HOLIDAY PAY ENTITLEMENT WHEN ABSENT DUE TO ILLNESS (Philippine Labor Law Overview)

1. Statutory and Regulatory Framework

Layer	Key Provisions	Salient Points
Constitution	Art. XIII, sec. 3	State affirms workers’ right to humane conditions of work and living wage.
Labor Code (PD 442)	Art. 94 [Regular Holiday Pay]	Every worker is entitled to holiday pay equal to at least 100 % of the basic daily wage; entitlement may be conditioned by IRR.
IRR, Book III, Rule IV	§§ 1–7	• Defines regular vs special days. • Sets the “holiday-pay-only-if-present-or-on-authorized-leave-with-pay” rule. • Details premium rates if work is performed.
DOLE Handbook on Workers’ Statutory Monetary Benefits (updated 2024)	Chap. IV	Gives interpretive guidance, tables for monthly- vs daily-paid employees, and reiterates treatment of absences due to illness.
SSS Law (RA 11199)	§§ 13–14	Outlines sickness benefit; relevant where sick leave credits are exhausted.
Jurisprudence	e.g., BPI Employees Union-Davao Chapter v. BPI (G.R. No. 164301, 2012); Intercontinental Broadcasting v. PBIU (G.R. No. 147783, 2004); Saint Francis Square Dev. Corp. v. Caloocan Teamsters Union (G.R. No. 230551, 2022)	Supreme Court consistently upholds the IRR rule and clarifies evidentiary and payroll-practice issues.

2. Regular vs Special (Non-Working) Days

Day Type	Pay if no work	Pay if work performed	Legal Basis
Regular holiday (e.g., 1 Jan, 12 Jun, 25 Dec)	100 % daily wage (subject to presence/ paid leave condition)	200 % for first 8 hrs; +30 % of hourly rate for overtime	Art. 94
Special non-working day (e.g., Chinese New Year, 31 Oct)	“No work, no pay,” unless company policy/CBA grants otherwise	130 % for first 8 hrs; +30 % of hourly rate for overtime	Proclamations each year

Holiday pay issues arise only for regular holidays; special days follow the “no work, no pay” default.

3. Who Is Covered?

Rank-and-file employees, whether probationary, regular, project, casual, or fixed-term, except:
• Government employees, except GOCCs without original charters
• Establishments employing less than 10 workers (Art. 94 (c))—but many micro-firms grant it voluntarily or by LGU ordinance.
Monthly-paid employees already receive their full salary for 365 days; the holiday pay component is embedded—absence affects only the debit of leave credits or leave-without-pay deduction, not the holiday pay itself.
Daily-paid employees must meet the “present or on leave with pay” test discussed below.

4. The “Present or on Authorized Leave with Pay” Test

Under § 4, Rule IV, Book III of the IRR, an employee is entitled to regular-holiday pay only if:

He/She is present at work or
He/She is on leave with pay (of whatever type) on the workday immediately preceding the regular holiday.

Illustration

Regular holiday: Monday, 10 June.

Employee absent Friday, 7 June on sick leave with pay (supported by a medical certificate).

Entitlement: YES, because the absence is leave with pay.

If the absence on 7 June were leave without pay, entitlement to the 10 June holiday pay would be lost unless the employee actually reports for work on the holiday.

5. Illness-Related Absences: Detailed Rules

Scenario	Entitlement	Rationale
*A. Sick leave credits available* and approved**	Holiday treated as a paid leave day; holiday pay granted.	Absence is “authorized leave with pay.”
*B. Sick leave credits exhausted, but employee qualifies for SSS sickness benefit and employer has advanced the benefit*	Advance is considered payment of wages; holiday pay granted.	DOLE Handbook: SSS advance is deemed pay.
C. Sick leave credits exhausted; employer did not advance SSS benefit (employee to be reimbursed directly by SSS)	Day prior to holiday counts as leave without pay; holiday pay NOT due, unless employee works on the holiday itself.	No wage payment from employer on day of absence.
D. Absence due to work-related injury/illness and covered by EC temporary total disability benefit (paid by employer on behalf of ECC/SSS)	EC benefit advance counts as paid leave; holiday pay granted.	Similar logic to SSS sickness advance.
E. Prolonged illness spanning several days up to the holiday (e.g., COVID-19 isolation)	Evaluate each preceding workday: if at least the last workday before holiday is paid under A, B, or D, holiday pay applies.	Presence rule focuses on the immediately preceding workday.

