In the Philippine labor landscape, a recurring point of contention between employers and employees is whether the monthly salary already covers payment for unworked regular holidays. The answer to this depends entirely on the Monthly Salary Factor used by the company and the specific stipulations of the employment contract.
Under the Labor Code of the Philippines, specifically Article 94, every worker is entitled to their regular daily wage during regular holidays, even if they do not work, provided they were present or on leave with pay on the workday immediately preceding the holiday.
The "Presumption" of Inclusion
There is a long-standing legal principle often cited from the Implementing Rules and Regulations (IRR) of the Labor Code and reinforced by jurisprudence (notably Odango vs. NLRC). It states that if an employee is paid a monthly salary that meets or exceeds the statutory minimum wage when divided by the actual number of working days, there is a legal presumption that the monthly pay already includes payment for all days of the month, including unworked regular holidays.
However, this presumption is not absolute. It is tested by the Divisor used to calculate the daily rate.
1. The Role of the Divisor
To determine if holiday pay is included, one must look at how the company computes the "Equivalent Monthly Regional Minimum Wage."
- Factor 365 days: If the employer uses 365 days as the divisor (365 days ÷ 12 months), it is mathematically certain that the monthly salary includes all days of the year—Sundays/Rest Days, Special Days, and Regular Holidays. In this scenario, the employee is already paid for the holiday even if they stay at home.
- Factor 313 days: This divisor accounts for the 313 "workable" days in a year (365 days minus 52 Sundays). Since the 313 days include the 12 regular holidays, employees under this computation are also deemed paid for unworked regular holidays.
- Factor 261 or 251 days: These divisors are typically used for employees who do not work on Saturdays and Sundays. If the divisor used by the company excludes holidays from the count of paid days, then the holiday pay is not included in the basic salary and must be paid separately.
2. The Rule on "Double Burden"
If an employee is required to work on a regular holiday, the "included" holiday pay only covers the first 100%. The employer must pay an additional 100% (totaling 200%) of the daily rate.
If the holiday pay is already "deemed included" in the monthly salary, the employer only needs to pay an additional day's wage (100%) on top of the monthly salary to satisfy the 200% requirement. If it is not included, the employer must pay the full 200% on top of the basic monthly take-home.
Key Exceptions and Nuances
The Principle of Non-Diminution of Benefits
If an employer has a long-standing practice of paying holiday pay separately, even if their divisor (like 365) technically includes it, they cannot suddenly stop doing so. Article 100 of the Labor Code prohibits the elimination or diminution of benefits supplemented by voluntary employer practice or policy.
Monthly-Paid vs. Daily-Paid
- Monthly-Paid Employees: Generally those whose monthly salary is constant regardless of the number of working days in a month. They are the ones usually subject to the "deemed included" rule.
- Daily-Paid Employees: These workers are paid based on "no work, no pay." For them, holiday pay is almost never included in a "basic salary" and must be explicitly added to their payroll during months containing regular holidays.
Retail and Service Establishments
Establishments regularly employing fewer than ten (10) workers are specifically exempted from the requirement to pay regular holiday pay under the Labor Code. In these cases, the question of "inclusion" is moot as the mandate does not apply.
Summary Table: Is it Included?
| Divisor Used | Days Accounted For | Is Holiday Pay Included? |
|---|---|---|
| 365 Days | All days in a year | Yes. Includes rest days and holidays. |
| 313 Days | Mon-Sat (excludes Sundays) | Yes. Includes regular holidays. |
| 261 Days | Mon-Fri (excludes Sat/Sun) | Depends. Usually includes holidays unless specified otherwise. |
| "Working Days Only" | Excludes holidays/weekends | No. Must be paid as an additional premium. |
Conclusion
In the Philippine context, the monthly basic salary is generally presumed to include unworked regular holiday pay for monthly-paid employees, provided the divisor used by the company accounts for those days. To verify this, employees and HR practitioners should audit the Payroll Factor or Divisor applied in the company’s accounting policy. If the divisor is 365 or 313, the holiday pay is legally "baked in" to the monthly check.