The right to overtime pay and night shift differential pay forms one of the core non-waivable protections under the Labor Code of the Philippines (Presidential Decree No. 442, as amended). These premiums recognize that work performed beyond normal hours or during nighttime imposes greater physical and social burden on the worker and must therefore be additionally compensated. The rules are mandatory, apply to all covered employees, and cannot be diminished by contract, company policy, or collective bargaining agreement waiver.

Legal Basis

Article 82–96, Book III, Title I of the Labor Code (Hours of Work)
Article 86 – Night Shift Differential
Article 87 – Overtime Pay
Article 88 – Undertime Not Offset by Overtime
Article 89 – Emergency/Compulsory Overtime
Article 90 – Computation of Additional Compensation
Article 93–94 – Holiday and Rest Day Premiums (interact with overtime and night differential)
Omnibus Rules Implementing the Labor Code, Book III, Rules II–IV
DOLE Explanatory Bulletin on Night Shift Differential (1991)
DOLE Handbook on Workers’ Statutory Monetary Benefits (latest edition)
Relevant jurisprudence (e.g., National Waterworks & Sewerage Authority v. NWSA Consolidated Union, G.R. No. L-26894, February 28, 1969; Bisig ng Manggagawa sa Concrete Aggregates, Inc. v. NLRC, G.R. No. 105090, September 16, 1993; PNCC v. NLRC, G.R. No. 124559, October 28, 1998; San Juan de Dios Hospital Employees Association v. NLRC, G.R. No. 126383, November 28, 1997)

Coverage and Exclusions

Covered employees (entitled to both overtime and night differential):

All rank-and-file employees in the private sector, whether monthly-paid, daily-paid, or piece-rate (if piece-rate scheme does not guarantee minimum wage plus premiums).
Seafarers on RPA (POEA Standard Employment Contract) vessels are entitled under separate but substantially similar rules.
Employees of government-owned and controlled corporations without original charters (if incorporated under Corporation Code).

NOT covered / exempt (no entitlement to overtime pay, night differential, holiday premium, service incentive leave, etc. – Article 82, Labor Code):

Government employees (subject to CSC rules and budget appropriations)
Managerial employees (those who formulate and execute management policies)
Officers or members of a managerial staff (meet all three tests: (a) primary duty consists of management, (b) customarily direct work of at least two subordinates, (c) authority to hire/transfer/discipline or effectively recommend such)
Field personnel (non-agricultural employees who regularly perform duties away from the principal place of business and whose time and performance cannot be controlled)
Members of the family of the employer who are dependent on him for support
Domestic workers/kasambahay (governed by RA 10361 – separate night work rules)
Persons in the personal service of another (if paid by results)
Workers paid purely by results/commission/boundary/piece rate without guaranteed minimum wage

Note: Supervisory employees who do not meet the managerial staff tests remain entitled to overtime and night differential.

Normal Hours of Work

Maximum: 8 hours per day or 40 hours per week (Article 83).
Meal break of not less than 60 minutes is non-compensable (not counted as hours worked).
Coffee breaks or rest periods of short duration (≤20 minutes) are compensable.
Any work beyond 8 hours, even by 1 minute, entitles the employee to overtime pay.

Overtime Pay

General Rule (Article 87)

Employee must be paid at least 25% additional of his regular hourly rate for each hour (or fraction thereof in excess of 15 minutes, per usual practice) worked beyond 8 hours on an ordinary working day.

Compulsory Overtime (Article 89)

Employer may require overtime in any of the following cases:

National emergency or imminent danger to public safety
Urgent work to prevent serious loss or damage to perishable goods
Necessary to prevent loss of life/property or imminent danger
Necessary to prevent serious obstruction or prejudice to business operations
When the country is at war or under military threat
To avail of favorable weather or environmental conditions in seasonal industries

Outside these cases, overtime is voluntary, but refusal without justifiable reason may be ground for disciplinary action.

Prohibition Against Waiver and Offset

Waiver of overtime pay is void (Article 6, Labor Code – non-diminution of benefits).
Undertime on one day cannot be offset against overtime on another day (Article 88).
“Built-in” or “fixed” overtime in the contract is illegal unless the total compensation clearly exceeds the statutory minimum plus premiums.

