When an Employee with Undertime Works on Overtime

Should an employee who reported late for work and ended up working past his regular working schedule be paid overtime?

This is the usual question I get from employers who feel that the employee should make up for being late by extending his hours of work on the same day.

Philippine labor law prohibits the offsetting of undertime by rendering overtime.

In a case, the Supreme Court had the chance to decide on a similar situation and said that the undertime employee is still entitled to overtime pay.  When undertime is offset against the overtime, the employee is ‘made to pay’ twice for his undertime hours. This is because the employee’s leave credits are reduced to the extent of the undertime hours while he is made to pay for the undertime hours with work beyond the regular working hours.  Clearly, this is not a fair situation for the employee, even when the undertime is his fault.

The proper approach should be to deduct the undertime hours from the available leave credits of the employee and to pay the employee overtime for the extended hours of work. 

If the employee has consumed his leave credits, his undertime hours may be deducted from his salary, but he should still be paid his overtime compensation for work performed beyond his regular working hours. (NATIONAL WATERWORKS and SEWERAGE AUTHORITY, vs.  NWSA CONSOLIDATED UNIONS, ET AL.)

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2 thoughts on “When an Employee with Undertime Works on Overtime

  1. ed

    My case is i’m holding a supervisory position. I’ve been working in this company for over 3 years and ever since, my position and compensation arrangement is that i’m not entitled to overtime pay but I am also not deducted on undertimes. lately near the end of my 3th year, i’m getting blamed by the president of the company for the ill performance of my assistant. now he instructed his finance director to monitor my time/attendance and will now deduct any undertime though i’m not yet still entitled to overtime pay. is this legal? thanks.

    1. Atty. Post author

      Ed: Supervisory and managerial employees are generally not covered by overtime pay. But imposing a strict time policy such that undertime may be deducted is an indication of a rank and file employee. In my opinion, this sounds like a demotion because you may suffer a reduction in salary for the same hours of work you put in as before. And demotions without due process may be questioned legally, particularly when an actual deduction for undertime has already been made. I suggest that you obtain a written clarification of your employment status and state the obvious that the new policy on your attendance is a reduction of salary. I hope this helps.

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