Introduction

In the Philippine labor landscape, holiday pay serves as a fundamental employee benefit designed to compensate workers for designated national holidays, ensuring fair remuneration even on days of rest. However, complexities arise when employees are on leave without pay (LWOP), a status where an employee is absent from work without receiving salary or wages. This article explores the intricacies of holiday pay entitlements under such circumstances, drawing from the provisions of the Labor Code of the Philippines and relevant Department of Labor and Employment (DOLE) issuances. Understanding these rules is crucial for employers to comply with labor standards and for employees to assert their rights, preventing disputes and promoting harmonious workplace relations.

LWOP typically occurs in scenarios such as extended personal leaves, disciplinary suspensions, or unauthorized absences. The key question is whether holidays falling within or adjacent to LWOP periods qualify for holiday pay, and if so, under what conditions. This discussion covers the legal framework, eligibility criteria, computation methods, exceptions, and practical implications, providing a comprehensive overview tailored to the Philippine context.

Legal Basis

The primary statutory foundation for holiday pay in the Philippines is found in the Labor Code of the Philippines, specifically Article 94, which mandates that every worker shall be paid their regular daily wage during regular holidays, even if no work is performed. This is supplemented by Republic Act No. 9492 (Holiday Rationalization Act) and various DOLE advisories, such as Department Order No. 202, Series of 2019, which classify holidays into regular holidays and special non-working days.

Regular Holidays: These include New Year's Day, Maundy Thursday, Good Friday, Araw ng Kagitingan, Labor Day, Independence Day, National Heroes Day, Bonifacio Day, Christmas Day, Rizal Day, Eid'l Fitr, and Eid'l Adha. Employees are entitled to 100% of their basic wage if they do not work, or 200% if they do, provided they meet eligibility requirements.
Special Non-Working Days: Examples include Chinese New Year, EDSA Revolution Anniversary, Black Saturday, Ninoy Aquino Day, All Saints' Day, and additional days declared by the President. For these, the "no work, no pay" principle applies unless the employee works, in which case they receive an additional 30% premium, or more under specific rules.

DOLE's Omnibus Rules Implementing the Labor Code further clarify that holiday pay is not due if the employee is absent without pay on the day immediately preceding the holiday, unless the absence is excused or on paid leave. This directly intersects with LWOP scenarios.

Definitions and Key Concepts

To fully grasp the rules, it is essential to define pertinent terms:

Leave Without Pay (LWOP): An approved or unapproved absence where the employee receives no compensation. It may be voluntary (e.g., for personal reasons beyond accrued leave credits) or involuntary (e.g., suspension). LWOP does not count as service for purposes like seniority or leave accrual.
Holiday Pay: Compensation for holidays, calculated based on the employee's basic daily wage. For regular holidays, it is equivalent to one day's pay for non-work, doubled if work is performed.
Basic Daily Wage: The employee's regular salary excluding allowances, overtime, and other premiums, as defined in the wage structure.
Preceding Working Day Rule: Eligibility for holiday pay on a regular holiday requires the employee to have worked or been on paid leave on the working day immediately before the holiday. This rule, established in DOLE's Handbook on Workers' Statutory Monetary Benefits, is pivotal in LWOP cases.

Eligibility for Holiday Pay During LWOP

The core rule is that employees on LWOP are generally not entitled to holiday pay for holidays occurring during the LWOP period. This stems from the principle that holiday pay is a form of wage for service rendered or readiness to render service. When an employee is on LWOP, they are not in a paid status, and thus, the holiday does not trigger compensation.

