Overtime Pay Rules for Partially Absent (“Undertime”) Employees in the Philippines

1. Statutory Foundations

Key Provision	Core Rule	Practical Effect
Art. 82, Labor Code	Excludes managerial employees, field personnel, and certain workers paid by results from the hours-of-work chapter.	If an employee falls within these exclusions, overtime (OT) rules do not apply. citeturn11search0
Art. 83	Normal hours = 8 per day. Meal periods (≥ 60 min) are unpaid hours.
Art. 87	OT work = service beyond 8 actual hours in a day. OT premium: +25 % on ordinary days; +30 % if OT falls on a rest day/holiday. citeturn9search4
Art. 88	Undertime not offset by overtime. Hours lost in a day (tardiness/half-day leave) may be deducted, yet OT rendered on another day—or on the same day after schedule—must still be paid if it exceeds eight hours. citeturn9search4turn0search0turn0search1
Book III, Omnibus Rules (IRR)	Defines “hours worked,” requires daily time records, and reiterates the Art. 88 rule against offsetting. citeturn12search0
DOLE Handbook on Workers’ Statutory Monetary Benefits (latest PDF, 2024 update)	Gives computation templates for undertime deductions and OT premiums; adopted by DOLE labor inspectors. citeturn6search1

2. What Counts as “Partial Absence”?

Tardiness / Late arrival – minutes or hours after the start of the scheduled shift.
Undertime leave – permission to leave before end of shift (paid or unpaid).
Half-day absence – employee works ≤ 4 hours of an 8-hour schedule.

All three shorten the day’s hours actually worked, trigger salary deductions under the “no-work-no-pay” principle, and are treated uniformly for OT purposes. citeturn6search2

3. The No-Offsetting Principle Explained

Even one minute of undertime cannot be “paid back” by working overtime, whether on the same day or another.
Rationale: OT carries a statutory premium; allowing offsetting would short-change labor. citeturn0search2

Illustrative day (ordinary working day)
Schedule: 8 a.m.–5 p.m. (1-hour lunch).
Scenario A – Late by 2 hrs, works until 7 p.m.
•Actual hours = 8 ⇒ No OT pay (not beyond 8 hrs) but deduct 2 hrs undertime pay.
Scenario B – Late by 3 hrs, works until 9 p.m.
•Actual hours = 9 ⇒ Pay 1 hr OT at 125 %, deduct 3 hrs undertime; remaining 2 hrs (5 p.m.–7 p.m.) are paid at the regular rate.

The DOLE Handbook uses the same logic in its sample worksheets. citeturn6search1

4. Computing the Money

Determine the hourly rate.
Daily salary ÷ 8 = basic hourly rate (BHR).
Deduct undertime.
Undertime hours × BHR = deduction.
Identify OT hours. Count only hours beyond 8 actual hours (not beyond scheduled time).
Apply the premium.
OT pay = OT hours × BHR × (1.25 ordinary | 1.30 rest/holiday).
Add night-shift differential (10 % of BHR) if OT hours fall between 10 p.m.–6 a.m.

5. Key Supreme Court Doctrines

Case	Take-away
Auto Bus v. Bautista, G.R. 156367 (16 May 2005)	Bus drivers paid on commission were not field personnel; employer must pay OT once actual work exceeds 8 hrs. citeturn2search5
San Miguel Corp. v. CA, G.R. 146775 (30 Jan 2002)	Even salaried employees may claim OT; employer bears burden of proving payment by complete time & payroll records. citeturn6search6
Mercidar Fishing v. NLRC, G.R. 123180 (9 Oct 1998)	Burden of proof for OT worked rests on the employee; once prima facie shown, employer must disprove or pay. citeturn0search5
L-18939 (Cervantes v. CIR, 1964)	Off-setting undertime with OT is invalid; rule predates the Labor Code and remains persuasive. citeturn9search2
Central Azucarera de Tarlac v. CATLU, G.R. 188949 (26 Jul 2010)	CBA may grant higher OT premium; statutory rates are the floor, not the ceiling. citeturn8search0
Lebatique v. NLRC, G.R. 162813 (27 Feb 2007)	Field personnel exception is construed narrowly; proof of unsupervised hours is essential for OT exemption. citeturn11search9

6. Employees Not Entitled to OT—Even if Partially Absent

Managerial employees & members of the managerial staff (Art. 82).
Field personnel—those whose actual hours cannot be determined with reasonable certainty.
Employees paid a fixed amount regardless of time consumed, provided they meet the field-personnel test.
Domestic workers (governed instead by the Batas Kasambahay).

Where an employee disputes the exemption, the employer must prove the factual basis. citeturn11search7

7. Record-Keeping & Burden of Proof

Employers must keep daily time records (DTR) and payroll journals for at least three (3) years.
In money-claim cases, the employer bears the burden to show payment once the employee gives a reasonable estimate of hours worked. citeturn0search5
Failure to present records usually results in the acceptance of the employee’s claim or the NLRC/DOLE’s re-computed figures.

8. Penalties & Enforcement

Civil: payment of OT differentials plus legal interest (currently 6 % p.a. until fully paid).
Administrative: DOLE compliance orders, closure of establishments, or cash-bond posting.
Criminal: Art. 303 of the Labor Code penalizes willful refusal to pay statutory monetary benefits with fines of ₱ 100,000–₱ 500,000 and/or imprisonment of 2–4 years.
Solidary liability: Corporate officers who “knowingly” allow violations may be joined as parties.

9. Best-Practice Checklist for Employers

Synchronize time-keeping devices (biometrics & CCTV).
Issue a clear undertime & OT policy—state that undertime requires prior approval and that off-setting is prohibited.
Automate payroll formulas exactly as per DOLE Handbook.
Audit at least twice a year—simulate sample days with undertime + OT to verify system accuracy.
Respect CBAs—if they promise higher OT or lenient undertime treatment, the CBA prevails.
Document managerial & field-personnel roles to defend any exemption.

10. Take-aways for Employees

Keep personal copies of DTR slips, logbooks, or GPS trip tickets.
Submit written OT requests/approvals; inform HR if forced to stay beyond schedule.
Know the deadlines: money claims must ordinarily be filed within 3 years of accrual (Art. 306).

Conclusion

For part-day absences, Philippine law draws a hard line: hours you miss are subject to deduction, but they can never erase the employer’s duty to pay the statutory OT premium for work rendered over eight hours. Jurisprudence consistently protects this benefit, while the DOLE’s enforcement machinery and handbook computations supply the day-to-day mechanics. When in doubt, remember the twin maxims of labor standards: doubt is resolved in favor of labor—and statutory benefits are the floor, never the ceiling.