SENIOR
Business Math HIGH
SCHOOL
Variables in the Computation of Module
Overtime Pay 8
Quarter 2
Business Mathematics
Quarter 2 – Module 8: Variables in the Computation of Overtime Pay
First Edition, 2020
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Business SENIOR
HIGH
Math
SCHOOL
Module
8
Quarter 2
Variables in the
Computation of
Overtime Pay
Introductory Message
For the facilitator:
Welcome to the Business Mathematics Module on Variables in the
Computation of Overtime Pay!
This module was collaboratively designed, developed and reviewed by
educators from Schools Division Office of Pasig City headed by its Officer-In-Charge
Schools Division Superintendent, Ma. Evalou Concepcion A. Agustin in partnership
with the Local Government of Pasig through its mayor, Honorable Victor Ma. Regis
N. Sotto. The writers utilized the standards set by the K to 12 Curriculum using the
Most Essential Learning Competencies (MELC) while overcoming their personal,
social, and economic constraints in schooling.
This learning material hopes to engage the learners into guided and
independent learning activities at their own pace and time. Further, this also aims
to help learners acquire the needed 21st century skills especially the 5 Cs namely:
Communication, Collaboration, Creativity, Critical Thinking and Character while
taking into consideration their needs and circumstances.
In addition to the material in the main text, you will also see this box in the
body of the module:
Notes to the Teacher
This contains helpful tips or strategies
that will help you in guiding the learners.
As a facilitator you are expected to orient the learners on how to use this
module. You also need to keep track of the learners' progress while allowing them
to manage their own learning. Moreover, you are expected to encourage and assist
the learners as they do the tasks included in the module.
For the learner:
Welcome to the Business Mathematics Module on Variables in the
Computation of Overtime Pay!
The hand is one of the most symbolized part of the human body. It is often
used to depict skill, action and purpose. Through our hands we may learn, create
and accomplish. Hence, the hand in this learning resource signifies that you as a
learner is capable and empowered to successfully achieve the relevant
competencies and skills at your own pace and time. Your academic success lies in
your own hands!
This module was designed to provide you with fun and meaningful
opportunities for guided and independent learning at your own pace and time. You
will be enabled to process the contents of the learning material while being an
active learner.
This module has the following parts and corresponding icons:
Expectations - These are what you will be able to know after
completing the lessons in the module
Pretest - This will measure your prior knowledge and the
concepts to be mastered throughout the lesson.
Recap - This section will measure what learnings and skills
that you understand from the previous lesson.
Lesson - This section will discuss the topic for this module.
Activities - This is a set of activities you will perform.
Wrap Up - This section summarizes the concepts and
applications of the lessons.
Valuing - This part will check the integration of values in the
learning competency.
Posttest - This will measure how much you have learned from
the entire module.
EXPECTATIONS
At the end of the lesson, you must be able to:
1. state the labor rules in the Philippines pertinent to the computation of
overtime pay;
2. identify the variables needed in the computation of overtime pay; and
3. familiarize with the different workdays in the Philippines (i.e. regular day,
regular holiday, special holiday).
4.
PRETEST
Read and answer carefully the questions below by choosing the letter that
corresponds to your answer.
1. Which of the following is not a regular holiday?
a. Maundy Thursday c. Labor Day
b. Bonifacio Day d. Ninoy Aquino Day
2. What is the minimum number of working hours per day required of an
employee to receive minimum wage?
a. 8 hours c. 10 hours
b. 40 hours d. 48 hours
3. This is what employees are entitled to for working beyond the required
number of hours.
a. overtime pay c. overtime premium
b. overtime rate d. overtime fine
4. How much will an employee earn if he/she went to work on a regular
holiday?
a. double the regular pay c. triple the regular pay
b. times 2.6 of the regular pay d. times 1.8 of the regular pay
5. What is the overtime rate for regular working days?
a. 1.25 times of hourly pay c. 1.95 times of hourly pay
b. 1.69 times of hourly pay d. 2.6 times of hourly pay
RECAP
Read and answer the problem below. Show the necessary solution.
Dianne is an accountant at a private firm in Pasig. She earns a monthly
salary of P27,000.00. Compute her net pay. Show also the details of the following:
1. Total contribution
2. Taxable income
3. Withholding tax
4. Total payroll deduction
5. Net pay
LESSON
Definition of Terms
➢ Daily Rate is the daily compensation an employee receives for 8 hours of
work;
➢ Regular Hourly Rate is the hourly compensation of an employee during
regular working days;
➢ Hourly Rate is the hourly compensation of an employee during any working
day (i.e. regular hourly rate times the corresponding multiplier);
➢ Overtime Premium is the amount added to the hourly rate to obtain the
overtime rate;
➢ Overtime Rate is the amount an employee will receive for every hour he/she
works beyond the required number of hours; and
➢ Overtime Pay is the total amount an employee will receive for the hour/s
he/she works beyond the required number of hours.
