I. Legal Framework

The Labor Code of the Philippines (Presidential Decree No. 442, as amended) is the primary statute governing overtime and holiday pay. Key provisions include:

Article 87 – Overtime work on ordinary working days entitles an employee to additional compensation of at least twenty-five percent (25%) of the regular wage.
Article 93 – Work performed on any rest day or special non-working day entitles the employee to an additional compensation of at least thirty percent (30%) of the regular wage.
Article 94 – Every worker is entitled to holiday pay on regular holidays. Work performed on a regular holiday entitles the worker to at least two hundred percent (200%) of the regular wage. Work on a special non-working day entitles the worker to at least one hundred thirty percent (130%) of the regular wage.

These minimum standards apply to all covered employees. Exemptions are expressly provided under Article 82 (managerial employees, officers or members of a managerial staff, field personnel, domestic helpers, persons in the personal service of another, and workers paid by result). Collective Bargaining Agreements (CBAs) or company policies may grant more favorable terms but cannot fall below these statutory floors. Night-shift differential under Republic Act No. 10151 is computed separately and layered on top of the applicable overtime or holiday rate.

II. Determination of the Basic Hourly Rate

All overtime and holiday computations begin with the employee’s basic hourly rate.

Daily-paid employees
[ \text{Basic Hourly Rate} = \frac{\text{Daily Rate}}{8} ]
Monthly-paid employees
The standard conversion factor recognized by the Department of Labor and Employment (DOLE) is 26 working days per month (reflecting the average non-agricultural work schedule).
[ \text{Daily Rate} = \frac{\text{Monthly Rate}}{26} ]
[ \text{Basic Hourly Rate} = \frac{\text{Monthly Rate}}{26 \times 8} = \frac{\text{Monthly Rate}}{208} ]

Piece-rate or task-based workers are entitled to the same percentage premiums, computed on the equivalent hourly or daily rate derived from their average earnings.

III. Overtime Pay on Ordinary Working Days

Any work rendered in excess of eight (8) hours on a regular working day is overtime.
[ \text{Overtime Pay per Hour (Ordinary Day)} = \text{Basic Hourly Rate} \times 1.25 ]
The total daily pay for the day is the regular eight-hour pay plus the overtime amount for each excess hour.

IV. Premium Pay for Rest-Day Work

An employee required or permitted to work on his scheduled rest day receives a 30% premium on top of the basic rate.
[ \text{Rest-Day Hourly Rate} = \text{Basic Hourly Rate} \times 1.30 ]

V. Overtime on Rest Day

When overtime is rendered on a rest day, the 30% rest-day premium is first applied, then an additional 30% overtime premium on the already-augmented rate.
[ \text{Overtime on Rest Day per Hour} = \text{Basic Hourly Rate} \times 1.30 \times 1.30 = \text{Basic Hourly Rate} \times 1.69 ]

VI. Holiday Pay and Work on Holidays

A. Regular Holidays (enumerated by law and presidential proclamation)

If the employee does not work on a regular holiday:
[ \text{Holiday Pay} = \text{Daily Rate} \times 1.00 ]
(The employee receives full daily pay without rendering service, provided the employee reported for work or was on leave with pay the working day immediately preceding the holiday.)
If the employee works on a regular holiday (regardless of whether the work is within or beyond eight hours):
[ \text{Pay for Holiday Work (first 8 hours)} = \text{Daily Rate} \times 2.00 ]
Overtime on a regular holiday:
[ \text{Overtime per Hour on Regular Holiday} = \text{Basic Hourly Rate} \times 2.60 ]
(200% base × 1.30 overtime premium).

B. Special Non-Working Days (SNWD)

If the employee does not work: no additional pay is required (zero premium).
If the employee works:
[ \text{Pay for SNWD Work (first 8 hours)} = \text{Daily Rate} \times 1.30 ]
Overtime on SNWD:
[ \text{Overtime per Hour on SNWD} = \text{Basic Hourly Rate} \times 1.69 ]

C. Double Holidays (two regular holidays falling on the same calendar day)

If not worked: 200% of daily rate (cumulative).
If worked (first 8 hours): 300% of daily rate.
Overtime per hour:
[ \text{Overtime per Hour on Double Holiday} = \text{Basic Hourly Rate} \times 3.90 ]

VII. Night-Shift Differential (NSD)

Work performed between 10:00 p.m. and 6:00 a.m. entitles the employee to an additional 10% of the basic hourly rate for each hour worked during that period. NSD is computed on the basic hourly rate before applying overtime or holiday premiums, then the resulting amount is added to the applicable overtime/holiday rate.
[ \text{NSD per Hour} = \text{Basic Hourly Rate} \times 0.10 ]

VIII. Integrated Computation Formula for Total Daily Compensation

For any given day, total compensation is the sum of:

Regular pay for the first eight hours (or applicable premium base), plus
Overtime/holiday/rest-day premiums, plus
NSD (if applicable).

Example 1 (Monthly-paid employee, Monthly Rate = ₱20,800; ordinary overtime 2 hours; no holiday or NSD)
[ \text{Basic Hourly Rate} = \frac{20{,}800}{208} = ₱100 ]
[ \text{OT Pay} = 100 \times 1.25 \times 2 = ₱250 ]
Regular pay for 8 hours = ₱800
Total for the day (additional) = ₱250.

Example 2 (Daily-paid employee, Daily Rate = ₱500; works on regular holiday for 10 hours)
[ \text{Basic Hourly Rate} = \frac{500}{8} = ₱62.50 ]
Holiday work (first 8 hrs) = 500 × 2.00 = ₱1,000
Overtime (2 hrs) = 62.50 × 2.60 × 2 = ₱325
Total pay for the day = ₱1,325.

Example 3 (Rest day + NSD 4 hours)
Basic Hourly = ₱100
Rest-day rate = 100 × 1.30 = ₱130
NSD = 100 × 0.10 × 4 = ₱40
Total = (130 × 8) + 40 = ₱1,080.

IX. Additional Rules and Requirements

Pro-rating: When an employee renders less than eight hours on a holiday or rest day, pay is computed on a pro-rata basis (hourly rate × applicable multiplier × actual hours).
Weekly Rest Period: Every employee is entitled to at least 24 consecutive hours of rest after six consecutive workdays. Work on the designated rest day triggers the 30% premium.
Monthly-paid Employees and Fixed Salary: The monthly salary already accounts for unworked regular holidays (no deduction is allowed). Additional premiums for worked holidays or overtime are paid on top of the fixed monthly salary using the formulas above.
Records and Payment: Employers must maintain payroll records showing hours worked, rates, and premiums. All overtime and holiday pay must be included in the regular payroll period and paid not later than the payroll date immediately following the period.
Part-time Employees: Entitled to the same percentage premiums based on their actual hours.
Piece-rate and Commission Workers: Premiums are computed on the basis of the equivalent hourly rate derived from average daily earnings.
Remedies and Liabilities: Non-payment or underpayment is an illegal deduction. Aggrieved employees may file a complaint with the Regional Office of the DOLE or the National Labor Relations Commission. Employers found liable face payment of the deficiency plus 100% indemnity, plus possible fines and imprisonment under Article 288.

The foregoing rates and formulas constitute the minimum legal standards. Employers and employees are encouraged to consult the latest DOLE issuances and, where applicable, their CBA for any higher entitlements. All computations must be transparent, documented, and paid in full in accordance with the Labor Code.