---
title: Compensatory Time Offs--How Does it Work?
---

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# Compensatory Time Offs--How Does it Work?

For exempt employees (e.g. *managers*, *field personnel, piece workers*), the law does not require their employers to grant them the benefit of *overtime* pay. It is at the employer’s discretion whether or not to pay for hours worked beyond the normal *work schedule*. Some employers, however, might create an employee benefits package in lieu of overtime pay. One of the most common perks is the **compensatory time off**. 

 

**Compensatory time off** refers to time off with pay as a substitute for overtime pay for irregular or occasional overtime work. If you're wondering how to set this up on Sprout HR, you can refer to the scenario below:

 

**Required No. of Hours to Work Inc. of Break:** 9 hours

**Work Schedule:** 9:00 AM to 6:00 PM (*Monday to Friday*)

**Schedule Type:** Normal

 

Last Wednesday (*October 31*), Employee A had to work for an extended period to finish all deliverables before the holidays. He worked from *9:00 AM* until *10:00 PM*, almost *4 hours* worth of overtime. What application should he apply for *November 5* (*Monday*) to offset the *4 hours* worth of overtime he rendered? In this case, he should file for an **Official Business**. This is how it should look: 

![](https://desk.zoho.com/DocsDisplay?zgId=659143319&mode=inline&blockId=8j1y5f914ea11a80243b6b02358f72c653128)

**NOTE:** This is different from the *Compensatory Time Off* feature of Sprout HR, and this method should only be applied in the event that the said feature is not compatible with the employee's Shift Schedule. 

 

For more details regarding the *Compensatory Time Off* feature, wherein overtime hours are converted into leave credits, you may refer to our articles below:

- [Compensatory Time-Off (CTO)](https://guide.sprout.ph/compensatory-time-off-cto?hsLang=en)
- [How to Create a Compensatory Time-Off Leave Plan](https://guide.sprout.ph/how-to-create-a-compensatory-time-off-leave-plan?hsLang=en)

 

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