Executive summary

A compressed workweek (CWW) is a voluntary flexible work arrangement where the normal workweek is “compressed” into fewer but longer workdays (e.g., 4×12, 5×9.6), without increasing the weekly total beyond the company’s normal workweek (commonly 48 hours maximum under labor standards; many firms use 40–44). In a valid CWW:

The longer daily hours (beyond 8) are not overtime if they are part of the approved CWW and the weekly total does not exceed the normal workweek agreed with employees (e.g., 48).
Overtime (OT) starts when work exceeds the approved daily hours under the CWW or the weekly cap, whichever comes first.
Rest-day work still earns rest-day premiums, and OT on a rest day earns compounded premiums.
Night shift differential (NSD) (10% per hour from 10:00 p.m. to 6:00 a.m.) continues to apply, layered on top of the applicable day’s rate.
CWW does not convert rest days or holidays into ordinary days; the usual premium rules still apply.

Below is a practical, compute-ready guide.

1) What makes a CWW valid (so longer daily hours aren’t OT)?

Voluntary, consensual adoption: The workforce (or union) agrees; no diminution of take-home pay and benefits.
Defined schedule: Written policy stating which days are workdays, how many hours per day, weekly cap, and rest days.
No increase in weekly hours: The total weekly hours under CWW cannot exceed the company’s normal workweek (commonly ≤ 48).
Meal break: At least 60 minutes off-the-clock for meals (not paid and not counted as hours worked unless the nature of work requires otherwise).
Coverage: Rank-and-file and non-exempt employees; managerial employees (and those validly exempt from hours-of-work rules) do not earn OT/rest-day premiums.

If any of the above is missing, hours beyond 8 risk being treated as overtime.

2) Key definitions for computation

Basic Daily Hours under CWW (BDH-CWW) – the approved daily number of hours (e.g., 12 in a 4×12).
Weekly Cap – the approved weekly total (e.g., 48).
Basic Hourly Rate (BHR) – Monthly Rate ÷ (Daily rate divisor × hours per day basis).
- Common practice for a 6-day/48-hour week:
  - Daily Rate = Monthly ÷ 26;
  - BHR = Daily Rate ÷ 8 (for base computations).
- If your CWW uses a different weekly scheme, use the company’s lawful divisors consistently.
Night Shift Differential (NSD) – 10% of the hourly rate applicable to the day for each hour worked 10:00 p.m.–6:00 a.m.
Rest Day – the scheduled 24-hour period of rest. CWW must specify this (e.g., Fri–Sun off in a 4×12).

3) When is overtime triggered in a CWW?

OT applies when any of the following happens:

Daily excess: Hours beyond BDH-CWW on a workday (e.g., the 13th hour on a 4×12).
Weekly excess: Total hours worked in the week exceed the Weekly Cap (e.g., >48).
Work on scheduled rest day (even if weekly cap isn’t breached): earns rest-day premium; excess over 8 on a rest day is rest-day OT.
Work on a holiday: apply holiday rules; excess over 8 that day is holiday OT (with corresponding compounding).
Unauthorized changes to the CWW (e.g., adding a 5th 12-hour day without proper consent): the excess hours are OT.

4) Premium rates (summary table)

Situation	First 8 hours (rate multiplier)	Overtime hours (rate multiplier)
Ordinary workday	1.00 × BHR	1.25 × BHR per OT hour
Rest day	1.30 × BHR	1.69 × BHR per OT hour (1.30 × 1.30)
Special non-working day	1.30 × BHR	1.69 × BHR per OT hour
Special day that is also rest day	1.50 × BHR	1.95 × BHR per OT hour (1.50 × 1.30)
Regular holiday	2.00 × BHR	2.60 × BHR per OT hour (2.00 × 1.30)
Regular holiday that is also rest day	2.60 × BHR	3.38 × BHR per OT hour (2.60 × 1.30)

NSD: add +10% of the rate per hour applicable to that day (e.g., 10% of 1.30×BHR on a rest day) for hours between 10:00 p.m. and 6:00 a.m. Important: On a CWW ordinary workday, hours within BDH-CWW are paid at 1.00× (not 1.25×), but excess beyond BDH-CWW earns 1.25×.

5) How to compute (step-by-step)

Step A — Fix the baseline

Determine the Monthly Rate and the company’s divisors (e.g., Daily = Monthly/26; BHR = Daily/8).
Identify the week’s CWW schedule (BDH-CWW and Weekly Cap).
Mark rest days and holidays.

Step B — Compute per day

Ordinary CWW workday:
- Pay BDH-CWW hours at 1.00× BHR.
- If the employee works beyond BDH-CWW, pay OT at 1.25× BHR for the excess.
- Add NSD where applicable (10% of the day’s hourly rate, exclusive of OT premium portion).
Rest day worked:
- First 8 hours at 1.30× BHR.
- Excess over 8 at 1.69× BHR.
- Add NSD (10% of 1.30× BHR for night hours).
Holiday worked: apply the multipliers in the table. Add NSD where applicable.

Step C — Weekly check

Sum all hours worked. If total > Weekly Cap, the excess (not already paid as OT) should be reclassified as weekly OT at the correct rate for the day(s) where the excess occurred.

