Below is a general discussion of the rules, principles, and common practices related to offsetting employee tardiness (or “lates”) against overtime work in the Philippines. Note that this overview is for informational purposes only and should not be construed as official legal advice. For specific situations, always consult a qualified labor lawyer or the Department of Labor and Employment (DOLE).

1. Key Concepts in Philippine Labor Law

1.1. Working Hours

Under the Labor Code of the Philippines, the normal working hours of an employee shall not exceed eight (8) hours a day. Employers are required to compensate employees for all hours actually worked, within the bounds of minimum wage and other labor standards.

1.2. Tardiness (Lates)

“Tardiness” or “late” arrival typically means arriving at work after the designated start time. In practice:

Salary Deduction: Many employers deduct from wages corresponding to the time the employee was absent from his or her post (the fraction of the daily wage equivalent to the minutes or hours missed).
Attendance and Disciplinary Measures: Repeated tardiness may also be subject to disciplinary action, up to and including dismissal in extreme or repeated cases, provided due process is followed.

1.3. Overtime

Article 87 of the Labor Code governs overtime pay. Any work performed beyond eight (8) hours in a workday must be compensated with the applicable overtime premium:

Regular Overtime: Not less than 125% of the employee’s regular wage rate for work beyond 8 hours on ordinary working days.
Overtime on a Rest Day or Special Holiday: Higher premiums apply (e.g., 130% or more, depending on the holiday).
Night Shift Differential: An additional benefit (at least 10% premium) for work performed between 10:00 p.m. and 6:00 a.m., if the job is not covered by an exemption.

2. Offsetting Lates Against Overtime: General Principle

In general, Philippine labor regulations do not explicitly authorize the offsetting of tardiness against overtime work. Traditionally, overtime pay is viewed as a separate legal entitlement due to employees who work beyond the normal eight-hour workday. Tardiness, on the other hand, typically results in a salary deduction for unworked hours (or minutes).

2.1. Wages as Inviolable

A recurring principle in Philippine labor law is that “wages are inviolable.” In simpler terms, the Labor Code and jurisprudence consistently protect employees’ right to full and timely payment for actual hours worked. This principle often translates to the idea that the pay for any additional hours (overtime) cannot be used to offset or cancel out an unrelated deduction (tardiness), unless the circumstances strictly fall under lawful deductions enumerated by law (e.g., income tax, SSS contributions, authorized loan payments, etc.).

2.2. Management Prerogative

Philippine labor law does recognize management prerogative, giving employers the right to set reasonable rules and regulations to efficiently manage business operations. Employers may try to implement policies for balancing lost time due to tardiness with extended work hours. However, such a policy:

Must not violate minimum labor standards (e.g., payment of minimum wage, overtime premiums, etc.).
Must be explained clearly and consistently applied to avoid claims of discrimination, unfair labor practice, or diminution of benefits.
Cannot bypass mandatory overtime premiums. If an employee works beyond eight hours, the employer is still obliged to pay overtime premiums.

3. Common Employer Practices and Their Legality

3.1. Strict Deduction for Lates, Separate Overtime Pay

Most employers simply deduct tardiness from the employee’s wage (on a pro-rated basis) and pay overtime separately with the appropriate premium. This is generally compliant with labor standards.

3.2. “Offsetting” Through Flexible Working Schedules

Some companies adopt flexible working arrangements (approved by DOLE or formalized through company policies) that allow employees to “make up” lost time during the same day or week. In such scenarios:

The employee might come in late but can legally extend working hours within the same day just to complete the normal 8-hour shift (without incurring tardiness deduction).
However, if the employee truly works beyond 8 hours in total for the day, overtime pay (with premium) would still be due.

These arrangements are generally acceptable as long as they are voluntary, documented, and do not reduce the lawful pay an employee is entitled to receive. They are often referred to as “flexitime” or flexible work arrangements, and DOLE encourages these practices if mutually beneficial to both parties.

3.3. Unilateral Offset Policies

A unilateral employer policy stating that an hour of late arrival will simply “cancel out” an hour of overtime (thereby negating any overtime premium) can be legally problematic if it effectively deprives the employee of overtime pay. It could be seen as:

A form of unauthorized wage deduction.
A violation of the principle that overtime hours must receive the overtime premium.
A possible diminution of benefit, depending on company practice and length of time it has been enforced.

3.4. Deductions from Overtime Pay

If an employer deducts minutes/hours of tardiness directly from the total overtime pay, this might violate labor standards because overtime pay is specifically for work done beyond the eight-hour threshold. If the employee truly worked the extra hours, the law entitles them to the corresponding overtime premium, regardless of whether they had been late earlier in the day.

4. Relevant Legal Bases and Guidance

Labor Code of the Philippines:
- Article 87 (Overtime Work): Requires payment of no less than 125% for overtime on ordinary working days.
- Wage-related provisions: Prohibit unauthorized or arbitrary deductions not enumerated by law.
DOLE Issuances and Guidelines:
- DOLE encourages Flexible Working Arrangements, provided both employer and employee agree, and they comply with labor standards (e.g., no deprivation of overtime premium, maintenance of minimum wage).
Supreme Court Rulings and Jurisprudence:
- Generally uphold the principle that wages and benefits are legally mandated and cannot be waived or reduced unilaterally.
- Reinforce that overtime pay is a statutory right of workers.

5. Practical Tips for Employers and Employees

For Employers

Establish Clear Attendance Policies: Ensure your rules on tardiness, undertime, and overtime are documented in a written policy or company handbook.
Avoid Illegal Offsetting: If creating a scheme that allows employees to “make up” lost time, ensure it complies with flexible work guidelines. Refrain from directly offsetting overtime hours or pay to cover tardiness.
Communicate Policies: Provide regular orientations to supervisors and HR personnel so that they uniformly apply the rules and avoid confusion or claims of discrimination.

For Employees

Check Company Policy: Review your employment contract or employee handbook for any clause on tardiness and overtime.
Record Hours Worked: Keep a personal log of actual hours worked. If you believe that your overtime premium is being improperly deducted or offset, raise the issue with HR or management in writing.
Seek Assistance: If the company policy appears to violate your statutory rights, consult DOLE or a labor attorney. DOLE has desks dedicated to resolving such issues through Single Entry Approach (SEnA) or formal mediation.

6. Conclusion

While there is no direct, specific Labor Code provision that categorically forbids offsetting lates against overtime, standard labor principles and jurisprudence strongly indicate that true overtime hours must be compensated at the lawful premium rate and cannot simply “cancel out” any tardiness. Tardiness typically results in a valid salary deduction for time not worked, and overtime pay is an additional statutory obligation for hours worked beyond the standard eight per day.

An acceptable alternative is the use of flexible or alternative work arrangements (with DOLE’s guidelines and mutual consent) to allow employees to complete eight hours without incurring lates, rather than trying to offset tardiness with overtime. Ultimately, clarity in company policy, adherence to minimum labor standards, and proactive communication go a long way in managing both employer and employee concerns on this issue.

Disclaimer: This article does not constitute legal advice. For any specific situations involving questions of policy drafting, wages, or potential disputes, you should seek professional legal counsel or inquire directly with the Department of Labor and Employment (DOLE).