In the evolving landscape of Philippine labor relations, the Compressed Workweek (CWW) has emerged as a popular flexible work arrangement. While it offers employees longer weekends and reduces commuting costs, it often creates confusion regarding holiday pay and the legal limits of work hours.
Under the Department of Labor and Employment (DOLE) guidelines—primarily Department Advisory No. 02, Series of 2004 and Department Advisory No. 02, Series of 2009—here is the comprehensive legal framework governing CWW schemes and holidays.
1. What is a Compressed Workweek (CWW)?
A CWW is a scheme where the normal workweek is reduced to fewer than six days, but the total number of hours worked remains the same (usually 48 hours per week). This results in daily work hours exceeding the standard eight-hour limit without the requirement of overtime pay, provided certain conditions are met.
Core Requirements for Valid Implementation:
- Voluntary Agreement: It must be expressly agreed upon by the majority of employees.
- No Diminution of Benefits: Employees must not lose any existing benefits (e.g., meal breaks, bonuses).
- Health and Safety: The nature of the work must not be hazardous to health despite the longer hours.
- DOLE Notification: The employer must notify the DOLE Regional Office of the adoption of the CWW.
2. Can Employers "Offset" Hours Using Holidays?
A common question arises: If a holiday falls on a workday, can an employer require an employee to work extra hours on another day to "make up" for the lost time?
The Rule on Offsetting
Under Article 88 of the Labor Code, "undertime work on any particular day shall not be offset by overtime work on any other day."
In a CWW context:
- Regular Holidays: If a regular holiday falls on a scheduled workday and the employee does not work, they are entitled to 100% of their daily wage. The employer cannot require the employee to work an extra day (e.g., a Saturday) to "compensate" for that holiday without paying the appropriate overtime or rest day premium.
- Compulsory Offsetting is Prohibited: An employer cannot unilaterally decide that because Tuesday was a holiday, everyone must work 2 hours extra for the rest of the week to hit the 48-hour mark at the base pay rate.
3. The 48-Hour Ceiling: Can Employers Exceed It?
The "ceiling" for a standard CWW is generally 48 hours per week. This is based on the logic that a six-day workweek at 8 hours per day equals 48 hours.
Exceeding 48 Hours
If an employee works beyond 48 hours in a CWW scheme, the following rules apply:
- Overtime Pay: Any hour worked beyond the "compressed" daily schedule (e.g., beyond 10 or 12 hours) or beyond the 48-hour weekly limit must be paid as overtime (OT).
- Rest Day Premium: If the CWW results in work on the designated rest day (the 6th or 7th day), the employee is entitled to a rest day premium (usually +30% of the daily rate).
- Legal Limits: While there is no absolute "hard cap" that forbids a human from working more than 48 hours, the Labor Code mandates that such work be compensated with premium rates. However, DOLE emphasizes that work hours should not reach a point where they endanger the safety or health of the employee.
4. Holiday Pay Calculation in a CWW
Calculating holiday pay in a CWW requires a different approach than the standard 8-hour day.
| Scenario | Rule/Compensation |
|---|---|
| Holiday falls on a Work Day (Unworked) | Employee is paid 100% of their regular daily rate. |
| Holiday falls on a Work Day (Worked) | Employee is paid 200% for the first 8 hours, and the specific CWW daily hours (e.g., the 9th and 10th hour) are paid with additional premiums. |
| Holiday falls on a Rest Day | If the employee does not work, they are generally not entitled to pay (unless the CBA says otherwise). If they work, they get the Holiday rate + Rest Day premium. |
[!IMPORTANT] For holiday pay purposes, the "daily wage" is generally based on the 8-hour standard unless the company policy or CBA specifically defines the "day" as the 10-hour or 12-hour shift.
Summary Checklist for Employers and Employees
- Overtime: Working beyond the compressed daily shift (e.g., the 11th hour in a 4-day/10-hour week) is Overtime.
- Holiday Offsetting: You cannot swap a holiday for a rest day to avoid paying premiums.
- Documentation: Ensure a written agreement exists for the CWW; otherwise, the 8-hour rule default applies, and the employer may be liable for years of back-overtime pay.
Would you like me to draft a sample Notice of Implementation for a Compressed Workweek to be submitted to DOLE?