Understanding Holiday Pay Computation in the Philippines
In the Philippine labor landscape, a common point of contention between employers and employees is whether a fixed monthly salary already "covers" payment for regular holidays. To understand this, one must look at the Labor Code of the Philippines and established jurisprudence by the Supreme Court.
1. The General Rule: Right to Holiday Pay
Under Article 94 of the Labor Code, 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.
- Regular Holiday: 100% of the daily wage (if unworked).
- Worked Regular Holiday: 200% of the daily wage (Double Pay).
2. The "Monthly-Paid" vs. "Daily-Paid" Distinction
The answer to whether your salary includes holiday pay depends on your classification:
A. Monthly-Paid Employees
These are employees who are paid a fixed amount per month, regardless of the number of working days in that month.
- The Legal Presumption: If an employee is "monthly-paid," there is a legal presumption that their monthly salary already includes payment for all days of the month, including regular holidays.
- The Factor used: Often, companies use a "Factor" to determine the monthly rate (e.g., 365 days or 313 days). If the factor used by HR includes the 12 regular holidays, then the holiday pay is technically "integrated" into the monthly paycheck.
B. Daily-Paid Employees
These are employees whose wages are computed based on the actual days worked.
- The Rule: They are generally not considered to have holiday pay included in a "salary" because they don't have a fixed monthly rate. They must be paid their daily rate for regular holidays even if they didn't clock in, provided they met the "attendance on the day before" requirement.
3. Divisors: The "Smoking Gun"
To know for sure if your salary includes holiday pay, you must look at your Monthly Salary Divisor. This is the number used to compute your daily rate.
| Divisor | What it implies |
|---|---|
| 365 days | Includes Sundays/Rest Days and all Regular Holidays. Holiday pay is included. |
| 313 days | Excludes Sundays/Rest Days but includes Regular Holidays. Holiday pay is included. |
| 261/262 days | Excludes Saturdays, Sundays, and Regular Holidays. Holiday pay might not be included (unless the contract states otherwise). |
Note: If your divisor is lower (e.g., 251 days), it usually means holidays are excluded from the computation of the monthly rate, and therefore, you should see a separate line item for holiday pay when a holiday occurs.
4. Exceptions: Who is NOT Entitled?
Not everyone is entitled to holiday pay under the law. According to Book III, Rule IV of the Omnibus Rules Implementing the Labor Code, the following are excluded:
- Government employees (governed by Civil Service laws).
- Retail and service establishments regularly employing less than ten (10) workers.
- Domestic helpers (Kasambahays) and persons in the personal service of another.
- Managerial employees and officers/members of the managerial staff.
- Field personnel and those whose performance is unsupervised by the employer.
5. Frequently Asked Questions
- What if the holiday falls on a Sunday or Rest Day? If a regular holiday falls on an employee's rest day, they are still entitled to 100% of their daily wage. If they are required to work on that day, they are entitled to an additional 30% of the 200% (total 260%).
- Does this apply to Special Non-Working Days? No. The "included in monthly salary" rule generally applies only to Regular Holidays. Special Non-Working Days follow the "No Work, No Pay" principle unless there is a favorable company policy or Collective Bargaining Agreement (CBA).
Summary for HR and Employees
If you are a monthly-paid employee in the private sector, your monthly salary is legally presumed to include your pay for regular holidays. However, if you are asked to work on that holiday, you are entitled to an additional 100% (bringing the total to 200%) because the "included" pay only covers the "unworked" portion of the holiday.
Would you like me to draft a sample computation for a monthly-paid employee working on a regular holiday?