnings be?
Solution:
You are asked to compute Jed’s total earnings. Before adding the
total earnings, compute the regular pay first.

His hourly rate is ₱135. The regular rate is 150%.


Solve the regular pay first:
Regular Pay = (150%)(₱1,080)
Solve the total earnings:

Earnings = ₱1,620+ ₱394.88

Earnings = ₱2,014.88
Jed’s total earnings for that day are ₱2,014.88.

On a Regular Holiday
Regular holidays have a fixed holiday like New Year's Day, Independence Day, and
Christmas Day. The only exceptions to this rule are National Heroes Day and the religious
holidays, such as Maundy Thursday, Good Friday, Eid'l Fitr, and Eidul Adha. The regular rate
on those days is 200% or the so-called double pay. On the other hand, the overtime rate for
regular holidays is 130%.
Closer Look
Overtime Pay on a Regular Holiday

John is an employee working from Wednesday to Sunday, being paid
₱100 per hour or ₱800 per day. On January 1, 2022, he was required to
work and render 4 hours of overtime work. How much overtime pay
would he earn for that day?
Solution:
You are asked to compute John’s overtime pay.

His hourly rate is ₱100, and he worked overtime for 4 hours. The


Overtime Pay = (200%)(4 hours)(₱100)(130%)

Overtime Pay = ₱1,040
John earned ₱1,040 worth of overtime pay for that day.

Earnings for Overtime on on a Regular Holiday

Solution:
You are asked to compute John’s total earnings. Before adding
the total earnings, compute the regular pay first.



Solve the regular pay.
Regular Pay = (200%)(₱800)

Earnings = ₱1,600+ ₱1,040

Earnings = ₱2,640
John’s total earnings for that day are ₱2,640.

Check Your Progress
A saleslady receives ₱60 per hour of work. She was required to work for 8
hours, and she also rendered 3 overtime hours on a regular holiday. How
much would she earn?
On a Rest Day on a Regular Holiday

If an employee was required to work on a rest day that falls on a regular holiday or vice
versa, the regular rate of pay is 260%, and the overtime rate is 130%.
Closer Look
Overtime Pay on a Rest Day on a Regular Holiday

Aaron is an employee working from Monday to Friday, being paid ₱165
per hour or ₱1,320 per day. On December 25, 2021, he was required to
work and render 1 hour of overtime work. How much overtime pay would
he earn for that day?
Solution:
You are asked to compute John’s overtime pay.

His hourly rate is ₱100, and he worked 1 hour overtime. The



Overtime Pay = (260%)(1 hour)(₱165)(130%)

Aaron earned ₱557.70 worth of overtime pay for that day.
Earnings for Overtime on a Rest Day on a Regular Holiday

Solution:
You are asked to compute John’s total earnings. Before
computing the total earnings, compute the regular pay first.



Solve the regular pay.
Regular Pay = (260%)(₱1,320)


Earnings = ₱3,432+ ₱557.70

Earnings = ₱3,989.70
Aaron’s total earnings for that day are ₱3,989.70.
Case Study
Retail Customers Resolve an Overtime Pay Dispute.

The Philippine Overseas Employment Administration or POEA received a
complaint from former employees of a huge company based in the
Middle East. Upon the end of the contract, the said employees were then
sent back to the Philippines. They complained to POEA about the
company not paying their overtime pay. The POEA then threatened the
company’s accreditation and reputation because of the said complaint.
The said company is apprehensive of the issue because it might affect
their existing contracts and future projects, and they might face penalties
sanctioned by the government.
Along the process of investigation about the former employees’

complaints, Rensol dug in, and the evidence revealed that the employees
rendered no overtime job and the company has no monetary obligations
to the employees.
In some cases that an Overseas Filipino Worker is still under a legally

binding contract, the Department of Labor and Employment (DOLE) or
the Overseas Workers Welfare Administration (OWWA) will be mediating
between the company and the employee. After the mediation, there will
be discussions regarding the complaint, finding a mutually justifiable
solution. Not all complaints need to be a legal battle.
Even though the employees have arrived home for over two months, an
investigation was made about the complaint with the intervention of the

POEA and Rensol. This case is above the agency’s jurisdiction, but Rensol
Recruitment vowed to serve beyond limitations.
How Rensol helped a Retail Customer resolve an Overtime

Pay Dispute: A Case Study
Johann Legis, “How Rensol helped a Retail Customer resolve
an Overtime Pay Dispute: A Case Study,” Rensol Recruitment,
https://rensol.com/overtime-pay-due-case-study/, last
accessed on December 12, 2021.

Keep in Mind
● Overtime pay refers to the additional pay for work hours outside the regular hours.
The regular and overtime rates vary according to the type of day:
● To calculate the overtime pay, you may use the following formula:
𝑂𝑣𝑒𝑟𝑡𝑖𝑚𝑒 𝑝𝑎𝑦 = 𝑅𝑒𝑔𝑢𝑙𝑎𝑟 𝑟𝑎𝑡𝑒 × 𝑂𝑣𝑒𝑟𝑡𝑖𝑚𝑒 ℎ𝑜𝑢𝑟𝑠 × 𝐻𝑜𝑢𝑟𝑙𝑦 𝑟𝑎𝑡𝑒 × 𝑂𝑣𝑒𝑟𝑡𝑖𝑚𝑒 𝑟𝑎𝑡𝑒
● To compute for the earnings for the day, the following formula will be applied:

