Holiday pay rules: a walkthrough

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The Philippines is said to have the longest Christmas celebration in the world as Christmas carols start playing as early as September. But in a strict sense, only four December days are declared as holidays by the government for Filipino workers.

Two weeks before Christmas, Malacanang announced that Dec. 25 and 27 will be regular holidays and Dec. 24 and 31 as special non-working holidays.

December 27 will be this year’s observance of Rizal Day since Dec. 30 falls on a Thursday. This is line with the government’s holiday economics policy under Republic Act 9492 (RA 9492), which states that regular holidays are movable to the nearest Monday. RA 9492 amended Sec. 26, Chapter 7 of Executive Order No. 292 (or the Administrative Code of 1987) which provides for fixed holidays.

The Palace announcement is also in line with Proclamation No. 1841 signed by former president Gloria Arroyo in July 2009. The proclamation provides for the observance of regular holidays and special non-working holidays for this year.

Pay rules

To incentivize work for these holidays, specific compensation rules are laid down under Memorandum Circular No. 1 of the Department of Labor and Employment (DOLE). That means a worker may enjoy even less than four December holidays, depending on whether he or she works or not on those days.

DOLE’s Memo Circular No. 1, which was signed in 2004, outlines the pay rules on regular holidays and special non-working holidays as follows:

For regular holidays

1) If it is an employee’s regular workday

If unworked – 100%

If worked

  • 1st 8 hours – 200%
  • excess of 8 hours – plus 30% of hourly rate on said day

2) If it is an employee’s rest day

If unworked – 100%

If worked

  • 1st 8 hours – plus 30% of 200%
  • excess of 8 hours – plus 30% of hourly rate on said day

For special non-working holidays

If unworked

  • No pay, unless there is a favorable company policy, practice or collective bargaining agreement (CBA) granting payment of wages on special days even if unworked.

If worked

  • 1st 8 hours – plus 30% of the daily rate of 100%
  • excess of 8 hours – plus 30% of hourly rate on said day

Falling on the employee’s rest day and if worked

  • 1st 8 hours – plus 50% of the daily rate of 100%
  • excess of 8 hours – plus 30% of hourly rate on said day

Based on these guidelines, a person who works for eight hours on Dec. 25 (Saturday), a regular holiday, should receive twice the amount of his or her regular daily pay plus 30 percent. This is based on the assumption that Saturday is a rest day in his or her company. But if Saturday is not a rest day, he or she would only receive twice the amount of his regular daily pay.

Exceptions to holiday pay

All workers regardless of employment status are entitled to the right to holiday pay as guaranteed under the Article 94, Book III of the Labor Code, except those in “retail and service establishments regularly employing less than 10 workers”

Labor lawyer Remigio Saladero, Jr., however, interprets this differently. In a forum on Labor Code over the weekend, he explained that this provision means that if less than 10 workers worked on a holiday, neither one of them would be entitled to a holiday pay.

He added that companies subcontracting or outsourcing labor to smaller units benefit from this provision as they are exempt from paying their employees with holiday pay.

Other exceptions to holiday pay based on the Omnibus Rules Implementing the Labor Code are as follows:

  • Those of the government and any of the political subdivision, including government-owned and controlled corporation;
  • Domestic helpers and persons in the personal service of another;
  • Managerial employees as defined in Book Three of the Labor Code;
  • Field personnel and other employees whose time and performance is unsupervised by the employer including those who are engaged on task or contract basis, purely commission basis, or those who are paid a fixed amount for performing work irrespective of the time consumed in the performance thereof.

13th month pay

In addition to holiday pay, workers are entitled to 13th month pay as provided for under Presidential Decree No. 851 (P.D. 851) signed by former president Ferdinand Marcos in December 1976. A 13th month pay is equivalent to one-twelfth of the basic salary of an employee for the entire year.

Under PD 851, employers are required to pay their rank-and-file employees not later than December 24.

Exempt from complying with the 13th month pay law are 1) “distressed employers” as defined in PD 851 2) the government and any of its political subdivisions including government-owned and controlled corporations 3) employers already paying their employees 13th month pay 4) employers of household helpers and related work and 5) employers of those who work on a commission, boundary or task basis.

What about BPO workers?

For workers employed in the business process outsourcing (BPO) industry, thorny issues regarding holidays and holiday pay naturally arise since they cater to different countries and time zones, with most BPO firms serving US-based clients.

In his business column, Leonard Vinz Ignacio observed that BPO employees render work during Philippine holidays, and alternatively, go on leave to have their much-needed rest during US holidays.

The US observes only one federal holiday during December, which is December 25.

Ignacio said the “peculiar nature” of call centers and other BPO businesses may give rise to issues on the payment of the holiday pay vis-a-vis the prohibition on diminution of benefits under Article 100 of the Labor Code.

Furthermore, the different observance of holidays by domestic BPO firms raises the question of whether these companies are violating the constitutionally guaranteed right to holiday pay as stated in Article 94 of the Labor Code as well as the holiday economics law.

As noted by Ignacio, there is no existing jurisprudence on this issue. Following the practice of outsourcing companies, BPO employees will have to work on Dec. 24, 27 and 30 on regular compensation.

Unfortunately, this concern may be still be up to the BPO companies at the end of the day as the labor department recently reaffirmed its push for self-regulation in what the government calls the “sunshine industry.”


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