Holiday Pay Eligibility & “Leave with Pay” Rules (Philippines)
A comprehensive, practice-oriented explainer. Philippine context. Not legal advice.
1) Two kinds of holidays, two sets of rules
A. Regular holidays (e.g., New Year’s Day, Araw ng Kagitingan, Labor Day, Independence Day, National Heroes Day, Bonifacio Day, Christmas Day, Rizal Day, plus others when proclaimed):
- No work: 100% of the daily wage (a full day’s pay) for eligible employees.
- Work performed (first 8 hours): 200% of the daily wage.
- Overtime on a regular holiday: hourly rate × 200% × 1.30.
- If the regular holiday also falls on the employee’s rest day and is worked: 260% (i.e., 200% × 1.30) for the first 8 hours.
B. Special (non-working) days (e.g., Ninoy Aquino Day, All Saints’ Day, Christmas Eve, New Year’s Eve, EDSA—subject to yearly proclamations):
- No work: “No work, no pay,” unless company policy/CBA/practice says otherwise.
- Work performed (first 8 hours): 130% of the daily wage.
- If it also falls on the rest day and is worked: 150% of the daily wage.
- Overtime on a special day: hourly rate × 130% × 1.30 (or × 150% × 1.30 if rest day).
“Double holiday” (two regular holidays fall on the same day, or a regular holiday coincides with a special day) • If unworked and both are regular holidays: typically 200% (two day’s pay). • If worked and both are regular holidays: typically 300% for the first 8 hours. (If a special day coincides with a regular holiday, the regular-holiday rules prevail.)
2) Who is covered (and common exclusions)
Covered: In general, rank-and-file and supervisory/managerial employees in the private sector with an employer-employee relationship, whether full-time, probationary, or fixed-term, including piece-rate and commission-based workers so long as a regular daily wage or equivalent is determinable.
Common exclusions/exceptions:
- Government workers and GOCC personnel covered by the Civil Service rules.
- Retail and service establishments that regularly employ fewer than 10 workers are exempt from the regular-holiday “no-work-with-pay” rule (employees must still be paid if they actually work).
- Project/seasonal workers are covered during active engagement; not during bona fide off-season.
- Domestic workers (kasambahay): covered by a separate law (RA 10361) with different standards—check the employment contract or household policy for holiday pay commitments.
Monthly-paid vs. daily-paid • Monthly-paid employees are generally deemed paid for all days of the month (worked or unworked rest days, special days, and regular holidays), unless the employer uses a payroll scheme that explicitly excludes certain days. • Daily-paid employees follow the holiday formulas above; eligibility hinges on presence rules (see §3–§4).
3) Core eligibility test for regular holiday pay (when unworked)
To receive the 100% pay for an unworked regular holiday, an employee must be:
- Present or on leave of absence with pay on the workday immediately preceding the regular holiday; and
- Present or on leave with pay on the workday immediately following it if the employer requires presence on both sides (typical in practice when holidays are mid-week), unless a valid reason exists.
Effects of absences surrounding a regular holiday:
- Absent without pay on the workday immediately preceding the holiday → no regular-holiday pay for the unworked day.
- On approved leave with pay (e.g., paid vacation/sick leave) on the day before the holiday → still entitled.
- If the day immediately preceding the holiday is non-working (rest day/special day), the reference point is the last working day before that non-working day.
- Successive non-working days: find the nearest preceding working day; being on paid leave that day preserves eligibility.
If the employee works on a regular holiday: entitlement to 200% applies regardless of prior-day absence; however, habitual absenteeism may be a disciplinary issue separate from pay computation.
4) “Leave with pay” and how it affects holiday eligibility
Counts as “leave with pay” for eligibility:
- Company-granted paid leaves (vacation/sick, emergency leave) actually paid under policy/CBA.
- Service Incentive Leave (SIL) (minimum 5 days/year) if it is paid and applied to the absence preceding the holiday.
- Other paid leaves (bereavement, birthday, calamity, study leave) if paid per policy/CBA.
- Maternity/Paternity/Solo Parent/Violence Against Women (VAWC), parental leaves: where wage or wage-equivalent is paid (e.g., salary differential obligations or paid components), the absence is generally treated as paid leave for eligibility purposes during the paid portion.
Does not count as “leave with pay”:
- Leave without pay (LWOP), absent without leave, or suspension without pay.
- Periods outside the paid component of a statutory leave (e.g., unpaid extensions).
- Unauthorized undertime or time-off that results in no pay for that day.
Practical tip: If someone will be absent on the workday before a regular holiday, HR can invite the employee to charge the absence to an available paid leave credit (if allowed) so holiday eligibility is preserved.
