Holiday Pay Computation and Rules in the Philippines 2023

As an employer, do you observe the holiday pay rules mandated by the Labor Code of the Philippines? If you're an employee, are you paid correctly for the work you've rendered during legal holidays in the Philippines?

You might dismiss the importance of this kind of pay, but it's essential to know the holiday pay computation in the Philippines. For employees, it ensures they receive fair compensation for working on a holiday. For employers, it ensures compliance with the law and prevents salary disputes from employees.

Here's everything you need to know about holiday pay in the Philippines.

What is Holiday Pay?

Holiday pay is the amount that eligible employees in the private sector receive—whether they worked or not—on a regular or special non-working holiday.

Under the Philippine Labor Code,^[1] employees covered by holiday pay rules should receive at least 100% of their salary even if they didn't report for work on legal holidays in the Philippines, as long as they're present on the workday or on paid leave on the day immediately before the holiday.

Who is Entitled to Holiday Pay?

Not all employees in the Philippines are entitled to this kind of pay. You're exempted from receiving this government-mandated benefit if you belong to any of the following groups:

Workers for retail and service companies with less than 10 regular employees
Managerial employees
Managerial staff members and officers
Government employees
Kasambahays
Employer's family members who are dependent on the employer for support
Employees engaged on task, contract, or purely commission basis

How to Compute Holiday Pay in the Philippines

holiday pay computation - how to compute holiday pay

The Department of Labor and Employment (DOLE) enforces two different sets of holiday pay rules in the Philippines: one for regular holidays and another for special non-working days.^[2]

👉 Regular Holiday Pay Computation

Here are the holiday pay computation rules that apply to the following regular holidays in the Philippines:

New Year’s Day - January 1
Araw ng Kagitingan - April 9 (moved to April 10 in 2023)
Maundy Thursday - Varies per year
Good Friday - Varies per year
Labor Day - May 1
Independence Day - June 12
National Heroes Day - Last Monday of August
Bonifacio Day - November 30
Christmas Day - December 25
Rizal Day - December 30

Computation for Employees Who Did Not Work

For example, if you didn't report for work on the November 30 holiday in the Philippines, you'll still receive your full salary for that day. You shouldn't be deducted for work that isn't performed on a holiday.

Computation for Employees Who Worked for 8 Hours

If you reported for work on a regular holiday, such as the April 9 or December 30 holiday in the Philippines, you should be paid double your salary (basic wage + cost of living allowance or COLA) for the first eight hours worked.

Here's how to compute regular holiday pay:^[3]

(Basic wage + COLA) x 200%

For example, if your daily rate is ₱1,000, your double pay for that holiday should be calculated as follows:

₱1,000 x 2 = ₱2,000

Computation for Employees Who Worked Overtime

If you worked for more than eight hours during a regular holiday such as the May 1 holiday in the Philippines, you should be paid an additional 30% of your hourly rate.

Hourly rate x 200% x 130% x number of hours worked

Let's say your hourly rate is ₱125, and you worked overtime for two hours (for total overtime of 10 hours). This should be your regular holiday pay computation:

₱125 x 2 x 1.30 x 10 hours = ₱3,250

Computation for Employees Who Worked for 8 Hours During Their Rest Day

If you worked during a regular holiday that also falls on your rest day (a Saturday or a Sunday, for example), you must receive 30% of your 200% salary in addition to 200% of your salary.

Use this holiday pay formula for a simpler computation:

[(Basic wage + COLA) x 200%] + [30% (Basic wage x 200%)]

For a daily rate of ₱1,000, the holiday rest day pay is computed as follows:

[(₱1,000 x 2)] + [0.30 (₱1,000 x 2)]

[₱2,000] + [0.30 x ₱2,000]

₱2,000 + ₱600 = ₱2,600

Computation for Employees Who Worked Overtime During Their Rest Day

If you worked for more than eight hours on a regular holiday (which is also your rest day), you'll get paid an additional 30% of your hourly rate.

Hourly rate x 200% x 130% x 130% x number of hours worked

Here's how to compute your holiday pay with overtime on your rest day:

₱125 x 2 x 1.30 x 1.30 x 10 hours = ₱4,225

Related reading:

👉 Special Holiday Pay Computation

Here are the holiday pay computation rules that apply to the following special non-working days:

Day after New Year's Day - January 2
EDSA People Power Revolution - February 25 (moved to February 24 in 2023)
Black Saturday - Varies per year
Ninoy Aquino Day - August 21
All Saints’ Day - November 1
All Souls' Day - November 2
Feast of the Immaculate Conception of Mary - December 8
Last Day of the Year - December 31

Note: The President will issue separate proclamations declaring national holidays for the observance of Eid’l Fitr, the end of the month-long Ramadan, and Eid’l Adha, the Feast of the Sacrifice, after the Ramadan 2023 dates are determined in accordance with the Islamic calendar or the lunar calendar.

Computation for Employees Who Did Not Work

The no work, no pay rule applies when you don't report for work on special non-working days such as the February 25 holiday in the Philippines, unless your employer has a policy or collective bargaining agreement (CBA) that requires payment on such a holiday.

Computation for Employees Who Worked for 8 Hours

If you work during a special non-working day, you must receive an additional 30% of your basic wage on the first eight hours worked.

Here's the special non-working holiday pay computation:

(Basic Wage x 130%) + COLA

If your daily rate is ₱1,000 (no COLA), your holiday pay is computed as follows:

₱1,000 x 1.30 = ₱1,300

Computation for Employees Who Worked Overtime

If you worked overtime, you'll get an additional 30% of your hourly rate.

Hourly rate of the basic wage x 130% x 130% x number of hours worked

With an hourly rate of ₱125 and two hours of overtime work, here's how to calculate your pay during a special non-working day:

₱125 x 1.30 x 1.30 x 10 hours = ₱2,112.50

Computation for Employees Who Worked for 8 Hours on Their Rest Day

If you worked on a special non-working day that also falls on your rest day, you'll get an additional 50% of your basic wage for the first eight hours.

For a simpler holiday pay computation, use this formula:

(Daily rate × 150%) + COLA

For a daily rate of ₱1,000 (no COLA), your holiday pay is computed as follows:

₱1,000 x 1.50 = ₱1,500

Computation for Employees Who Worked Overtime on Their Rest Day

If you worked overtime on a special non-working day (which is also your rest day), you'll receive an additional 30% of your hourly rate.

Hourly rate of the basic wage x 150% x 130% x number of hours worked

Here's how to compute your holiday rest day pay with overtime of two hours:

₱125 x 1.50 x 1.30 x 10 hours = ₱2,437.50

Is Holiday Pay Taxable?

Only minimum-wage earners (MWE) are exempted from withholding taxes for their holiday pay. This goes the same with overtime pay, night differential pay, and hazard pay earned by an MWE.

Final Thoughts

Holiday pay rules exist to protect the rights of workers to compensation that's due to them. Employees must scrutinize their payslips and report to the HR or Accounting Department any incorrect holiday pay computation.

For their part, employers should make sure they compute their employees' holiday pay correctly. Bookmark this holiday pay computation guide for the next time you need to determine your holiday pay in the Philippines.

Sources:

^[1]Labor Code of the Philippines
^[2] DOLE to employers: Observe proper holiday pay rules amid pandemic
^[3]COUNT YOUR BLESSINGS: COMPUTE YOUR HOLIDAY PAY! (Alburo Alburo & Associates Law Offices)

Holiday Pay Computation and Guidelines in the Philippines

Venus Zoleta

What is Holiday Pay?

Who is Entitled to Holiday Pay?