(Philippine labor-law context; practical guide for employees and employers)

1) The core issue

A “foreign holiday” (e.g., U.S. Thanksgiving, Chinese New Year not proclaimed locally, Eid dates not declared locally, etc.) is not automatically a Philippine holiday. In the Philippines, the legal consequences of a “holiday” (holiday pay, premium pay rules, work suspensions, etc.) generally attach only to:

Regular holidays and special (non-working) days proclaimed under Philippine law, and
Certain special working days or other classifications as declared by Philippine authorities.

So when an employer announces: “No work today because it’s [Foreign Holiday]”, the day is usually treated—under Philippine law—as an ordinary working day unless (a) it coincides with a Philippine holiday, or (b) the employer’s policy/CBA/practice treats it as a company holiday benefit.

The question then becomes: If there’s no work, can the employer deduct salary? The legally correct answer depends on (1) your pay structure, (2) who caused the non-work, and (3) what your contract/policies/practice say.

2) Start with classifications that matter

A. Is it a Philippine holiday?

If it is a Philippine regular holiday or special non-working day, different statutory pay rules apply (holiday pay, premium pay, etc.). But if it’s only a foreign holiday (not locally declared), those statutory holiday rules generally do not apply.

B. Are you monthly-paid or daily-paid?

This matters a lot.

Monthly-paid employees are typically paid a fixed monthly salary (common for office staff, many BPO staff, managers, etc.). As a rule in Philippine wage practice, monthly pay is understood to cover the month’s pay period regardless of the number of working days (subject to lawful absences and lawful deductions).
Daily-paid (or hourly-paid) employees are paid based on days/hours actually worked, subject to legal minimums and rules.

C. Was the non-work day employee-initiated or employer-initiated?

Employee-initiated: you chose not to work (e.g., absent without leave, personal reason, refused a schedule).
Employer-initiated: the company told you not to work, shut down operations, removed the shift, or prevented work.

This “who caused it” factor heavily affects whether non-payment is just “no work, no pay” or becomes illegal withholding/deduction.

3) The governing principles in Philippine labor law

Principle 1: “No work, no pay” (general rule)

Philippine labor standards generally follow a basic rule: if no work is performed, the employee is not entitled to wages—unless a law, contract, CBA, policy, or established company practice provides otherwise (examples: paid leaves, holiday pay, certain paid suspensions, etc.).

But this principle is not a free pass to withhold pay in all “no work” situations—especially where the employer is the one who directed the non-work, or where the employee is monthly-paid and was ready, willing, and able to work.

Principle 2: Restrictions on wage deductions (Labor Code rules on deductions)

The Labor Code contains strict protections against unauthorized deductions from wages. Deductions are typically allowed only when:

authorized by law/regulations, or
ordered by a court, or
for specific items allowed by the Labor Code (and usually with employee consent where required), or
for union dues/assessments under proper conditions, or
for losses/damages under narrowly defined due process requirements.

A key practical point: employers sometimes argue, “It’s not a deduction; it’s just non-payment because no work was done.” That argument can fail when the employee is monthly-paid (and the monthly wage is treated as “earned for the pay period”), or when the employee was prevented from working by the employer.

Principle 3: Non-diminution of benefits (Labor Code Article 100)

If a company has consistently treated foreign holidays as paid days off (or paid them as holidays/premiums) over time, it may become an established company practice. Once a benefit has ripened into practice, the employer generally cannot unilaterally withdraw or reduce it if it is:

consistently and deliberately granted, and
not a one-time mistake or isolated generosity, and
enjoyed over a significant period.

So even if a foreign holiday is not legally a Philippine holiday, it can become a company benefit that can’t be taken away casually.

4) The most common scenarios (and what’s usually legal)

Scenario A: Foreign holiday is NOT a PH holiday; employer declares “no work” and then deducts one day of pay

1) If you are daily-paid/hourly-paid

If the day is a normal working day but no work is performed, the employer may generally apply no work, no pay if:
- the arrangement was clear (e.g., “unpaid day off” or “use leave credits”), and
- there is no law/policy/practice requiring payment, and
- there is no agreement that it’s paid.