5) Computing holiday pay: quick reference tables
A. Regular holidays
| Scenario | Pay Rule |
|---|---|
| Unworked (eligible) | 100% of daily wage |
| Worked, 1st 8 hrs | 200% of daily wage |
| Overtime hours | Hourly rate × 200% × 1.30 |
| Worked on rest day and regular holiday | 260% for 1st 8 hrs (200% × 1.30) |
| “Double” regular holiday, unworked | 200% |
| “Double” regular holiday, worked (1st 8 hrs) | 300% |
B. Special (non-working) days
| Scenario | Pay Rule |
|---|---|
| Unworked | No work, no pay (unless company policy/CBA/practice grants pay) |
| Worked, 1st 8 hrs | 130% |
| Worked on rest day and special day | 150% |
| Overtime | Hourly rate × (day’s premium) × 1.30 |
Night shift differential & OT stack on top of the applicable holiday/special-day base.
6) Edge cases & examples
Example 1 (Regular holiday on Monday):
- Employee was absent without pay on Friday. Monday is a regular holiday and unworked. → No holiday pay (failed the “immediately preceding working day” test).
- If the employee instead charged Friday to paid VL, Monday’s holiday pay would be due.
Example 2 (Holiday follows a special day):
- Friday (special day, plant closed), Saturday/Sunday (rest), Monday (regular holiday). The “immediately preceding working day” is Thursday. If the employee was present or on paid leave Thursday, they get Monday holiday pay.
Example 3 (Worked on the holiday despite previous absence):
- Employee was AWOL on the day before but worked 8 hours on a regular holiday. → Pay at 200% for that day (work overrides the unworked-holiday eligibility rule).
Example 4 (Monthly-paid scheme):
- If the employer’s payroll covers 365 days (or 313/314/319 depending on scheme) and does not deduct for unworked regular holidays, the monthly salary already includes holiday pay. Check the payroll basis to avoid double-paying the unworked day.
7) Documentation & payroll controls (HR/Payroll checklist)
- Holiday calendar: Mark regular vs. special vs. proclaimed days and the plant calendar (closed/open).
- Eligibility audit: For regular holidays, flag employees absent on the nearest preceding working day; invite paid-leave conversion when possible.
- Leave ledger integrity: Make sure paid leave postings are timely; late postings can wrongly disqualify/qualify someone.
- Timekeeping granularity: Define what counts as “present” (e.g., minimum hours) and how undertime affects day status.
- Payroll scheme disclosure: State in the handbook/contract if monthly pay already includes holidays/rest days.
- Retail/service <10 data-preserve-html-node="true" workers: If exempt, note it in policy; still pay lawful premiums when work is performed.
- Communication: Before long weekends, send a memo explaining presence/leave rules to avoid disputes.
8) Common disputes—and clean answers
“I didn’t work the holiday. Why no pay?” → Check if it’s a regular holiday (pay due) or special day (no work, no pay unless company policy says otherwise). If regular, verify presence/paid-leave on the preceding working day.
“We’re monthly-paid; do we add 100% again for unworked regular holidays?” → Usually no if the monthly-paid scheme already covers unworked regular holidays. Avoid double counting.
“We’re a small retail store (<10 data-preserve-html-node="true" workers); do we pay unworked regular holidays?” → Exempt from unworked regular-holiday pay. But if they work on the holiday, apply the 200% rule for regular holidays (or 130%/150% for special days, as applicable).
“Employee on maternity leave before a regular holiday—entitled?” → If the day preceding the holiday falls within the paid portion of maternity leave (or salary differential period), treat as leave with pay → holiday pay applies for unworked regular holidays.
“Holiday on my rest day; I didn’t work.” → If it’s a regular holiday, 100% is still due (eligibility rules apply). For special days, no work, no pay unless company policy grants pay.
9) Model policy clauses you can adapt
Holiday Eligibility Clause (Regular Holidays):
Employees shall be entitled to regular-holiday pay for unworked regular holidays provided they are present or on leave with pay on the workday immediately preceding such holiday. If the day immediately preceding a regular holiday is a non-working day, eligibility shall be based on presence or paid leave on the nearest preceding working day.
Special Day Clause:
The Company follows the “no work, no pay” principle on special (non-working) days unless otherwise provided by CBA, written policy, or established practice. Work on a special day shall be paid at 130% of the daily wage (or 150% if it falls on the rest day), with applicable overtime and night-shift differentials.
Monthly-Paid Payroll Disclosure:
Monthly salaries are computed on a [state scheme—e.g., 313/314/319/365-day] basis, which [already includes / does not include] payment for unworked regular holidays and rest days. Any premiums for actual work performed on holidays and special days shall be paid on top of the monthly rate.
10) Bottom line
- Identify the day: Regular holiday (paid even if unworked, subject to eligibility) vs. special day (no work, no pay).
- Check presence: For unworked regular holidays, the employee must be present or on paid leave on the nearest preceding working day.
- Compute correctly: Apply the 100%/200%/260% (regular) and 130%/150% (special) rules; stack OT/NSD properly.
- Mind payroll schemes and small-retail exemptions to avoid over- or under-payment.
- Use paid-leave credits strategically to preserve eligibility and minimize disputes.
If you want, tell me your pay scheme (daily or monthly), the dates involved, and who was absent or on which leave. I can map exact entitlements and provide a ready-to-send payroll memo for that pay period.