Overtime, Premium Pay, and Waivers—Everything You Need to Know

This explainer covers normal hours of work, when 12-hour shifts are allowed, how to compute overtime and premiums (rest day, holiday, night shift), who is exempt, rules on waivers/quitclaims, and compliance tips under Philippine labor standards.

1) Baseline rule: the “8 hours a day” standard

Normal hours of work for covered employees are 8 hours a day. Work beyond 8 in a day is overtime and must be paid with the proper premium.
The Labor Code carves out categories not covered by the hours-of-work rules (see §6 below).

Key idea: The law does not set an absolute daily maximum for private-sector work; instead, it sets an 8-hour normal day, requires overtime premiums beyond that, and imposes health/safety safeguards.

2) So… are 12-hour shifts legal?

Yes—if any of the following are true and the conditions are met:

Regular schedule with overtime: The employee works 12 hours in a day, where hours 9–12 are paid as overtime (and any night/rest-day/holiday premium that applies).
- Must still observe meal period (see §5) and OSH standards (§9).
Compressed Workweek (CWW): The company and employees agree in writing to a CWW (e.g., 4×12 for a 48-hour week, or 3×12 for 36 hours). In a compliant CWW:
- Daily hours may exceed 8 without overtime if the weekly or bi-weekly total does not exceed the agreed normal (often 48 hours/week) and there is no diminution of benefits.
- Overtime applies if work exceeds the scheduled compressed hours for the day (e.g., beyond the agreed 12).
- DOLE’s flexible work/CWW advisories require: • Voluntary agreement by majority of affected employees (or through the union), • No reduction in take-home pay/benefits, • Notice to DOLE office, and • OSH risk assessment and safeguards for long shifts.
Emergencies or exigent circumstances allowed by law/regulations, with proper compensation.

Bottom line: A 12-hour shift is lawful if it’s (a) paid correctly as OT (and premiums), or (b) covered by a compliant CWW; and in all cases, OSH and meal-break rules must be observed.

3) Overtime (OT) and premium pay—how to compute

Let’s define a few terms first.

Basic hourly rate = (Daily rate) ÷ 8.
Overtime on an ordinary working day = hourly rate × 1.25 × (OT hours).
Night shift differential (NSD) = 10% of the regular hourly rate for hours worked between 10:00 p.m. and 6:00 a.m., whether or not OT.
Rest-day/Special Day/Regular Holiday pay rules stack with OT rules (see tables below).

A) Ordinary working day (not a rest day/holiday)

First 8 hours: 100% of hourly rate.
OT (beyond 8): +25% of hourly rate for each OT hour.
NSD: +10% of hourly rate for the portion between 10 p.m.–6 a.m.
OT at night: You compute OT premium and NSD (they stack, because they compensate different things—excess hours vs. night work).

B) Rest day (no special/regular holiday)

First 8 hours: +30% premium → 130% of hourly rate.
OT on rest day: +30% of the hourly rate of the day for each OT hour (i.e., 130% base then apply +30% on the hourly rate).

C) Special (non-working) holiday (not a rest day)

First 8 hours: +30% premium → 130% of hourly rate (if required to work).
OT on special day: +30% of the hourly rate of the day for each OT hour.
If the special day also happens to be a rest day, the base premium increases (commonly +50% for the first 8 hours), and OT is computed on that day rate.

D) Regular holiday (not a rest day)

First 8 hours: 200% of daily/hourly rate.
OT on regular holiday: +30% of the hourly rate of the day for each OT hour.
If the regular holiday falls on a rest day, the base rises further (commonly +30% on top of 200% for the first 8 hours), then compute OT on that day rate.

Tip: When two conditions coincide (e.g., overtime at night on a rest day), compute each applicable premium on the correct day rate and hour block, then add the results. Keep a clean worksheet showing each step.