But risk points for the employer:

If employees were ready and willing to work but the employer prevented work, some wage claims can succeed depending on contract/policy and fairness considerations.
If the company historically paid such days, Article 100 (non-diminution) issues can arise.

2) If you are monthly-paid

This is where deductions become much more legally vulnerable.

A one-day “salary deduction” from a fixed monthly salary because the employer itself declared a non-work day can be challenged as:

unauthorized deduction/withholding, and/or
underpayment of wages, and/or
contract violation, especially if the employee was available to work and the company chose not to operate.

In practice, for monthly-paid employees, employers usually need a strong basis to deduct, such as:

the employee incurred an unpaid absence (employee-initiated), or
the employee had no leave credits and agreed to an unpaid leave arrangement, or
there is a clear policy/contract allowing “company shutdown days” to be charged to leave credits or treated as unpaid with proper notice and consistency, and it doesn’t violate non-diminution.

Bottom line: For a monthly-paid employee, a unilateral salary cut because the employer aligned with a foreign holiday is often legally risky unless properly grounded in contract/policy and not contrary to established practice.

Scenario B: Employer says “no work,” but forces employees to file leave (VL/SL) for a foreign holiday shutdown

This can be legal if:

the employee actually has leave credits available, and
the policy/contract clearly allows charging leave credits for company-declared non-work days, and
it’s applied consistently and with adequate notice, and
it doesn’t violate a prior established practice of treating the day as paid without charging leave.

It can be challenged if:

employees are forced to go “negative leave” or effectively unpaid without clear policy, or
the employer previously treated these days as paid company holidays (non-diminution), or
the forced leave is imposed discriminatorily or inconsistently.

Scenario C: Employer offers “make-up day” or compressed workweek to cover a foreign-holiday day off

This is commonly used in the Philippines and can be lawful if structured properly:

A compressed workweek arrangement is generally allowed in Philippine practice when it is voluntary/consulted and does not reduce weekly pay (implementation details matter).
A “make-up day” is generally permissible if it complies with labor standards (hours of work, overtime rules if thresholds are exceeded, rest days, etc.) and is properly agreed/communicated.

Risk point: if the make-up arrangement results in overtime or violates rest day rules, premium pay may be due.

Scenario D: Employer used to treat foreign holidays as paid days off, then suddenly announces they’re unpaid (or deducted)

This is where non-diminution of benefits becomes central.

If employees can show:

consistent past payment (e.g., paid day off every year for that foreign holiday),
a policy memo or handbook benefit, or
payroll records showing the pattern,

then the employer may be prevented from withdrawing it unilaterally,

unless the employer can prove a recognized defense (e.g., the payment was clearly a one-time grant, a mistake promptly corrected, or subject to a condition that did not occur).

5) “Deduction” vs “non-payment”: why the label doesn’t save an employer

Employers sometimes avoid calling it a “salary deduction” and instead say, “We just won’t pay that day.” In a dispute, the issue is substance:

If you are daily-paid, non-payment for a day not worked is often consistent with “no work, no pay” (unless a benefit applies).
If you are monthly-paid, your salary is not typically computed as a day-to-day piece rate; reducing it for an employer-declared shutdown day can look like withholding earned wages unless there’s a valid, disclosed basis.

Also, even for daily-paid workers, if the company’s policy or practice promises pay, the company can’t simply reclassify it after the fact.

