Published: November 17, 2020 | Updated: November 19, 2020 | Posted by: Venus Zoleta | Personal Finance
As an employer, do you observe the holiday pay rules as mandated by the Labor Code of the Philippines? And if you’re an employee, are you paid correctly for the work you’ve rendered on a holiday?
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 rules in the Philippines.
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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, employees covered by holiday pay rules should receive at least 100% of their salary even if they did not report for work, as long as they’re present on the workday or on paid leave on the day immediately before the holiday.
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:
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.
Here are the holiday pay computation rules that apply to the following regular holidays:
Back to main article: Holidays in the Philippines and Long Weekends Guide
If you didn’t report for work on a regular holiday, you’ll still receive your full salary for that day. You shouldn’t be deducted for work that isn’t performed on a holiday.
If you reported for work on a regular holiday, 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:
(Basic wage + COLA) x 200%
For example, if your daily rate is PHP 1,000, your holiday pay should be calculated as follows:
PHP 1,000 x 2 = PHP 2,000
If you worked for more than eight hours during a regular holiday, 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 PHP 125, and you worked overtime for two hours (for total overtime of 10 hours). Here’s how to calculate your regular holiday pay:
PHP 125 x 2 x 1.30 x 10 hours = PHP 3,250
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 PHP 1,000, the holiday rest day pay is computed as follows:
[(PHP 1,000 x 2)] + [0.30 (PHP 1,000 x 2)]
[PHP 2,000] + [0.30 x PHP 2,000]
PHP 2,000 + PHP 600 = PHP 2,600
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:
PHP 125 x 2 x 1.30 x 1.30 x 10 hours = PHP 4,225
Here are the holiday pay computation rules that apply to the following special non-working days:
The no work, no pay rule applies when you don’t report for work on a special non-working day, unless your employer has a policy or collective bargaining agreement (CBA) that requires payment on such a holiday.
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 PHP 1,000 (no COLA), your holiday pay is computed as follows:
PHP 1,000 x 1.30 = PHP 1,300
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 PHP 125 and two hours of overtime work, here’s how to calculate your pay during a special non-working day:
PHP 125 x 1.30 x 1.30 x 10 hours = PHP 2,112.50
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 computation, use this formula:
(Daily rate × 150%) + COLA
For a daily rate of PHP 1,000 (no COLA), your holiday pay is computed as follows:
PHP 1,000 x 1.50 = PHP 1,500
If you worked overtime on a special non-working day (which is also your rest day), you will 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:
PHP 125 x 1.50 x 1.30 x 10 hours = PHP 2,437.50
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.
Holiday pay rules exist to protect the rights of workers to compensation that’s due 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 guide for the next time you need to compute your holiday pay in the Philippines.
Source:  Labor Code of the Philippines