Specific Scenarios

Holiday Falling Within LWOP Period:
- If a regular holiday occurs entirely within an LWOP period, the employee receives no holiday pay. For instance, an employee on a two-week LWOP from December 20 to January 5 would not receive pay for Christmas Day (December 25) or Rizal Day (December 30), as they are not in active service.
- For special non-working days, the "no work, no pay" rule applies strictly, so no entitlement exists regardless of LWOP status, unless work is performed (which is impossible during LWOP).
Holiday Adjacent to LWOP:
- If the holiday immediately follows or precedes LWOP, eligibility depends on the preceding working day. For example, if an employee is on LWOP until the day before a regular holiday and reports to work on that preceding day, they qualify for holiday pay. Conversely, if LWOP extends to the preceding day, no pay is due.
- Illustration: Labor Day (May 1) is a regular holiday. If an employee is on LWOP from April 25 to April 30 (preceding day is April 30, assuming it's a workday), they forfeit holiday pay for May 1.
LWOP Due to Suspension:
- Disciplinary suspensions without pay are treated as LWOP. Holidays during suspension periods do not attract pay, as confirmed in jurisprudence like San Miguel Corporation v. National Labor Relations Commission (G.R. No. 119293, 1997), where the Supreme Court held that suspended employees are not entitled to benefits during the penalty period.
Unauthorized Absences (AWOL):
- Absences without leave (AWOL) are a form of LWOP and result in no holiday pay. Moreover, repeated AWOL can lead to termination under Article 297 of the Labor Code for habitual neglect of duties.

Computation of Holiday Pay in LWOP Contexts

When an employee is partially on LWOP around a holiday, computation requires prorating or adjusting based on actual paid days:

Basic Formula for Regular Holiday Pay: Holiday pay = (Basic daily wage) × (Percentage entitlement: 100% for no work, 200% for work).
Adjustment for LWOP: If LWOP affects the preceding day, the entire holiday pay is forfeited. No partial payments apply; it's an all-or-nothing rule.
Integration with Other Pays: Holiday pay during non-LWOP periods integrates with monthly salaries for monthly-paid employees, but for daily-paid workers, it's added separately. LWOP deductions are made from the basic wage, excluding holiday pay calculations.

For employees returning from LWOP, if the holiday follows immediately after resumption, they qualify if they work the preceding day post-LWOP.

Exceptions and Special Cases

While the general rule denies holiday pay during LWOP, exceptions exist:

Company Policy or Collective Bargaining Agreement (CBA): Employers may provide more favorable terms via company policies or CBAs, granting holiday pay even during LWOP. Such provisions are enforceable if not contrary to law (Article 1308, Civil Code).
Maternity or Paternity Leave: These are paid leaves under Republic Act No. 11210 (Expanded Maternity Leave Law) and Republic Act No. 8187 (Paternity Leave Act). Holidays during these periods entitle the employee to holiday pay, as they are not LWOP.
Service Incentive Leave (SIL): Unused SIL can be converted to cash, but if taken as LWOP beyond the five-day entitlement, holidays during excess days may not qualify for pay.
Force Majeure or Calamity: If LWOP results from events like natural disasters, DOLE may issue advisories allowing holiday pay leniency, as seen during the COVID-19 pandemic under Labor Advisory No. 17, Series of 2020.
Part-Time or Probationary Employees: The rules apply similarly, but probationary status does not inherently affect holiday pay unless LWOP is involved.

Practical Implications and Compliance

For employers:

Accurate payroll systems must track LWOP periods to avoid overpayment or underpayment, which could lead to DOLE penalties (up to P100,000 per violation under Republic Act No. 11058).
Documentation of LWOP approvals is vital to defend against claims.

For employees:

Verify entitlements through pay slips and consult DOLE regional offices or labor unions if discrepancies arise.
File complaints with the National Labor Relations Commission (NLRC) for non-payment, with a three-year prescription period under Article 306 of the Labor Code.

Jurisprudence reinforces these rules. In Insular Life Assurance Co. v. NLRC (G.R. No. 119930, 1998), the Court emphasized that holiday pay requires active employment status, excluding LWOP periods.

Conclusion

Holiday pay rules during LWOP in the Philippines underscore the balance between employee welfare and employer prerogatives, ensuring benefits are tied to service. Employees on LWOP forfeit holiday pay for affected holidays due to the preceding working day requirement, with limited exceptions based on policy or law. Compliance fosters trust and minimizes litigation, aligning with the Labor Code's goal of social justice. Employers and employees alike should stay informed of DOLE updates, as holiday declarations and rules evolve annually.