The question of whether holiday pay is already "baked into" a monthly salary is a common point of contention between employers and employees. Under the Labor Code of the Philippines and existing jurisprudence, the answer depends heavily on how the employee is classified and how the monthly salary was computed.
1. The General Rule: Right to Holiday Pay
Under Article 94 of the Labor Code, every worker is entitled to their regular daily wage during regular holidays, even if they do not work, provided they were present or on leave with pay on the workday immediately preceding the holiday.
If the employee is required to work on a regular holiday, they are entitled to 200% of their regular daily wage.
2. The Classification of Employees
To determine if holiday pay is included in the salary, the Department of Labor and Employment (DOLE) distinguishes between two categories of monthly-paid employees:
- Monthly-Paid Employees: Those who are paid a fixed amount per month, regardless of the number of working days in that month.
- Daily-Paid Employees: Those who are paid based on the days actually worked (the "no work, no pay" principle).
3. The "Divisor" Rule
The most transparent way to determine if holiday pay is included in a monthly salary is to look at the Company Policy or the Employment Contract and identify the "Monthly Salary Divisor" used by the payroll department.
- If the divisor is 365 days: This figure includes all days in a year (313 ordinary working days + 12 regular holidays + 52 rest days). In this case, the 12 regular holidays are considered already paid even if the employee does not work.
- If the divisor is 313 days: This figure excludes Sundays/rest days but includes the 12 regular holidays. Here, the holiday pay is also considered integrated into the monthly rate.
- If the divisor is lower (e.g., 261 or 251 days): This usually excludes rest days and holidays. In such cases, if a holiday occurs, the employee must be paid an additional amount if it isn't already reflected in the base.
Note on Jurisprudence: The Supreme Court held in Odango v. NLRC that if the employee's monthly salary is higher than the minimum wage multiplied by the number of working days plus holidays, there is a legal presumption that holiday pay is already included.
4. Regular Holidays vs. Special Non-Working Days
It is vital to distinguish between the two types of holidays in the Philippines:
| Type of Holiday | Payment if Unworked | Payment if Worked |
|---|---|---|
| Regular Holiday | 100% of daily wage (Included in salary) | 200% of daily wage |
| Special Non-Working Day | No pay (unless company policy says otherwise) | 130% of daily wage |
Special Non-Working Days are generally not included in the monthly basic salary. If an employee does not work on a special non-working day, the "no work, no pay" principle applies unless a favorable company policy exists.
5. Excluded Workers
Not all employees are entitled to holiday pay. Under Article 82 of the Labor Code, the following are exempt from holiday pay coverage:
- Government employees.
- Managerial employees and officers/members of the managerial staff.
- Field personnel.
- Family members of the employer who are dependent on them for support.
- Domestic helpers (kasambahay) and persons in the personal service of another.
- Employees of retail and service establishments regularly employing less than ten (10) workers.
6. Summary of the Legal Standpoint
If you are a monthly-paid employee in the private sector, the law presumes your monthly salary covers all days of the month, including holidays. Therefore, you do not receive "extra" pay for a regular holiday if you stay home. However, if you are required to report for work on that holiday, you must be paid the additional 100% premium (totaling 200%), as the monthly salary only covers the "unworked" portion of the holiday pay.