6) What documents decide the case (in real complaints)

When this issue becomes a legal dispute, outcomes often turn on evidence like:

Employment contract (monthly vs daily; paid/unpaid shutdown provisions)
Company handbook / HR policy (company holidays, foreign holiday schedules, leave charging)
CBA (if unionized)
Company memos / emails announcing the foreign holiday treatment
Payroll records (did the company pay it in prior years?)
Timesheets / schedules (was the employee scheduled and then removed?)
Proof of readiness to work (for employer-initiated shutdown disputes)

7) Practical compliance guidance

For employers (risk-reducing options)

If you want to align with a foreign client calendar:

Option 1: Treat the foreign holiday as a paid company holiday

Cleanest employee-relations outcome, but a recurring cost.
If done consistently, it may become a protected benefit—so decide deliberately.

Option 2: Charge it to leave credits (with clear policy and notice)

Put it in writing in the handbook or annual calendar: “Foreign holidays are non-working and will be charged to VL, subject to available credits.”
Apply consistently.

Option 3: Use a make-up day / compressed workweek

Document the arrangement; ensure compliance with hours-of-work rules.

Option 4: Keep operations open and staff voluntarily file leave

Avoids forced leave arguments.

Avoid: Surprise after-the-fact salary deductions for monthly-paid staff without clear contractual/policy basis.

For employees (how to assess if a deduction is likely illegal)

A deduction/non-payment is more challengeable when:

You are monthly-paid and the employer unilaterally reduced your monthly pay because they declared “no work.”
The employer historically paid that foreign holiday (non-diminution issue).
You were ready and willing to work but were told not to report / no work was provided.
There is no written policy allowing leave-charging or unpaid shutdown days, or the policy is applied inconsistently.

What to gather:

The memo/email announcing the non-work day
Payslip showing the deduction
Prior-year payslips showing it was paid (if applicable)
Handbook/policy pages about holidays/leave
Contract clause on pay and shutdowns

Where to raise it:

Start with HR in writing (polite, factual request for basis).
If unresolved: a labor standards complaint (typically DOLE) or wage money-claim route depending on circumstances and amount; unlawful deductions/underpayment issues are commonly pursued as money claims.

8) Nuances and edge cases

A. If the foreign holiday coincides with a PH holiday

Then Philippine holiday rules apply regardless of the foreign holiday label. The employer can’t avoid PH holiday pay obligations by calling it a “foreign holiday day off.”

B. Project-based, fixed-term, or “per output” arrangements

Pay treatment can differ if the compensation structure is genuinely per output/per project and lawfully documented. But minimum labor standards may still apply depending on classification and facts.

C. BPO and global operations

BPOs often publish annual “PH holidays + client holidays” calendars. The legality usually turns not on being a BPO, but on:

pay scheme (monthly/daily),
policy clarity, and
established practice.

9) Quick “rule of thumb” summary

Foreign holiday is not automatically a paid holiday in the Philippines.
Daily-paid: non-payment for a company-declared non-work foreign holiday day can be lawful under “no work, no pay,” unless a policy/practice promises pay.
Monthly-paid: unilateral one-day salary deduction for an employer-declared shutdown is high risk and often contestable unless clearly authorized by contract/policy and consistent with past practice.
If the company has been paying it consistently, non-diminution of benefits may stop the employer from withdrawing it.

10) Sample policy language (for clarity and dispute prevention)

(Illustrative only; should be tailored to the workplace)

Client Holiday – Leave Charging

“Client Holidays are non-working days observed to align with client operations. Employees will not be scheduled to work on these days. Where an employee has available Vacation Leave credits, the day will be charged to Vacation Leave. If no credits are available, the day may be treated as unpaid leave, subject to applicable law and prior notice.”

Client Holiday – Make-up Work

“In lieu of leave charging, Management may schedule a make-up workday within the same payroll cycle, consistent with labor standards on hours of work and rest days.”

Company Holiday (Paid)

“The Company may designate certain client holidays as paid company holidays. Such designations will be announced annually.”

If you want, share a redacted version of your contract clause on wages + the company memo announcing the foreign holiday non-work day (no personal info needed), and I’ll map it to the most likely legal outcome (monthly vs daily, deduction vs leave charge, and whether non-diminution arguments are strong).