Try This
A. Matching Type. Match the regular rates in Column B to the type of day in Column A.
Column A Column B
_____________ 1. Rest or Special Day a. 100%
_____________ 2. Regular Holiday b. 130%
_____________ 3. Rest Day on Special Day c. 150%
_____________ 4. Regular Day d. 200%
_____________ 5. Rest Day on Regular e. 260%

Holiday
B. Identification. Identify the overtime rate on the following types of day.
________________ 1. Rest or Special Day
________________ 2. Regular Holiday
________________ 3. Rest on Special Day
________________ 4. Regular Day
________________ 5. Rest Day on Regular Holiday

Practice Your Skills
Earning from Overtime

Compute the earnings of the following employees. Show your complete solutions.
1. Red is receiving ₱140 per hour of work, and he is required to work for 8 hours every
day. He worked for 9.5 hours on his rest day. How much overtime pay would he earn
that day?
2. Cyra is being paid ₱1,600 for every regular 8-hour day. If she did 2 hours of overtime
work on a regular day, how much did she earn for that day?

3. Vernie is an employee who is required to work for 8 hours every day. He receives ₱85
per hour of work. On Christmas Day, also his rest day, he was requested to work for
11 hours to relieve another employee. How much overtime pay would he earn that
day?
4. Eloisa is an employee who is paid ₱1,600 for every 8 hours of work. On a special
working holiday, which happens to be her rest day, she worked for 9.5 hours. How
much would she earn that day?

5. Jeffrey is an employee who is paid ₱125 per hour. On Christmas day, he was
requested to work for 8 hours and do mandatory overtime of 3 hours. How much is
his total earnings that day?
Challenge Yourself
Answer the following questions:

1. Rolin is a full-time employee being paid ₱1,350 per day and must work for 8 hours a
day. On a special working holiday, which happens to be his rest day, he was
required to work for 10 hours.
a. How much is his hourly rate?
b. How much would be his overtime pay?
c. How much would be his total earnings for that day?

2. In your coffee shop, there are two employees: A barista and a cashier. Both of them
are paid ₱75 per hour. The barista worked overtime on his rest day for 4 hours. On
the other hand, the cashier worked overtime on a regular holiday for 2 hours.
a. Who earned more overtime pay?
b. What is the factor that caused the overtime pay difference?

3. In a machine shop, there are two employees. Both of them are paid ₱110 per hour.
Employee A worked overtime on a regular holiday for 2 hours. On the other hand,
Employee B worked overtime on a regular holiday that is also his rest day for 2
hours.
a. Who earned more overtime pay?
b. Why did one employee earn more than the other?
Bibliography
Clendenen, Gary, and Stanley Salzman. Business Mathematics. Essex: Pearson Education
Limited, 2015.
Santos, Durwin and Sta. Maria, Karl Bryan. Business Math. Makati City: Don Bosco Press,
Inc., 2015.
Sterling, Mary Jane. Business Math for Dummies. NJ: Wiley, 2008.
http://mis.kp.ac.rw/admin/admin_panel/kp_lms/files/digital/SelectiveBooks/Mathemati
cs/Business%20Math%20For%20Dummies%20-%20%20Mary%20Jane%20Sterling.pdf

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Unit 4: Salaries and Wages

Learn the Basics 4

Practice Your Skills 20

4.5. Overtime Pay 1

Learning Objectives DepEd Competency

● Compare the diﬀerent types of overtime

4.5. Overtime Pay 2

How Much is Overtime?

Step 2: Identify the given in the problem.

Step 3: Write the working equation.

Step 4: Substitute the given values.

4.5. Overtime Pay 3

Regular Pay = (regular rate)(regular pay)

Step 5: Find the answer.

Learn the Basics

4.5. Overtime Pay 4

Table. Summary of overtime rates on diﬀerent types of working day.

Type of Overtime Regular Rate Overtime Rate

On a regular day 100% 125%

On a rest day or special day 130% 130%

On a rest day on a special day 150% 130%

On a regular holiday 200% 130%

On a rest day on a regular holiday 260% 130%

4.5. Overtime Pay 5

𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠 = 𝑅𝑒𝑔𝑢𝑙𝑎𝑟 𝑝𝑎𝑦 + 𝑂𝑣𝑒𝑟𝑡𝑖𝑚𝑒 𝑝𝑎𝑦

Overtime Pay on a Regular Day

Step 1: Identify what is required in the problem.

Step 2: Identify the given in the problem.

Step 3: Write the working equation.

Step 4: Substitute the given.

Step 5: Find the answer.

Jerico earned ₱487.50 worth of overtime pay for that day.

4.5. Overtime Pay 6

Earnings for Overtime on a Regular Day

Step 1: Identify what is required in the problem.

Step 2: Identify the given in the problem.

Step 3: Write the working equation.

Step 4: Substitute the given.

Step 5: Find the answer.

Jerico’s total earnings for that day are ₱1,527.50.

Check Your Progress

4.5. Overtime Pay 7

On a Rest Day or Special Day

Overtime Pay on a Rest Day or Special Day

Step 2: Identify the given in the problem.

Step 3: Write the working equation.

Step 4: Substitute the given values.

Step 5: Find the answer.

Connie earned ₱490.10 worth of overtime pay for that day.

4.5. Overtime Pay 8

Earnings for Overtime on a Rest Day or Special Holiday

Step 2: Identify the given in the problem.

Step 3: Write the working equation.

Step 4: Substitute the given values and then solve.

Solve the total earnings.

Step 5: State the answer.

Connie’s total earnings for that day are ₱1,998.10.

4.5. Overtime Pay 9

Check Your Progress

A mason is paid ₱75 per hour of work. He rendered 2 hours of overtime