Introduction

In the Philippines, holiday pay is a fundamental employee right enshrined in the Labor Code, ensuring fair compensation during designated holidays. These rules aim to balance workers' rest entitlements with business operations. The topic of local special holidays often raises questions, as they differ from national holidays in scope and declaration. This article comprehensively explores holiday pay regulations under Philippine law, focusing on whether employees receive pay on local special holidays. It covers legal foundations, classifications, computation methods, applicability to various employment types, and practical considerations, all within the Philippine context.

Legal Basis for Holiday Pay

The primary legal framework for holiday pay is found in the Labor Code of the Philippines (Presidential Decree No. 442, as amended). Specifically:

Article 94 mandates holiday pay for regular holidays, requiring employers to pay employees their full daily wage even if no work is performed, provided certain conditions are met.
Article 93 addresses premium pay for work on rest days, special days, and holidays.
Implementing rules are detailed in the Omnibus Rules to Implement the Labor Code, particularly Book III, Rule IV.
The Department of Labor and Employment (DOLE) issues annual labor advisories and guidelines, such as those clarifying holiday pay computations and proclamations of holidays.
Republic Act No. 9492 (Holiday Economics Law) rationalizes holiday observances, allowing the President to move certain holidays to promote tourism and productivity.
Presidential proclamations, like Proclamation No. 90 series or similar annual issuances, list national regular and special non-working holidays. Local holidays may be declared via local ordinances, resolutions, or executive orders from local government units (LGUs) or the President for specific areas.

These laws apply to all private sector employees, excluding government workers (governed by separate civil service rules), managerial employees, field personnel, and those paid purely on commission without fixed hours, unless otherwise provided in collective bargaining agreements (CBAs) or company policies.

Classification of Holidays in the Philippines

Holidays in the Philippines are categorized into three main types, each with distinct pay implications:

Regular Holidays (National Holidays): These are fixed nationwide observances, such as New Year's Day (January 1), Araw ng Kagitingan (April 9), Independence Day (June 12), National Heroes Day (last Monday of August), Bonifacio Day (November 30), Christmas Day (December 25), and Rizal Day (December 30). Additional regular holidays include Maundy Thursday, Good Friday, Labor Day (May 1), Eid'l Fitr, and Eid'l Adha (dates vary based on lunar calendar proclamations).
Special Non-Working Holidays (National Special Days): These include Ninoy Aquino Day (August 21), All Saints' Day (November 1), and the last day of the year (December 31). They may also encompass movable dates like Chinese New Year or Black Saturday, as proclaimed annually.
Local Special Holidays: These are non-working days declared for specific localities, such as city or provincial foundation days, fiestas, or commemorative events. Examples include Manila Day (June 24, for Manila residents only), Cebu Charter Day (February 24, for Cebu City), or Davao City's Kadayawan Festival period. Declarations come from LGUs via ordinances or sanggunian resolutions, or from the President via executive orders for regional significance. They are not nationwide unless elevated to national status.

Local special holidays fall under the broader umbrella of special non-working days but are geographically limited. If a local holiday coincides with a national one, the stricter or more beneficial rule applies.

Pay Rules for Regular Holidays

For regular holidays:

No Work: Employees receive 100% of their basic daily wage, provided they worked or were on paid leave the day before the holiday (the "worked or paid" rule). This applies to monthly-paid employees automatically, as holidays are factored into their salary computation (divisor method: annual salary divided by 365 or 314 days, depending on company policy).
Work Performed: Employees get 200% of their basic wage (100% regular pay + 100% premium). If the holiday falls on a rest day, an additional 30% premium applies, totaling 260% (200% + 30% of 200%).
Overtime: If work exceeds eight hours, overtime pay is 30% of the hourly rate on top of the holiday premium.

These rules ensure employees are compensated for rest, promoting work-life balance.

Pay Rules for Special Non-Working Holidays

For national special non-working holidays:

No Work: The "no work, no pay" principle applies. Employees do not receive pay unless covered by company policy, CBA, or voluntary employer practice. However, if the employee is on paid leave (e.g., vacation or sick leave), they may still receive pay.
Work Performed: Employees receive 130% of their basic wage (100% regular + 30% premium). If on a rest day, it becomes 150% (130% + 30% of 130% for rest day premium, but DOLE clarifies it's an additional 30% on basic, not compounded unless specified).
Overtime: Additional 30% per hour beyond eight hours.