4) Sample computations (step-by-step)

Assumptions:

Monthly basic salary: ₱20,000
Company uses the common divisor 26 working days/month.
Daily rate = ₱20,000 ÷ 26 = ₱769.23 (rounded to centavos after full calc).
Hourly rate = ₱769.23 ÷ 8 = ₱96.15.

Example 1: 12-hour ordinary workday ending at 9:00 p.m. (no night work)

Regular 8 hours pay: 8 × ₱96.15 = ₱769.20 (minor rounding difference from ₱769.23 daily; companies typically round at the day level).
OT hours: 4
OT pay: 4 × (₱96.15 × 1.25)
- ₱96.15 × 1.25 = ₱120.19 (₱96.15 + ₱24.04)
- OT total: 4 × ₱120.19 = ₱480.76
Total for the day: ₱769.23 (or ₱769.20) + ₱480.76 ≈ ₱1,249.99–₱1,250.

Example 2: 12-hour day with 2 night hours (10:00 p.m.–12:00 a.m.)

Start from Example 1, then add NSD for 2 hours:
- NSD hourly = 10% × ₱96.15 = ₱9.62
- NSD total = 2 × ₱9.62 = ₱19.24
Grand total ≈ ₱1,269.23.

If any of those two night hours are also OT, you still pay OT premium on them and the NSD for that same time block.

5) Meal periods, rest breaks, travel time

Meal period: Employers must provide not less than 60 minutes for regular meals (unpaid), unless a valid exception applies (e.g., shorter meal under special circumstances with premium or agreement in certain industries).
Short rest breaks (e.g., 5–20 minutes) are generally compensable working time.
Travel time: If required by the employer and primarily for its benefit (e.g., job site to job site), it is typically compensable; ordinary home-to-work commute is not.

6) Who is not covered by the 8-hour/OT rules?

Common exemptions under the Labor Code and jurisprudence include:

Managerial employees (those who lay down or execute management policies, or whose primary duty involves management; work hours are not regulated).
Members of the managerial staff meeting the legal test.
Field personnel whose time and performance are unsupervised.
Those paid by results (e.g., piece-rate/commission) when hours cannot be determined with reasonable certainty and are covered by an approved performance-based scheme.
Domestic workers (kasambahay) are governed by RA 10361 (Kasambahay Law) with its own hours/rest/benefits scheme.
Government employees are under the Civil Service rules, not the Labor Code.
Health personnel in large cities have special rules (e.g., 40-hour weeks with specific additional compensation when beyond 8/day or 5/day in hospitals/clinics).

Important: Job titles don’t control—actual functions and conditions do. Misclassification is a frequent compliance risk.

7) Rest day and weekly limits

Employees are entitled to a 24-consecutive-hour rest after 6 consecutive workdays.
Employers set the weekly rest day but must consider the employee’s religious preference when possible.
Long-shift rosters (e.g., 2-2-3, 4×12) must still ensure the weekly rest-day entitlement and proper premiums.

8) Flexible work and Compressed Workweek (CWW)

Core compliance elements for a valid CWW:

Written agreement with majority of affected employees or the union.
Clear schedule (e.g., 4 days × 12 hours = 48 hours a week).
No reduction in take-home pay and benefits versus the previous schedule.
Overtime applies only when work exceeds the agreed daily compressed hours or the agreed weekly cap.
Prior notice to DOLE (Regional/Field Office) of adoption/changes.
OSH assessment addressing fatigue, hydration, lighting, ergonomics, and recovery, plus medical surveillance for high-risk jobs.

9) Occupational Safety and Health (OSH) for 12-hour shifts

Employers must identify and control fatigue-related risks in extended shifts:
- Adequate meal/rest breaks, hydration, and recovery time between shifts.
- Maximum consecutive night shifts policies (e.g., limit to 3–4 before a longer recovery).
- Transport/home-safe arrangements for late-night dismissals when applicable.
- High-risk tasks (e.g., confined spaces, heavy machinery, chemical exposure) require enhanced monitoring and possibly shorter work blocks.
Mandatory OSH orientation, first-aiders, and medical emergency plans apply according to enterprise size/risk.

