Overtime Pay & Night Differential Computation Guide

The base rules

Under Article 87 of the Labor Code, overtime is any work performed beyond eight hours in a single day — the eight-hour figure comes from the standard normal working hours set in Article 83. Any time worked past the eighth hour, scheduled or not, triggers the overtime premium.

Night shift differential is separate and governed by Article 86: employees are entitled to an additional premium of at least 10% of their regular hourly rate for every hour worked between 10:00 PM and 6:00 AM. Even a single hour within that window qualifies — an 8 PM to 5 AM shift still earns differential pay for the 10 PM to 5 AM portion specifically.

2026 premium rate table

These base rules have remained unchanged into 2026 under Articles 82–97 of the Labor Code.

The most common payroll mistake: adding instead of multiplying

Here's where a lot of payslips get it wrong. When overtime happens during night hours, the two premiums don't simply add together — they compound. A payroll system that computes 125% overtime, then separately adds 10% night differential, arriving at 135%, is doing it incorrectly.

Worked example

Take an hourly rate of ₱94.38 (roughly the NCR non-agriculture minimum wage divided across an 8-hour day). Working an overtime hour during the night shift:

Notice this comes out to 137.5% of the base rate — not the 135% the additive shortcut would produce. On a full night of overtime hours, that gap adds up.

How far the stacking can go

Premiums keep compounding across every applicable category. Working overtime, at night, on a regular holiday that also happens to be your rest day, can push total compensation as high as roughly 286% of the regular hourly rate for that time. Each layer — holiday, rest day, overtime, night differential — multiplies onto the last rather than simply adding up.

Who's covered

Most rank-and-file private sector employees are entitled to both overtime and night differential pay. The Labor Code excludes a few specific categories under Article 82:

• Managerial employees — those whose primary duty is management, with authority to hire or fire.
• Field personnel — employees who work away from the office and whose actual hours can't be determined with reasonable certainty.
• Domestic helpers and those in establishments with fewer than 10 workers — subject to specific exemptions.
• Government employees — governed by Civil Service Commission rules rather than the Labor Code (though a higher 20% night differential applies to them under separate rules).