Holiday Pay Eligibility During Sick Leave in the Philippines — A Comprehensive Guide

1. Introduction

Few topics trigger as much confusion at payroll time as the situation where a regular holiday falls smack in the middle of an employee’s sick-leave spell. Is the worker still owed holiday pay? Does it matter whether the sick leave is with pay or without pay? This article brings together, in one place, the entire body of Philippine rules, issuances, and leading court decisions that govern holiday-pay entitlement when an employee is on sick leave.

Quick Snapshot

Holiday pay is a statutory benefit under Article 94 of the Labor Code.

“Sick leave” per se is not a statutory right (outside the five-day Service Incentive Leave), but it commonly exists through company policy, a CBA, or as SIL converted to sick leave.

If the sick leave is paid, the employee remains entitled to holiday pay.

If the sick leave is unpaid (or the employee is on AWOL), the holiday-pay entitlement is generally lost, unless the employee actually works on the holiday.

Everything else in this article flows from — and elaborates on — these core rules.

2. Statutory Bases and Key Issuances

Source	Relevant Provision
Labor Code of the Philippines (as renumbered)	Art. 94 (Holiday Pay); Art. 95 (Service Incentive Leave)
Omnibus Rules Implementing the Labor Code	Book III, Rule IV (Holidays, Service Incentive Leaves and Service Charges)
DOLE Handbook on Workers’ Statutory Monetary Benefits (latest edition)	Chapter on Holiday Pay — “Effect of absences”
Republic Act No. 11199 (Social Security Act of 2018)	SSS sickness benefit provisions
Supreme Court Jurisprudence	Auto Bus Transport Systems, Inc. v. Bautista (G.R. L-155322, 15 February 2008); Philchem Industrial Corp. v. NLRC (G.R. L-125965, 9 June 1999); Cebu Royal Plant v. Deputy Minister of Labor (G.R. L-58639, 12 May 1989)

3. Understanding “Sick Leave” in the Philippine Setting

Statutory minimum – The Labor Code does not mandate a separate sick-leave bank; it only guarantees the five-day Service Incentive Leave (SIL) under Art. 95, which an employee may use for illness.
Company-granted sick leave – Most establishments voluntarily grant 7-15 paid sick-leave days per year, often under a CBA or employee handbook.
SSS sickness benefit – A social-insurance cash grant administered by SSS; it is not wages and thus does not satisfy the “paid-leave” requirement for holiday pay. (The SSS reimburses the employer, but holiday pay remains a payroll cost.)

4. Holiday Pay in a Nutshell

Regular holidays (currently 12 per year) must be paid at 100 % of the employee’s daily wage even if unworked; 200 % if worked, plus a 30 % premium if it also falls on the employee’s rest day.
Special (non-working) days are “no work, no pay” unless a favorable company policy or CBA says otherwise. This article focuses on regular holidays.

5. General Eligibility Rule

Implementing Rule, Book III, Rule IV, §2 — “Every worker shall be paid his regular daily wage for any unworked regular holiday**; **provided, that the employee is present or is on leave with pay on the workday immediately preceding the regular holiday.”

👉 Key phrase: “on leave with pay.” The Department of Labor and Employment (DOLE) repeatedly explains in its Handbook that only employees paid for the day immediately before the holiday qualify for holiday pay. Absence without pay breaks the entitlement.

6. Interplay: Sick Leave vs. Holiday Pay

Scenario	Is the employee considered “on leave with pay*” on the workday preceding the holiday?	Entitled to Holiday Pay?	Reasoning
A. Sick leave is charged to paid SIL or to company-granted paid sick days	Yes	Yes	The absence is paid; the law treats it the same as reporting for work.
B. Sick leave is unpaid (exhausted leave credits, no-work-no-pay status, or on AWOL)	No	No (unless employee actually works on the holiday)	Employee failed the “paid on the day before” test.
C. Continuous paid sick leave covering both the day before and the holiday itself	Yes	Yes	The entire period is leave with pay.
D. Continuous unpaid sick leave covering multiple days, incl. the holiday	No	No	Still unpaid; test not met.
E. Employee reports for work on holiday despite sick leave	N/A	Yes — 200 % of wage	Work performed on a holiday overrides the absence rule.