10) Waivers, quitclaims, and “OT waivers”

Statutory labor standards (e.g., minimum wage, OT, holiday/rest-day pay, NSD, service incentive leave) are generally non-waivable.
Quitclaims/waivers are looked upon with disfavor and may be invalid if there is fraud, coercion, mistake, or unconscionable consideration.
Valid settlements are typically those that are voluntary, informed, and for a reasonable consideration—but even then, they usually cannot defeat clear statutory entitlements.
“I agree to work 12 hours without overtime” is not enforceable unless the setup falls under a valid CWW (and even then, only up to the agreed compressed hours).

11) Common pitfalls (and how to avoid them)

Counting errors in stacked premiums (e.g., OT + NSD + rest-day). Keep a line-by-line calculator sheet per day.
Rounding too early in the math. Multiply first, round at the end to the centavo.
Misclassifying employees as “managerial” or “field” without meeting the legal test.
Skipping DOLE notice or lacking written agreement for CWW/flexible work.
Ignoring meal break or pushing unsafe back-to-back 12s without proper recovery time.
De-facto diminution of benefits when moving to CWW (e.g., eroding allowances tied to “per day” metrics). Adjust policies to preserve value.

12) Quick reference tables

Premiums (first 8 hours)

Ordinary day: 100%
Rest day: 130%
Special (non-working) holiday: 130%
Regular holiday: 200%
Rest day + Special holiday: commonly 150%
Rest day + Regular holiday: commonly 260%

Overtime (beyond first 8 hours)

Ordinary day OT: +25% of hourly rate
Rest day or Special holiday OT: +30% of hourly rate of the day
Regular holiday OT: +30% of hourly rate of the day

Night Shift Differential

Any day between 10:00 p.m.–6:00 a.m.: +10% of the regular hourly rate for those hours

Note: Company CBAs or policies may grant higher rates; apply the more favorable rule to the employee.

13) Practical compliance checklist (for 12-hour rosters)

Written CWW/flexible work agreement (if used), with DOLE notice.
Timekeeping system that captures start/stop, breaks, and flags rest-day/holiday hours.
Payroll rules that stack OT/NSD/holiday/rest-day correctly.
Meal period of at least 60 minutes (absent a lawful, documented exception).
OSH controls for fatigue and night work; training logs up to date.
Classification audit (managerial/field/persons paid by results) with documentation.
Policy on call-ins/emergencies that sets premiums and limits.
Clear payslips showing hour types and rates.

14) FAQs

Q: Can an employee “volunteer” to skip OT pay for convenience? A: No. Overtime is statutory unless within a valid CWW schedule; private waivers don’t defeat the law.

Q: If we adopt 4×12 (48 hours/week), do we still pay OT? A: Not for the 12 hours that are part of the agreed CWW day, provided all CWW conditions are met. Beyond 12 on a CWW day is OT; work on rest days/holidays still earns respective premiums.

Q: Does a 12-hour shift automatically include paid meal time? A: No. You must provide at least 60 minutes for meals, typically unpaid, unless a valid shorter meal arrangement applies with proper compensation/protection.

Q: Are short coffee breaks paid? A: Generally yes, if they’re short (e.g., 5–20 minutes) and under employer control.

Q: What’s the weekly cap? A: There’s no single magic number in law, but 48 hours/week is the traditional benchmark for normal full-time schedules. Longer totals raise fatigue/OSH and overtime exposure.

Takeaway

12-hour shifts are lawful in the Philippines if you either pay overtime and other premiums correctly or operate under a compliant compressed workweek with no loss of benefits—and in all cases, you honor meal breaks, weekly rest, and OSH requirements.
Avoid “waiver” shortcuts; focus on proper structure, documentation, and pay math.