What are the variables needed in the computation of overtime pay?
➢ regular hourly rate
➢ hourly rate
➢ overtime rate
What are the labor rules in the Philippines pertinent to the computation of overtime
pay?
1. Article 83 of the Labor Code states that the normal number of hours of work
of any employee shall not exceed 8 hours a day, exclusive of at least 1 hour
lunch break.
2. Article 87 of the Labor Code provides that an employee can work beyond
eight hours provided that he/she will be compensated for the extra hours by
25% of the hourly rate (30% for non-regular workdays).
3. Articles 93 and 94 of the Labor Code provides the specifications for hourly
rate and overtime premium depending on the type of workday when an
employee reports to work (i.e. regular holiday, special holiday, rest day
which falls on a regular holiday, and rest day which falls on a special
holiday)
4. Several wage orders such as Wage Order no. 20 and Wage Order no. 22
stipulates that the Cost of Living Allowance (COLA) shall be integrated in the
basic pay (daily rate). This means bigger computations for overtime pay.
5. Labor Advisory no.13, s. 2019 listed the following regular holidays and
special holidays:
Regular Holidays – January 1, April 9, May 1, June 12, August 31,
November 30, December 25, December 30, and the dates of Eidul Fitr
and Eidul Adha
Special (Non-Working) Days – January 25, February 25, April 11,
August 21, November 1, November 2, December 8, December 24, and
December 31
Note: This information may change depending on the updates from the government.
How do we compute the variables needed in the computation of overtime pay?
To compute for these, we follow the steps below.
Step 1. Identify the regular hourly rate. That is
𝑟𝑒𝑔𝑢𝑙𝑎𝑟 ℎ𝑜𝑢𝑟𝑙𝑦 𝑟𝑎𝑡𝑒 = 𝑑𝑎𝑖𝑙𝑦 𝑟𝑎𝑡𝑒 ÷ 8
Step 2. Identify the workday an employee reported to work. The regular
hourly rate shall be multiplied by the respective % to obtain the hourly rate
and overtime rate. Refer to the table below.
Type of Workday Hourly Rate % Overtime Rate %
Regular Day 100% 125%
Special Holiday 130% 169%
Rest Day on a Special Holiday 150% 195%
Regular Holiday 200% 260%
Rest Day on a Regular Holiday 260% 338%
Step 3. Compute the hourly rate. That is
ℎ𝑜𝑢𝑟𝑙𝑦 𝑟𝑎𝑡𝑒 = 𝑟𝑒𝑔𝑢𝑙𝑎𝑟 ℎ𝑜𝑢𝑟𝑙𝑦 𝑟𝑎𝑡𝑒 × 𝑟𝑒𝑠𝑝𝑒𝑐𝑡𝑖𝑣𝑒 ℎ𝑜𝑢𝑟𝑙𝑦 𝑟𝑎𝑡𝑒 %
Step 4. Compute the overtime rate. That is
𝑜𝑣𝑒𝑟𝑡𝑖𝑚𝑒 𝑟𝑎𝑡𝑒 = 𝑟𝑒𝑔𝑢𝑙𝑎𝑟 ℎ𝑜𝑢𝑟𝑙𝑦 𝑟𝑎𝑡𝑒 × 𝑟𝑒𝑠𝑝𝑒𝑐𝑡𝑖𝑣𝑒 𝑜𝑣𝑒𝑟𝑡𝑖𝑚𝑒 𝑟𝑎𝑡𝑒 %
Note: In some companies, employees are paid if they report to work during their
scheduled rest days or during Sundays. In such case, the rates to be followed is the
same with special holiday.
Examples:
A. Shiela works at an accounting firm earning a minimum wage of P537.00
daily. Determine her regular hourly rate, hourly rate, and overtime rate if
she report to work on: a regular day, a special holiday, a special holiday
during her rest day, a regular holiday, and a regular holiday during her rest
day.
Simply follow the formulas written above. During any kind of workday, the
regular hourly rate is the same. For Shiela, that is
𝑟𝑒𝑔𝑢𝑙𝑎𝑟 ℎ𝑜𝑢𝑟𝑙𝑦 𝑟𝑎𝑡𝑒 = 𝑃537.00 ÷ 8 = 𝑃67.13
i. Regular day
The hourly rate % is 100%; overtime rate % is 125%.
