The rendition of overtime work and the submission of sufficient proof that said work was actually performed are conditions to be satisfied before a seafarer could be entitled to overtime pay.
The Supreme Court held that the correct criterion in determining whether or not seafarers are entitled to overtime pay is not whether they were on board and can not leave ship beyond the regular eight working hours a day, but whether they actually rendered service in excess of said number of hours. ( PCL Shipping Philippines, Inc. vs. NLRC[, G.R. No. 153031, December 14, 2006)
Overtime pay could not be granted to a seafarer for failure to produce any proof that he actually performed overtime work.
Shipowners must ensure compliance with overtime pay rule under the Maritime Labour Convention 2006 (MLC2006) of the International Labor Organization (ILO) which provides limits on hours of work and rest for seafarers on board a vessel. Persons working beyond the standard time must be compensated with an overtime pay which shall be computed on the basis of existing labour regulations.
Under the POEA standard employment contract, the seafarer shall be compensated for all work performed in excess of the regular eight (8) hours. Overtime pay may be classified as open, fixed or guaranteed.
In computing overtime, a fraction of the first hour worked shall be considered as one full hour. After the first hour overtime, any work performed which is less than thirty (30) minutes shall be considered as half an hour and more than thirty (30) minutes shall be considered one full hour.
Overtime work may be compensated at the following rates:
1. Open overtime – not less than 125 percent (125%) of the basic hourly rate computed based on two hundred eight (208) regular working hours per month.
2. Guaranteed or fixed overtime – not less than thirty percent (30%) of the basic monthly salary of the seafarer. This fixed rate overtime shall include overtime work performed on Sundays and holidays but shall not exceed one hundred five (105) hours a month.
3. Overtime work for officers shall be computed based on the fixed overtime rate.
4. For ratings, overtime work shall be based on guaranteed or open overtime rate, as mutually agreed upon by the contracting parties. For ratings paid on guaranteed overtime, overtime work in excess of 105 hours a month for ratings shall be further compensated by their hourly overtime rate.
Any hours of work or duty including hours of watchkeeping performed by the seafarer on designated rest days and holidays shall be paid rest day or holiday pay.
Overtime records should be kept and signed by the seafarer and the master or duly authorized officer.
The Supreme Court underscored in the earlier case of Cagampan v. NLRC (G.R. No. 85122-24, 22 March 1991) that the contract provision guarantees the right to overtime pay but the entitlement to such benefit must first be established.
The Supreme Court downplayed the seafarers’ view that the “guaranteed or fixed overtime pay of 30% of the basic salary per month” embodied in their employment contract should be awarded to them as part of a “package benefit.” They have theorized that even without sufficient evidence of actual rendition of overtime work, they would automatically be entitled to overtime pay.
The Supreme Court disregarded the seafarers’ arguments in National Shipyards and Steel Corporation v. CIR (3 SCRA 890) that they should be paid overtime compensation for every hour in excess of the regular working hours that he was on board his vessel or barge each day, irrespective of whether or not he actually put in work during those hours.
The Court noted that seafarers are required to stay on board their vessels by the very nature of their duties, and it is for this reason that, in addition to their regular compensation, they are given free living quarters and subsistence allowances when required to be on board.
It could not have been the purpose of the law to require their employers to pay them overtime even when they are not actually working; otherwise, every seafarer on board a vessel would be entitled to overtime for sixteen hours each day, even if he spent all those hours resting or sleeping in his bunk, after his regular tour of duty.
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It has been a practice for officers to be compensated by a fixed overtime rate method, where, regardless of how many overtime works performed in a month, they get paid a fixed monthly overtime. Officers on fixed overtime rate agreement are no longer required keep a monthly overtime record because they are regularly paid by a fixed monthly overtime pay. They get paid if their overtime is less than 105 hours or more than 105 hours of overtime.