Philippine Labor Law Glossary
Definition: An hourly rate is the wage assigned to one hour of work and is commonly used to compute overtime, night shift differential and partial-day pay.
What Hourly Rate Means
The hourly rate translates an employee’s ordinary wage into compensation for one hour of work. For an employee with a normal eight-hour workday, the ordinary hourly rate is commonly derived by dividing the applicable daily rate by eight.
The hourly rate used on an ordinary day is not always the final rate used for overtime or work on a holiday or rest day. The appropriate day multiplier is first applied, followed by the applicable overtime or night-shift premium.
Why the Hourly Rate Matters
Article 87 requires additional compensation for work beyond eight hours. Article 86 requires a night shift differential for qualifying work between 10:00 p.m. and 6:00 a.m. Both computations depend on the correct hourly wage for the particular day.
A payroll error in the underlying daily rate, normal hours or holiday multiplier can therefore affect several hourly benefits.
Evidence That Matters
| Evidence | Why it matters |
|---|---|
| Employment contract and pay rate | Shows the agreed salary or wage. |
| Work schedule | Shows the normal hours in a workday. |
| Daily time records | Show actual hours worked and overtime. |
| Payroll calculation | Shows the hourly rate and multipliers applied. |
| Holiday and rest-day calendar | Determines the correct base rate for the day. |
Practical Example
Hypothetical example: If the applicable daily rate is ₱800 for an eight-hour ordinary workday, the ordinary hourly rate is ₱100. One hour of overtime on an ordinary day is generally paid at ₱125, representing the hourly rate plus the statutory 25% overtime premium.
Common Misunderstanding
Misunderstanding: The same hourly rate applies on ordinary days, rest days and holidays.
Correct approach: The employee’s ordinary hourly rate is adjusted according to the legal multiplier for the day and any overtime or night-work premium.
Related Terms
Sources and Legal Citations
- Labor Code, Articles 83, 86 and 87 — normal workday, night shift differential and overtime pay. Official DOLE text.
- DOLE 2024 Handbook on Workers’ Statutory Monetary Benefits — hourly-rate treatment for overtime and night shift differential. Official handbook.
Editorial Review and Legal-Review Status
Prepared by: LaborCode.ph Editorial Team
Editorial review: Reviewed under the LaborCode.ph Content Review Policy
Source verification: Official legal sources checked on August 6, 2026
Article-level legal review status: No named lawyer-review credit has been assigned to this glossary entry.
Legal review invitation: Qualified Philippine labor lawyers interested in reviewing this entry or suggesting a correction may contact LaborCode.ph. Legal-review credit will be added only after a named lawyer completes the review.
Disclaimer
The correct hourly rate depends on the employee’s actual pay structure, normal schedule and the day on which work is performed.