Published — June 20, 2022
The following post does not create a lawyer-client relationship between Alburo Alburo and Associates Law Offices (or any of its lawyers) and the reader. It is still best for you to engage the services of your own lawyer to address your legal concerns, if any.
Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
After reading “What is the rule on accounting for employee’s undertime or absences?”, read also “Is Payment for Overtime Work Absolute?”
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Undertime work on any particular day shall not be offset by overtime work on any other day.
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Permission given to the employee to go on leave on some other day of the week shall not exempt the employer from paying the additional compensation required.
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The proper method should be to deduct the undertime from the accrued leave but pay the employee the overtime to which he is entitled.
Undertime work on any particular day shall not be offset by overtime work on any other day. Permission given to the employee to go on leave on some other day of the week shall not exempt the employer from paying the additional compensation required. (Article 88, Labor Code of the Philippines)
Jurisprudence says:
“…offsetting the overtime with the undertime and at the same time charging said undertime to the accrued leave of the employee is unfair, for under such method the employee is made to pay twice for his undertime because his leave is reduced to that extent while he was made to pay for it with work beyond the regular working hours.” (National Waterworks and Sewerage Authority vs. NWSA Consolidated Unions, et al., G.R. No. L-18939, August 31, 1964)
Thus, according to jurisprudence, the proper method should be to deduct the undertime from the accrued leave but pay the employee the overtime to which he is entitled. This method also obviates the irregular schedule that would result if the overtime should be set off against the undertime for that would place the schedule for working hours dependent on the employee.
What is the rule on payment of overtime work?
The law says:
“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%) 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.” (Article 87, Labor Code of the Philippines)
For the purpose of computing overtime pay, the regular wage of an employee shall include the cash wage only, without deduction on account of facilities provided by the employer. (Article 90, Labor Code of the Philippines)
Thus, where a worker incurs undertime hours during his regular daily work, said undertime hours should not be offset against the overtime hours.
If it were otherwise, the unfairness would be evident from the fact that the undertime hours correspond only the employee’s hourly rate of pay. On the other hand, the overtime hours reflect both the employee’s hourly rate of pay and the appropriate overtime premium such that, not being of equal value, offsetting the undertime hours against the overtime hours. This would result in the undue deprivation of the employees’ overtime premium.
Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.
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