Special holidays encourage optional work, with incentives for those who report.

Are Employees Paid on Local Special Holidays?

Local special holidays are treated similarly to national special non-working holidays, meaning the "no work, no pay" rule generally applies. Key points:

No Automatic Pay for No Work: Employees in the affected locality do not receive pay if they do not work, unless:
- The holiday falls on their regular payday or is included in salary computations.
- Company policy, CBA, or established practice provides for paid non-working local holidays.
- The employee uses accrued leave credits (e.g., service incentive leave).
Pay for Work Performed: If employees work, they are entitled to 130% premium pay, mirroring special non-working holiday rules. This incentivizes businesses to operate if needed, especially in service-oriented industries.
Geographic Limitation: Only employees in the declaring locality are affected. For multi-branch companies, branches outside the area follow regular work rules. For example, on Quezon City Day (August 19), only Quezon City-based employees observe it as non-working.
Declaration and Notification: LGUs must notify DOLE and affected employers in advance. Failure to declare properly may lead to disputes, resolvable through DOLE's voluntary arbitration or labor standards enforcement.
Coinciding with Other Days: If a local special holiday falls on a regular holiday, regular holiday pay rules prevail (100% pay for no work). If on a rest day, additional 30% premium applies to work performed.
Exemptions and Variations: Certain industries (e.g., hospitals, public utilities) may require work, with mandatory premium pay. Retail and service establishments with fewer than 10 employees may be exempt from some premium pay obligations under Republic Act No. 6727 (Wage Rationalization Act), but holiday pay rules still apply.

DOLE Labor Advisory No. 11-2023 (or similar recent advisories) reiterates these for local holidays, emphasizing compliance to avoid penalties.

Applicability to Different Employee Types

Regular and Probationary Employees: Full entitlement to holiday pay rules.
Part-Time, Casual, or Seasonal Workers: Pro-rated based on hours worked, but "worked or paid" rule applies for regular holidays.
Piece-Rate or Task-Based Workers: Paid based on output, but entitled to holiday pay equivalent to average daily earnings over the past 30 days.
Field Personnel and Supervisors: Generally exempt if unsupervised and paid on results, but may claim if misclassified.
Domestic Workers (Kasambahay): Under Republic Act No. 10361 (Batas Kasambahay), entitled to holiday pay similar to private sector, with 100% for regular holidays and premium for specials.
Government Employees: Governed by Civil Service Commission rules; local holidays may be observed as non-working, with pay.

Computation Examples

Assume a basic daily wage of PHP 600.

Regular Holiday, No Work: PHP 600.
Regular Holiday, Work: PHP 1,200 (200%).
Special/Local Holiday, No Work: PHP 0 (unless policy applies).
Special/Local Holiday, Work: PHP 780 (130%).
Holiday on Rest Day, Work: For regular: PHP 1,560 (260%); for special/local: PHP 900 (150%).

For monthly-paid (PHP 15,000/month, 314 divisor): Holiday pay is embedded; no deduction for non-working holidays.

Exceptions, Disputes, and Penalties

CBAs and Company Policies: May provide better benefits, like paid local holidays.
Muslim Holidays: In areas with significant Muslim populations (e.g., ARMM), Eid holidays are regular for locals.
Force Majeure: During calamities, holidays may be suspended.
Disputes: Resolved via DOLE's Single Entry Approach (SEnA) or National Labor Relations Commission (NLRC). Underpayment can lead to double indemnity under Article 94.
Penalties: Employers face fines (PHP 1,000–5,000 per violation) or imprisonment for non-compliance.

Practical Considerations for Employers and Employees

Employers should:

Monitor annual presidential proclamations and local declarations.
Communicate holiday schedules in advance.
Maintain accurate payroll records.

Employees should:

Verify entitlements through DOLE hotlines or regional offices.
Document work hours on holidays for claims.

In summary, while employees are not automatically paid for no work on local special holidays due to the "no work, no pay" rule, premium pay applies if work is performed. These rules reflect the Philippines' commitment to labor rights, adaptable to local contexts while ensuring national consistency. For specific cases, consulting DOLE or legal experts is advisable.