How Are Overtime Rates Computed on Sprout Payroll?

 

Sprout Payroll uses tables for setting up overtime (OT) rates. If you're setting up the company's account for the first time, you can find the OT rates in the overtime table's under the Setup tab, after which, click on Payroll and Select OT Rates from the dropdown lists. 

Let's take a look at the screencap below:

Default OT Rates (261 days/year Factor Rate):

The default rates for new accounts follow the legal standard set by the Philippine Department of Labor and Employment  (DOLE) found here - Handbook Workers' Statutory Monetary Benefits

Let's assume that the rates below follow these conditions:

• The factor rate used is 261 days per year.

• Employees are paid the whole month and are deducted for absences and undertime.

• Holidays are already paid by default.

• Rest Days, Night Differential and Overtime are not included by default so these always include 100% plus the premium.

• Hourly and/or daily paid employees are accommodated by the system via their status and a separate rate for the day plus another rate for the premium.

• For 258 days per year, a new OT table will be created. We'll be going through this at 
  the latter part of this article.

Here are the following rate types and their respective computations.

Rest Days & Holidays:

• Ordinary (0) -> The employee is already paid for the day and no other premium is added.

• Rest Day ->1.300  or 130% = 100% + 30%

• Special Holiday -> 0.300 or 30% + 100% (already paid) = 130%

• Legal Holiday 1.000 or 100% + 100% (already paid) = 200%

• Special Holiday Rest Day -> 1.500 or 150%

• Legal Holiday Rest Day -> 2.600 or 260%

• Double Holiday -> 2.000 or 200% + 100% (already paid) = 300%

• Double Holiday Rest Day -> 3.900 or = 390%

Rest Days & Holidays with Overtime:

• Ordinary OT -> 1.25 or 125% = 1 x 1.25

• Rest Day OT -> 1.69 or 169% = 1.3 x 1.3

• Special Holiday OT ->1.69 or 169% = 1.3 x 1.3

• Legal Holiday OT -> 2.60 or 260 % = 2 x 1.3

• Special Holiday Rest Day OT -> 1.95 or 195% = 1.5 x 1.3

• Legal Holiday Rest Day OT -> 3.38 or 338% = 2.6 x 1.3

• Double Holiday OT -> 3.90 or 390% = 3 x 1.3

• Double Holiday Rest Day OT -> 5.070 or 507% = 3.9 x 1.3

Rest Days & Holidays with Night Diffrential:

• Ordinary ND -> 0.100 or 10 % + 100% (already paid) = 110%

• Rest Day ND -> 1.43 or 143% = 1.3 x 1.1

• Special Holiday ND -> 0.430 or 43% + 100% (already paid) = 143%

• Legal Holiday ND -> 1.200 or 120% = 100% (already paid) + 100% + (10% Ordinary ND *2) = 220%

• Special Holiday Rest Day ND -> 1.650 or 165% = 1.5 x 1.1

• Legal Holiday Rest Day ND -> 2.860 or 286% = 2.6 x 1.1

• Double Holiday ND -> 3.30 or 330% = 3 x 1.1

• Double Holiday Rest Day ND -> 4.290 or 429% = 3.9 x 1.1

Rest Days & Holidays with Night Differential + Overtime:

• Ordinary ND-OT ->1.375 or 137.5% = 1 x 1.1 x 1.25

• Rest Day ND-OT -> 1.859 or 185.9% = 1.3 x 1.1 x 1.3

• Special Holiday ND-OT -> 1.859 or 185.9% = 1.3 x 1.1 x 1.3

• Legal Holiday ND-OT ->2.860 or 286% = 2 x 1.1 x 1.3

• Special Holiday Rest Day ND-OT -> 2.145 or 241.5% = 1.5 x 1.1 x 1.3

• Legal Holiday Rest Day ND-OT -> 3.718 or 371.8% = 2.6 x 1.1 x 1.3

• Double Holiday ND-OT -> 4.290 or 429% = 3 x 1.1 x 1.3

• Double Holiday Rest Day ND-OT -> 5.577 or 557.7%  = 3.9 x 1.1 x 1.3

New OT Table for 258 days/year Factor Rate:

If there are employees that use 258 days per year as the factor rate, a new OT table should be added and assigned to them.

Let's assume that the rates for this new table follow these conditions:

• The factor rate used is 258 days per year.

• Employees are paid the whole month and are deducted for absences and undertime.

• Holidays are already paid by default except for the following (employee is only paid when present on the following Special Holidays):

• Ninoy Aquino Day - August 21

• All Saints’ Day - November 1

• Last Day of the Year - December 31

• Rest Days, Night Differential and Overtime are not included by default so these always include 100% plus the premium.

• Hourly and/or daily paid employees are accommodated by the system via their status and a separate rate for the day plus another rate for the premium.

Rates are the same with the 261 days per year factor rate except for the following:

Holidays:

• Special Holiday -> 1.300 = 130%

Holidays with Night Differential:

• Special Holiday ND -> 1.430 = 140%

Computing the overtime rates of various employees may prove to be tricky.

Thankfully, the automation of this process on Sprout Payroll eases the burden greatly.