As an employer, do you observe the holiday pay rules 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 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, 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
Read more: Holiday Money Mistakes You Should Avoid
How to Compute Holiday Pay in the Philippines
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.
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
- 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
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 2022 dates are determined in accordance with the Islamic calendar or the lunar calendar.[2]
Back to main article: Plan Your Time Off: Holidays in the Philippines and Long Weekends in 2022
a. Computation for Employees Who Didn't Work
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.
b. Computation for Employees Who Worked for 8 Hours
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 ₱1,000, your double pay for that holiday should be calculated as follows:
₱1,000 x 2 = ₱2,000
c. Computation for Employees Who Worked Overtime
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 ₱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
d. 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
e. 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
Read more: 7 Productive Things You Can Do on a Long Weekend
Special Holiday Pay Computation
Here are the holiday pay computation rules that apply to the following special non-working days:
- Chinese New Year - Varies per year
- EDSA People Power Revolution - February 25
- Black Saturday - Varies per year
- Ninoy Aquino Day - August 21
- All Saints’ Day - November 1
- Feast of the Immaculate Conception of Mary - December 8
a. Computation for Employees Who Didn't Work
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.
b. 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
c. 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
d. 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
e. 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
Read more: 13th Month Pay in the Philippines: Computation and Common Questions Answered
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 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] LIST: Philippine holidays for 2022 (Rappler, 2021)
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