Overtime Rates Summary (DOLE Standard Computation)

Situation	First 8 Hours Rate	Overtime Rate (beyond 8 hours)
Ordinary working day	100%	+25% of regular hourly rate
Ordinary day + night shift (10pm–6am)	+10%	+25% × 1.10 = +37.5%
Special non-working day / special holiday	+30%	+30% × 1.30 = +69%
Special day + night shift	+30% × 1.10 = +43%	+30% × 1.30 × 1.10 = +79.5%
Regular holiday (no work: employee still gets 100% pay)	+100% (total 200%)	—
Regular holiday (worked)	+100% (total 200%)	+30% on the 200% rate = +260% for first 8; OT +30% × 1.30 = +338%
Regular holiday falling on rest day (worked)	+100% + 30% = +260%	+30% on the 260% rate = +338%
Rest day (scheduled rest day worked)	+30%	+30% × 1.30 = +69%
Rest day + night shift	+30% × 1.10 = +43%	+30% × 1.30 × 1.10 = +79.5%

All premiums are computed on the regular base pay only (excluding allowances, facilities, bonuses that are not integrated into regular wage).

Computation Examples (assuming daily rate ₱645, hourly rate ₱80.625)

4 hours overtime on ordinary day (2 of which are night shift):
- 2 OT hours daytime: ₱80.625 × 1.25 × 2 = ₱201.5625
- 2 OT hours night: ₱80.625 × 1.25 × 1.10 × 2 = ₱221.71875
- Total OT pay: ₱423.28125
10 hours worked on a special non-working day that is also night shift:
- First 8 hours: ₱645 × 1.30 × 1.10 = ₱922.35
- 2 OT hours: ₱80.625 × 1.30 × 1.30 × 1.10 × 2 = ₱299.76
- Total pay for the day: ₱1,222.11

Night Shift Differential (Article 86)

Every employee shall be paid not less than 10% of his regular wage for each hour worked between 10:00 p.m. and 6:00 a.m., regardless of whether the day is ordinary, rest day, or holiday.

Key points:

Applies only to hours actually worked within the 10pm–6am window (even if only 1 minute past 10pm).
Paid even if the employee is already receiving overtime premium, holiday premium, or rest day premium.
The 10% is computed on the regular base hourly rate; premiums are multiplicative when combined with overtime or holiday pay.
Employees whose regular shift is entirely or mostly at night (graveyard shift) are still entitled every single night they work.
No night differential for work between 6:00 a.m. and 10:00 p.m., even if it is overtime.

Interaction of Multiple Premiums

The Supreme Court has consistently ruled that overtime, night differential, rest day, special day, and regular holiday premiums are separate and distinct and must be cumulatively applied (see Lepanto Consolidated Mining Co. v. Lepanto Workers Union, G.R. No. 157486, October 19, 2005; Prangan v. NLRC, G.R. No. 126529, March 26, 1999).

The correct formula is multiplicative layering of the applicable premiums.

Compressed Workweek and Flexible Work Arrangements

Under DOLE Advisory No. 02-04 (2004), Advisory No. 02-09, and D.O. 221-21, employers and employees may voluntarily agree to a compressed workweek (e.g., 10–12 hours/day without overtime pay) provided:

Weekly hours do not exceed 48 (or the agreed maximum)
No diminution of existing benefits
Voluntary individual written conformity
Report to DOLE within 10 days

In genuine compressed workweek schemes, work beyond the agreed daily hours but within the weekly maximum is not entitled to overtime pay. However, work exceeding the weekly maximum remains compensable as overtime.

If the arrangement is not reported or is shown to be involuntary, the employee retains full overtime rights.

Remedies for Non-Payment

File money claims with the NLRC Regional Arbitration Branch (30-day mediation at SEnA, then formal complaint).
Prescription: 3 years from accrual of cause of action (Article 291, Labor Code; now Article 306 under RA 10151 numbering).
Penalties: restitution + 10% attorney’s fees + double indemnity under RA 8188 if willful violation for overtime on holidays/rest days.
Criminal liability possible under Article 288 (now 302) for unjust refusal to pay wages.

Conclusion

Overtime pay and night shift differential are fundamental, non-waivable statutory rights designed to protect the health, safety, and economic welfare of Filipino workers. Employers who attempt to circumvent these obligations through misclassification, built-in overtime, or coercive compressed schedules do so at the risk of substantial backwage awards, damages, and penalties. Employees are encouraged to document their actual hours worked and immediately assert their rights through the mechanisms provided by law.