6) Worked examples (illustrative only)

Assume:

Monthly basic = ₱30,000; Daily = ₱30,000 ÷ 26 = ₱1,153.85; BHR = ₱1,153.85 ÷ 8 = ₱144.23.
CWW = 4×12 (Mon–Thu 12 hours each), Fri–Sun rest; Weekly Cap = 48.
No allowances/differentials other than those computed; ignore income tax.

Example 1 — Ordinary CWW week, no excess

Mon–Thu: exactly 12 hours each, no night hours.
Pay = 48 hours × 1.00×BHR = 48 × 144.23 = ₱6,922. (Already embedded in the daily/weekly pay scheme; shown here for clarity.)
No OT, because 12-hour days are within BDH-CWW and total ≤48.

Example 2 — One day exceeded BDH-CWW by 2 hours

Mon–Wed: 12h; Thu: 14h (2 hours over).
Thu OT pay = 2 × 1.25 × 144.23 = ₱360.58 in addition to the regular 12h × 144.23.
Weekly total = 50h; already captured the 2h as daily OT; no further weekly OT.

Example 3 — Worked on rest day (Friday) for 8 hours

Friday: 8h rest-day work → 8 × 1.30 × 144.23 = ₱1,498.
Weekly total becomes 56h; because Friday was a rest day, those hours are already premium-paid. No extra weekly OT beyond what Friday already earned (but hours beyond Weekly Cap should never be used to deny the rest-day premium).

Example 4 — Rest day 10 hours, with 3 night hours (10 p.m.–1 a.m.)

First 8h: 1.30 × 144.23 × 8 = ₱1,498.
2h OT on rest day: 1.69 × 144.23 × 2 = ₱487.
NSD: 3h × (10% of 1.30×144.23) = 3 × (0.10 × 187.50) ≈ ₱56.
Total for Friday ≈ ₱1,498 + ₱487 + ₱56 = ₱2,041.

(Roundings for illustration.)

7) Practical rules & common pitfalls

State BDH-CWW clearly. If you adopt 4×12, write “12 hours” as the standard daily hours. Work beyond 12 then becomes overtime.
Don’t “average” away premiums. You cannot deny rest-day/holiday premiums by arguing that the weekly hours stayed at or under the cap. Day-type rules (rest/holiday) control the premium.
Shift crosses midnight: Split hours by day-type (ordinary/rest/holiday) and apply NSD to the hours between 10 p.m.–6 a.m.
Make-up days: If the designated rest day is used as a make-up workday, it is still a rest day unless the schedule is formally changed in advance under the CWW policy; otherwise, rest-day premiums apply.
Preventive suspension/standby: Only hours actually worked count for overtime; standby without work normally doesn’t—unless the employee is engaged to wait and substantially controlled (fact-specific).
Exempt employees: Managerial and other exempt categories are not entitled to OT/rest-day premiums—but be sure exemption is properly classified.
Meal period: The 60-minute meal break is not compensable; if the job reasonably requires an on-duty meal (rare), count and pay it.
Pay slips: Show regular hours, OT hours (by day-type), NSD hours, and rates to avoid disputes.

8) Implementation checklist (HR/Payroll)

☐ Written CWW policy with BDH-CWW, Weekly Cap, rest days, and consent.
☐ Timekeeping captures start/end, breaks, day-type, NSD hours.
☐ Payroll formulas coded for rate multipliers in the table above.
☐ Clear rule on schedule changes and notice (to avoid accidental rest-day work).
☐ Training for supervisors on approving OT and week-end work under CWW.
☐ Payslip layout shows breakdown (regular/OT/rest-day/holiday/NSD).

9) FAQs

Q1: If we run 5×9.6 (48 hours) and an employee works 11 hours on Tuesday, what’s OT? A: OT is 11 − 9.6 = 1.4 hours at 1.25× BHR, plus NSD if applicable.

Q2: Can we rotate the rest day weekly? A: Yes, if stated in the CWW policy and communicated in advance. Whatever day is designated as rest for that week carries rest-day premium if worked.

Q3: Does NSD apply to OT hours too? A: Yes—compute NSD on the hourly rate applicable to the day (e.g., 1.00×, 1.30×, 2.00×), then separately add the OT premium for the same hours. Do not compute NSD on the OT premium portion itself.

Q4: If we keep the week within 48 hours but call people on the rest day and drop hours elsewhere, do we still pay rest-day premium? A: Yes. Rest-day status is a day-type rule; premiums apply irrespective of weekly averaging.

Q5: What about undertime on a CWW day? A: Pay only hours actually worked for hourly-paid staff; for monthly-paid, follow company rules that are consistent with labor standards and the CWW agreement (no unlawful diminution).

Key takeaways

Under a valid compressed workweek, longer daily hours are not OT within the approved daily and weekly limits.
OT begins beyond the approved daily CWW hours or when weekly hours exceed the cap.
Rest-day and holiday premiums still apply, and OT on those days compounds as shown in the rate table.
NSD (10%) stacks on top of whatever day-type rate applies to the night hours.
Clean policies, accurate timekeeping, and transparent payslips prevent disputes and ensure compliance.