OT Pay, Not Subject to Non-Diminution of Benefits Rule
Overtime pay is an additional compensation paid to covered employees who work in excess of eight (8) hours a day: Provided That, compressed workweek is not observed in the establishment.
The basis for overtime pay is in Article 87 of the the Labor Code.
Meanwhile, Compressed Workweek Arrangement is allowed and recognized via DOLE Department Advisory No. 2, Series of 2009. This arrangement allows a maximum of 12 hours work per day resulting in a 4-day work week. Other variations may be made lower than this maximum. No overtime pay is due even if the work exceeds 8 hours since what happens is only a transfer of work hours to other days.
Going back to over time pay, is it subject to the rule on non-diminution of benefits under Article 100 of the Labor Code?
In San Miguel Corporation v. Layoc (G.R. No. 149640, 19 October 2007), the Supreme Court categorically stated: “Thus, overtime pay does not fall within the definition of benefits under Article 100 of the Labor Code [on Non-Diminution of Benefits].”
In that case, the employees argued that the overtime pay that they have been receiving cannot anymore be taken away from them invoking the Non-Diminution of Benefits Rule.
It was held:
“First, [the employees] assert that Article 100 of the Labor Code prohibits the elimination or diminution of benefits. However, contrary to the nature of benefits, [the employers] did not freely give the payment for overtime work to [the employees]. [The employers] paid [the employees] overtime pay as compensation for services rendered in addition to the regular work hours. [The employees] rendered overtime work only when their services were needed after their regular working hours and only upon the instructions of their superiors. [The employees] even differ as to the amount of overtime pay received on account of the difference in the additional hours of services rendered…
“Aside from their allegations, [the employees] were not able to present anything to prove that [the employers] were obliged to permit [the employees] to render overtime work and give them the corresponding overtime pay. Even if [the employers] did not institute a no time card policy, [the employees] could not demand overtime pay from [the employers] if [the employees] did not render overtime work. The requirement of rendering additional service differentiates overtime pay from benefits such as thirteenth month pay or yearly merit increase. These benefits do not require any additional service from their beneficiaries.
“Thus, overtime pay does not fall within the definition of benefits under Article 100 of the Labor Code.”