ℎ𝑜𝑢𝑟𝑙𝑦 𝑟𝑎𝑡𝑒 = 𝑃67.13 × 100% = 𝑃67.13
𝑜𝑣𝑒𝑟𝑡𝑖𝑚𝑒 𝑟𝑎𝑡𝑒 = 𝑃67.13 × 125% = 𝑃83.91
This means Shiela will earn P67.13/hr for the first 8 hours, and
P83.91/hr for overtime.
ii. Special holiday
The hourly rate % is 130%; overtime rate % is 169%.
ℎ𝑜𝑢𝑟𝑙𝑦 𝑟𝑎𝑡𝑒 = 𝑃67.13 × 130% = 𝑃87.27
𝑜𝑣𝑒𝑟𝑡𝑖𝑚𝑒 𝑟𝑎𝑡𝑒 = 𝑃67.13 × 169% = 𝑃113.45
This means Shiela will earn P87.27/hr for the first 8 hours, and
P113.45/hr for overtime.
iii. Special holiday during her rest day
The hourly rate % is 150%; overtime rate % is 195%.
ℎ𝑜𝑢𝑟𝑙𝑦 𝑟𝑎𝑡𝑒 = 𝑃67.13 × 150% = 𝑃100.70
𝑜𝑣𝑒𝑟𝑡𝑖𝑚𝑒 𝑟𝑎𝑡𝑒 = 𝑃67.13 × 195% = 𝑃130.90
This means Shiela will earn P100.70/hr for the first 8 hours, and
P130.90/hr for overtime.
iv. Regular holiday
The hourly rate % is 200%; overtime rate % is 260%.
ℎ𝑜𝑢𝑟𝑙𝑦 𝑟𝑎𝑡𝑒 = 𝑃67.13 × 200% = 𝑃134.26
𝑜𝑣𝑒𝑟𝑡𝑖𝑚𝑒 𝑟𝑎𝑡𝑒 = 𝑃67.13 × 260% = 𝑃174.54
This means Shiela will earn P134.26/hr for the first 8 hours, and
P174.54/hr for overtime.
v. Regular holiday during her rest day
The hourly rate % is 260%; overtime rate % is 338%.
ℎ𝑜𝑢𝑟𝑙𝑦 𝑟𝑎𝑡𝑒 = 𝑃67.13 × 260% = 𝑃174.54
𝑜𝑣𝑒𝑟𝑡𝑖𝑚𝑒 𝑟𝑎𝑡𝑒 = 𝑃67.13 × 338% = 𝑃226.90
This means Shiela will earn P174.54/hr for the first 8 hours, and
P226.90/hr for overtime.
Note: Make sure to have your answers correct to at least 2 decimal places. We
usually do not allow rounding off resulting numbers until the final answer because
it lessens the accuracy of the computation itself.
ACTIVITIES
I. Identify what is being referred to by the following statements.
1. The amount added to the hourly rate to get the overtime rate.
2. The normal number of hours at work as stated in the Labor Code.
3. The amount when the daily rate is divided by the required number of
hours at work.
4. A workday when an employee can get 260% of his regular hourly rate for
overtime.
5. The number of hours an employee works that is beyond the normal
number.
II. Solve the regular hourly rate, hourly rate and overtime rate of the following
given the daily rate and the type of workday.
1. daily rate: P550.00, type of workday: regular holiday on a rest day
2. daily rate: P680.00, type of workday: special holiday on a rest day
3. daily rate: P720.00, type of workday: regular holiday
4. daily rate: P830.00, type of workday: special holiday
5. daily rate: P910.00, type of workday: regular day
WRAP-UP
Before we summarize the lesson, answer the following questions:
1. What is the normal number of hours of work according to the Labor Code?
2. What condition exists for work beyond the normal number of hours of work?
3. What are the different types of workdays? How many percent of regular
hourly rate are hourly rate and overtime rate for each type of workday?
4. How do we compute for hourly rate and overtime rate?
The lesson can be summarized as follows:
➢ The normal number of hours of work as per Labor Code is 8 hours, exclusive
of at least 1 hour lunch break.
➢ An employee can work beyond eight hours provided that he/she will be
appropriately compensated.
➢ When an employee reports to work during a regular day, his/her overtime
rate is 125% of his regular hourly rate.
➢ When an employee reports to work during a special holiday, his/her
overtime rate is 169% of his regular hourly rate.
➢ When an employee reports to work during his/her rest day which falls on a
special holiday, his/her overtime rate is 195% of his regular hourly rate.
➢ When an employee reports to work during a regular holiday, his/her
overtime rate is 260% of his regular hourly rate.
➢ When an employee reports to work during his/her rest day which falls on a
regular holiday, his/her overtime rate is 338% of his regular hourly rate.
