Published — June 1, 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 this article about overtime pay, read also: Can Employees Be Compelled To Render Overtime Work?
-
Eight (8) hours a day is the normal hours of work of any employee
-
An employee is entitled to overtime pay for work performed beyond eight (8) hours a day
-
Generally, right to overtime pay cannot be waived
May an employment contract contains a stipulation where the employee is waiving his right to overtime pay? Overtime pay refers to the additional pay for work performed in excess of 8 hours a day. Without overtime work, there is no overtime pay to speak of.
At a first glance, it would seem that an employment contract may not contain a stipulation allowing the employee to waive his overtime pay. However, such is not always the case. The law grants the employer a wide management prerogative to include a scheme which necessarily results in not having to pay the overtime premium of his employees.
The law says:
It is a general rule that an employee performing an overtime work is entitled to the corresponding overtime pay. Otherwise, the employer would be liable for the deficiency.
However, there are instances where the payment of overtime pay may be waived by employees as in the case of adopting a Compressed WorkWeek pursuant to Advisory No. 02 (Series of 2004) of the Department of Labor and Employment.
Compressed WorkWeek refers to one where the normal workweek is reduced to less than six (6) days but the total number of work hours of Forty-Eight (48) hours per week remains. In this kind of work arrangement, the normal workday is increased to more than 8 hours but not to exceed twelve hours without the corresponding overtime premium.
Going back to the question, “May an employment contract contain a stipulation that the employee is waiving his right to overtime pay?”
The law says:
Yes.
However, it is important to note that the employment contract should be executed in good faith and not to evade the mandates of the law.
In the case of Bisig Manggagawa sa Tryco et. al vs. NLRC et. al, G.R. No. 151309, October 15, 2008, the Supreme Court maintained the validity of the Memorandum of Agreement (MOA) which the employer and his employees entered into pursuant to Department of Labor and Employment Order (D.O.) No. 21, Series of 1990, the basis at the time.
The MOA provides for a workweek schedule to be implemented in the company effective May 20, 1996. As provided in the MOA, 8:00 A.M. to 6:12 P.M, from Monday to Friday, shall be considered as the regular working hours, and no overtime pay shall be due and payable to the employee for work rendered during those hours.
The MOA specifically stated that the employee waives the right to claim overtime pay for work rendered after 5:00 P.M. until 6:12 P.M. from Monday to Friday considering that the Compressed Workweek schedule is adopted in lieu of the regular workweek schedule which also consists of 46 hours. However, should an employee be permitted or required to work beyond 6:12 P.M. such employee shall be entitled to overtime pay.
Is the above-mentioned MOA in accordance with law?
The Supreme Court says:
Yes.
Accordingly, the MOA complied with the following conditions set by the DOLE:
- The employees voluntarily agree to work more than eight (8) hours a day, the total in a week of which shall not exceed their normal weekly hours of work prior to adoption of Compressed Workweek Arrangement;
- There will not be any diminution whatsoever in the weekly or monthly take-home pay and fringe benefits of the employees;
- If an employee is permitted or required to work in excess of his normal weekly hours prior to the adoption of the Compressed Workweek Scheme, all such excess hours shall be considered as overtime work and shall be compensated in accordance with the provisions of the Labor Code or applicable Collective Bargaining Agreement (CBA);
- Appropriate waivers with respect to overtime premium pay for work performed in excess of eight (8) hours a day may be devised by the parties to the agreement; and
- The effectivity and implementation of the new working time arrangement shall be by agreement of the parties.
Thus, with legal guidance above, the employee can contractually waive his right to overtime pay.
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.
All rights reserved.
SUBSCRIBE NOW FOR MORE LEGAL UPDATES!
[email-subscribers-form id=”4″]