7. Computation Examples

Daily-paid worker, ₱610 daily wage, on paid sick leave on 30 April; 1 May (Labor Day) is a regular holiday. Holiday pay due on 1 May (unworked): ₱610 × 100 % = ₱610
Same worker, but sick-leave credits exhausted; leave on 30 April is unpaid. Holiday pay due on 1 May (unworked): ₱0 (ineligible)
Monthly-paid worker (₱15,250/month). Monthly-paid staff are assumed paid for all days of the month, including holidays and rest days; no separate computation is needed. Even if on unpaid sick leave, the monthly rate already excludes absences, so the holiday pay question rarely surfaces — employers simply deduct unpaid absences but do not deduct the holiday portion.

8. Jurisprudence Highlights

Auto Bus Transport v. Bautista (2008) — Affirmed that holiday pay is owing if the worker was either (a) at work or (b) on paid leave on the workday immediately preceding the holiday.
Philchem v. NLRC (1999) — Upheld DOLE’s interpretation that paid leave satisfies the presence requirement.
Cebu Royal Plant (1989) — Clarified that being on strike (an unpaid absence) disqualifies employees from holiday pay, underscoring the “paid leave” element.

These cases consistently sustain DOLE’s long-standing policy.

9. Employer Obligations and Record-Keeping

Leave-credit tracking — Accurate ledgers of sick-leave balances are critical.
Payroll annotation — Identify whether a sick-leave day is paid (SL-P) or unpaid (SL-UP) so the payroll system can auto-trigger the holiday-pay rule.
Policy dissemination — Employees must receive a written policy (handbook or memo) explaining how sick leave affects holiday pay.

10. Interaction with SSS Sickness Benefit

The SSS sickness benefit is not counted as company-paid leave; the employer advances the SSS amount, but it is reimbursement of statutory benefit, not wage.
Therefore, an employee on SSS sickness benefit is technically on unpaid leave as far as wage-related benefits go — holiday pay is not due unless the employer elects a more generous approach.

11. Penalties for Non-Compliance

Wage Order Non-compliance — Under Art. 302 (penal provisions) of the Labor Code, willful failure to pay holiday pay is punishable by a fine of ₱40,000–₱400,000, or imprisonment of 3-24 months, or both, plus payment of double indemnity to each affected worker.
Labor-standard case — Employees may file a money claim with the DOLE Regional Office or through a NLRC complaint; 30-day prescriptive period for DOLE inspection cases, three (3) years for money claims under the Code.

12. Best-Practice Checklist

For Employers	For Employees
✓ Define paid and unpaid sick leave clearly in the handbook or CBA.	✓ File sick-leave forms promptly and indicate if it will be charged to paid credits.
✓ Automate payroll to check the “day before” rule.	✓ Monitor your leave balance; exhaust paid credits first to preserve holiday pay.
✓ When granting SSS sickness benefit, decide (and disclose) whether you will still credit the day as paid leave for holiday-pay purposes.	✓ Keep copies of approved leave slips and payslips to verify correct holiday-pay treatment.

13. Frequently Asked Questions (FAQs)

“The holiday falls within my seven-day medical certificate. Do I still get holiday pay?” If your sick-leave days are paid (charged to leave credits), yes. If they are unpaid, no.
“Our company provides 10 paid sick-leave days but deducts them from SIL. Is the holiday still paid?” Yes. As long as the leave is with pay, the source of the credit does not matter.
“What if the doctor certifies me unfit for work on the holiday itself?” Fitness to work is irrelevant to holiday pay; the decisive factor is whether the day before the holiday is a paid day.
“Does this rule apply to special non-working holidays?” Special days follow a different ‘no-work-no-pay’ regime; paid-leave status there matters only if your company or CBA voluntarily grants pay.

14. Conclusion

Eligibility for holiday pay during sick leave hinges on one deceptively simple test: Was the employee “on leave with pay” on the workday immediately preceding the regular holiday? Understanding — and correctly labeling — sick-leave days as paid or unpaid resolves 99 % of disputes. Employers should integrate this rule into their payroll systems and leave-credit policies, while employees should keep close track of their leave balances to avoid losing statutory pay.

Disclaimer: This article is for educational purposes only and does not constitute legal advice. For specific cases, consult a qualified Philippine labor-law practitioner or the nearest DOLE Regional Office.