Key evidentiary practices

Medical certificate or RT-PCR result should be filed within company policy period (commonly 24–48 hrs).
Payroll records must reflect “SL-Paid,” “SL-Unpaid,” “SSS-Adv” remarks to defend in DOLE inspection.
Jurisprudence (e.g., Intercontinental Broadcasting, 2004) places burden on employer to prove non-payment legitimately withheld.

6. Consecutive Absences: The “Undue Advantage” Safeguard

§ 6, Rule IV: Employees who have been “absent without pay on the workday immediately preceding AND succeeding a holiday” are not entitled to holiday pay, unless they work on the holiday.

For illness-related cases this double-absent bar rarely applies because at least one of the two days is typically on paid sick leave.

7. Daily- vs Monthly-Paid Nuances

Aspect	Daily-Paid	Monthly-Paid
Counting method	Paid only for days actually worked + paid regular holidays (if qualified).	Salary covers all days of the month, including rest days and holidays.
Effect of unpaid sick day before holiday	Disqualifies from holiday pay.	Results in a pro-rated deduction for the unpaid day; holiday pay component remains embedded.
Payroll Implementation	Use separate “HP” code to credit holiday pay; system auto-checks qualification rule.	Payroll prorates monthly salary for LWOP days; no separate HP line item.

8. Computation Refresher (Daily-Paid Example)

Basic Daily Wage (BDW)          = PHP 610.00
Absent 1 day (LWOP)             = –610.00
Regular Holiday (qualified)     = +610.00
Net basic for the pay period    = PHP 610.00

If not qualified (absent without pay the day before): holiday pay line becomes 0.

9. Interplay with Company Policy & CBAs

More beneficial CBA provisions prevail (Art. 100, non-diminution).
Some CBAs waive the “presence” requirement for medically certified absences even if unpaid—this is contractual and enforceable.
Policies should be written, disseminated, and applied uniformly to avoid discriminatory application that could amount to unfair labor practice.

10. Supreme Court Guidance

Paid vs Unpaid Absence Must Be Shown – Intercontinental Broadcasting v. PBIU held that an employer who withholds holiday pay bears the burden of proving the absence was without pay.
Sick-Leave Credits Equivalent to Pay – In BPI Employees Union, the Court ruled that charging against available sick leave makes the day “paid,” hence holiday pay follows.
Monthly-Paid Inclusivity – Saint Francis Square reiterated that monthly-paid employees enjoy a fixed salary for 365 days, so holiday pay is deemed included and is not forfeited by an unpaid absence unless the employer actually deducts that day’s wage.
Construction/Project Workers – In Toyota Motor PH Corporate v. CA (2010), the Court extended holiday pay to project-based workers whose contracts span the holiday, subject to presence rule.

11. Employer Compliance Checklist

Update handbook/CBA: Align with latest DOLE handbook (2024).
Robust leave-management system: automates pay status tagging.
Medical verification protocol: clear timeline for submission.
Payroll audit trail: preserve e-payroll logs for 3 years (Art. 306).
SSS sickness advance: adopt policy of automatic advance to avoid forfeiture issues and potential DOLE findings.
Training for timekeepers & HR: annual briefing every Q1 before holiday-dense months (April–June, November–December).

12. Penalties for Non-Compliance

Wage Orders / Art. 128 Inspection – DOLE may issue a Compliance Order requiring payment plus 10 % simple interest p.a.
Article 288 fines: PHP 40,000–400,000 plus possible closure for repeated violations.
Criminal liability if willful refusal constitutes unjustified withholding of wages.

13. Best Practices for Employees

File sick leave & medical certificate promptly.
Keep a personal log of absences and payroll slips.
Verify if employer advanced SSS sickness; follow up reimbursement if not.
Consult union or HR on CBA clauses more favorable than statutory minimums.

14. Key Take-Aways

Entitlement hinges on the pay status of the day immediately before the regular holiday.
An illness-related absence with pay—whether via sick leave credits, SSS sickness advance, or EC benefit—preserves the right to holiday pay.
Daily-paid workers must be cautious of unpaid sick days; monthly-paid workers are generally protected but still risk salary deductions.
Documentation and timely communication are the dual shields against forfeiture.
Employers should err on the side of advancing sickness benefits to avoid inadvertent violation of holiday pay rules.

Disclaimer: This article provides a general overview based on existing Philippine labor statutes, regulations, and jurisprudence up to June 21, 2025. It is not a substitute for personalized legal advice. Consult counsel or the Department of Labor and Employment for case-specific guidance.