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2. Article 87, provides that work may be performed beyond eight (8)
hours a day provided that the employee is paid for the overtime work
an additional compensation equivalent to his regular wage plus at
least twenty-five percent (25%0 thereof. Work performed beyond
eight hours on a holiday or rest day shall be paid an additional
compensation equivalent to the rate of the first eight hours on a
holiday or rest day plus at least thirty percent (30%) thereof.
3. Article 93 provides that:
a. Where an employee is made or permitted to work on his or
her scheduled rest day, he or she shall be paid an additional
compensation of at least thirty percent (30%) of his or her regular
wage. An employee shall be entitled to such additional
compensation for work performed on Sunday only when it is his
or her established rest day.
b. When the nature of the work of the employee is such that
he or she has no regular work days and no regular rest days can
be scheduled, he or she shall be paid an additional
compensation of at least thirty percent (30%) of his or her regular
wage for work performed on Sundays and holidays.
c. Work performed on any special holiday shall be
paid an additional compensation of at least thirty
percent (30%) of the regular wage of the employee.
Where such holiday work falls on the employee’s
scheduled rest day, he or she shall be entitled to an
additional compensation of at least fifty percent
(50%) of his or her regular wage.
d. Where the collective bargaining agreement or
other applicable employment contract stipulates the
payment of a higher premium pay than that
prescribed under this Article, the employer shall pay
such higher rate.
4. Article 94 provides that:
a. The employer may require an employee to work on
any holiday but such employee shall be paid a
compensation equivalent to twice his regular rate.
b. Work on a rest day which falls on a special day shall
be paid 150 % of regular hourly rate.
c. Work on a regular holiday shall be paid 200 % of
regularly rate.
d. Work on a rest day which fails on a regular holiday
shall be paid 260 % of regular hourly rate.
Computation of Overtime Pay
Assuming that the minimum daily wage rate is Php 340, 000,
how much is the overtime rate per hour?
On Ordinary Day
On an ordinary day, the overtime rate per hour is
determined as follows:
First, compute the hourly rate of the employee:
Regular hourly rate= Daily wage rate/ 8 hours
= Php 340. 00 / 8 hours
= Php 42. 50 per hour
Now, to determine overtime rate per hour.
Overtime rate = Regular hourly rate + 25 % of Regular hourly rate
Overtime rate = Php 42. 50 + (25 % of Php 42. 50)
= Php 42. 50 + Php 10. 625
= Php 53. 125
Employees generally have their rest days, which may not fall
on Sunday. If an employee is made to work on a Sunday, his or
her rest day could be Monday or any other day of the week to
compensate for the Sunday that he or she worked. If an
employee is made to work on his or her rest day or on an a
special holiday like Maundy Thursday or Good Firday, which
dates are not fixed, the compensation of his or her pay would
be as follows:
Compute the hourly rate of the employee on a rest day or
special day. The hourly on rest day is 130 % of the regular rates:
Hourly rate = 130 % of Regular hourly rate
(on rest day or special day) = 130 % x Php 42. 50
= Php 55. 25 per hour
To determine overtime rate per hour:
Overtime rate = Hourly rate on rest day + 30 % hourly rate on
rest day
= Php 55. 25 + (30 % + Php 5. 25)
= Php 55. 25 + Php 16. 575
= Php 71. 825
Alternatively, the overtime rate per hour would be:
Overtime rate = Hourly Rate on rest day x 130 %
= Php 55. 25 x 130 %
= Php 71. 825
Example: Linda earns the regular daily rate of Php 340. 00
giving her an hourly rate of Php 42. 50. She was requested by
her boss to work on a Saturday, her rest day.
a. She worked for 8 hours
Total pay for the day = 8 hours x (Php 42. 50 x 130 %)
= 8 x Php 55. 25
= Php 442. 00
b. She worked for 10 hours
Total pay for the day = [(8 x Php 55. 25) + (2 x Php 55.25
x 130 %)]
= Php 442. 00 + (2 x Php 71. 825)
= Php 442. 00 + Php 143. 65
= Php 585. 65
On Rest Day which Falls on a Special Day
Compute the hourly rate of the employee on a rest day
which falls on a special day:
Hourly rate = 150 % of Regular hourly rate
(on rest day which = 150 % x Php 42. 50
falls on a special day) = Php 63. 75
To determine overtime rate per hour:
Overtime rate = Hourly rate on a rest day + 30 % of hourly
rate which falls on a regular holiday
= Php 110. 50 + (30 % of Php 110. 50)
= Php 110. 50 + Php 33. 15
= Php 143. 65
Alternatively,
Overtime rate = Hourly rate on a rest day which falls on a
regular holiday x 130 %
= Php 110. 50 x 130 %
= Php 143. 65
Example: Theresita earns the regular daily rate of Php 340. 00
giving her an hourly rate of Php 42. 50. She was requested by
her boss to work on December 30, Rizal Day, which is a regular
holiday. However, Rizal Day fell on a Monday which was
Theresita’s rest day.