➢ The computation of regular hourly rate, hourly rate, and overtime rate is
given as follows:
𝑟𝑒𝑔𝑢𝑙𝑎𝑟 ℎ𝑜𝑢𝑟𝑙𝑦 𝑟𝑎𝑡𝑒 = 𝑑𝑎𝑖𝑙𝑦 𝑟𝑎𝑡𝑒 ÷ 8
ℎ𝑜𝑢𝑟𝑙𝑦 𝑟𝑎𝑡𝑒 = 𝑟𝑒𝑔𝑢𝑙𝑎𝑟 ℎ𝑜𝑢𝑟𝑙𝑦 𝑟𝑎𝑡𝑒 × 𝑟𝑒𝑠𝑝𝑒𝑐𝑡𝑖𝑣𝑒 ℎ𝑜𝑢𝑟𝑙𝑦 𝑟𝑎𝑡𝑒 %
𝑜𝑣𝑒𝑟𝑡𝑖𝑚𝑒 𝑟𝑎𝑡𝑒 = 𝑟𝑒𝑔𝑢𝑙𝑎𝑟 ℎ𝑜𝑢𝑟𝑙𝑦 𝑟𝑎𝑡𝑒 × 𝑟𝑒𝑠𝑝𝑒𝑐𝑡𝑖𝑣𝑒 𝑜𝑣𝑒𝑟𝑡𝑖𝑚𝑒 𝑟𝑎𝑡𝑒 %
VALUING
Michael works in private company where he earns P870.00 daily. For every
hour he extends at work, he will earn at least P135.94. He plans to report to work
on August 31 because he wants to take advantage of double pay and even higher
overtime rate. Do you agree with him about his plan to report to work on the said
date? State your reason and suggest ways to make his plan more sensible for him
and for the company he is working for.
POSTTEST
Determine the type of workday of the following overtime rate by matching each of
them with letters in the second column.
The daily rate is P600.00
1. P146.25 a. regular day
2. P93.75 b. special holiday
3. P195.00 c. regular holiday
4. P253.5 d. rest day on a special holiday
5. P126.75 e. rest day on regular holiday
Pretest
1. d 2. a 3. a 4. a 5. A
Recap
SSS : P800.00
PhilHealth : P405.00
Pag-IBIG : P100.00
1. Total contribution : P1,305.00
2. Taxable income : 𝑃27,000.00 − 𝑃1,305.00 = 𝑃25,695.00
Pretax : P0.00
Tax on the excess : ሺ𝑃25,695.00 − 𝑃20,833.00ሻ × 20% = 𝑃972.40
3. Withholding tax : P972.40
4. Total payroll deduction : 𝑃1,305.00 + 𝑃972.40 = 𝑃2,277.40
5. Net pay : 𝑃25,695.00 − 𝑃972.40 = 𝑃24,722.60
Activities
I. Identification
1. Overtime premium
2. 8 hours
3. Regular hourly rate
4. Regular holiday
5. Overtime
II. Problem Solving
1. P68.75, P178.75, P232.38
2. P85.00, P127.50, P165.75
3. P90.00, P180.00, P234.00
4. P103.75, P134.88, P175.34
5. P113.75, P113.75, P142.19
Posttest
1. d 2. a 3. c 4. e 5. b
KEY TO CORRECTION
REFERENCES
DOLE. “Labor Advisory 13-19 Payment of Wages for the Regular Holidays and
Special (Non-working) Days for the Year 2020.” Accessed June 26, 2020.
https://www.dole.gov.ph/news/labor-advisory-13-19-payment-of-wages-for-
the-regular-holidays-and-special-non-working-days-for-the-year-2020/.
Galvez, Daphne. “DOLE raises NCR minimum wage to P537 with P25 hike.”
Accessed June 26, 2020. https://newsinfo.inquirer.net/1050451/dole-
raises-ncr-minimum-wage-to-p537-with-p25-hike.
Lopez-Mariano, Norma. Business Mathematics. Manila: REX Bookstore, 2016.
National Wages and Productivity Commission. “Daily Minimum Wage Rates.”
Accessed June 26, 2020. https://nwpc.dole.gov.ph/.
National Wages and Productivity Commission. “Summary of Current Regional Daily
Minimum Wage Rates by Region, Non-Agriculture and Agriculture.” Accessed
June 26, 2020. https://nwpc.dole.gov.ph/stats/summary-of-current-
regional-daily-minimum-wage-rates-by-region-non-agriculture-and-
agriculture/.
Ocon, Ima. “How to Calculate Overtime Pay in the Philippines.” Accessed June 23,
2020. https://sprout.ph/blog/how-to-calculate-overtime-pay/.
Time and Date. “Holidays and Observances in the Philippines in 2020.” Accessed
June 23, 2020. https://www.timeanddate.com/holidays/philippines/.