a. Theresita worked for 8 hours. Her total pay for the day would
be:
Total pay for the day = 8 hours x Regular hourly rate x 260 %
= 8 x Php 42. 50 x 260 %
= 8 x Php 110. 50
= Php 884. 00
b. She worked for 10 hours. Her total pay for the day would be:
Total pay for the day = [(8 hours x Regular hourly rate x 260
%) + (2 hours x [Regular hourly rate x 260 %] x 130 %)]
= (8 x Php 110. 50) + (2 x Php 143. 65)
= Php 884. 00 + Php 287. 30
= Php 1171. 30
Salary
Earnings of employees paid on a monthly or annual basis is
generally referred to as salary. It is sometimes, necessary to
convert salaries annual basis into monthly basis, weekly to
monthly basis, monthly to semi- monthly, etch. In these cases,
we should always remember that:
1 year = 12 months = 24 semi monthly = 6 bi- monthly
1 year = 52 weeks = 26 bi- monthly
1 month = 2 semi- monthly
semi- monthly = 2/5 every month
bi- monthly = every two months
bi- weekly = every two weeks
Take note that the prefix “semi” means 1/2, while the
prefix “bi” means twice. It is likewise, important to
note that a month is not equal to 4 weeks. If it were,
then these would only be 48 weeks in a year, which is
not the case. There are 52 weeks in a year, not 48.
Hence, to convert monthly salary into weekly salary,
we have to convert the monthly into annual salary
first and then divide by 52.
Let us study the following conversions, assuming an annual salary of Php 72 000:
1. Monthly salary = Annual salary
2
= Php 72 000
2
= Php 6 000
2. Semi- annually salary = Annual salary
24
= Php 72 000
24
= Php 3 000
or
Monthly salary = Php 6 000 = Php 3 000
2 2
3. Weekly salary = Annual salary
52
= Php 72 000
52
=Php 1 384. 62
4. Bi- weekly salary = Annual salary
26
=Php 72 000
26
= Php 2 769. 23
or
= Weekly salary x 2 = Php 1 384. 62 x 2 = Php 2 769. 23
To convert monthly salary into hourly rate, we first determine the
number of regular hours in a workweek. Some companies have
40- hour workweek while others have 48- hour workweek
If the regular week load is 40 hours,
Hourly rate = Hourly week
40 hours
If the regular week load is 48 hours,
Hourly rate = Weekly rate
48 hours
In our example, if the regular week load is 40 hours,
Hourly rate = Weekly rate
40 hours
= Php 1 384. 62
40
= Php 34. 62
If the regular week load is 48 hours,
Hourly rate = Weekly rate
48 hours
= Php 1 384. 62
48
= Php 28. 50
Income
Income is a broader term than wages or salary. Wages
and salaries are income to the persons receiving it.
However, for people who are not employees, their
income may not be in the form of wages or salaries. They
can have commission income if they are paid for the
commission on sales they make, rental income if they
have properties they rent out, dividend income if they are
authors and other income for whatever endeavor they
engage in including profit-making business. A business
firm’s income is in the form of profits that the business
earns that we have studied in the proceeding chapter.
Examples:
1. Janine is a stockholder of the Wisdom Corporation. For the
current year, the corporation declared a 10 % cash dividend to
stockholders. Janine owns 1 000 shares of the company ‘s Php
10. 00 par value shares. To compute for her dividend income,
Janine’s dividend income = No. of shares x Par value x Dividend
rate = 1 000 shares x Php 10. 00 par value x 10 % = Php 1 000.
2. John Abram is an author and his book sold 10 000 copies
for the first semester. His book sells at Php 375. 00 per copy. He
receives a 22 % royalty from his publisher. His royaly iincome
would be:
John Abram’s royalty = 2 500 copies x Php 375 x 22 % = Php
206 250.