Through Republic Act No. 9177, the first day of Shawwal, the tenth month of the Islamic calendar, was declared a regular national holiday for the observance of Eidul Fitr. Eidul Fitr is the first day marking the end of the thirty (30)-day fasting period of Ramadhan.
The approximate date of Eidul Fitr may be determined in accordance with the Islamic calendar (Hijra) or the lunar calendar, or upon Islamic astronomical calculations, whichever is possible or convenient.
On 19 May 2020, President Rodrigo Roa Duterte, through the Executive Secretary Salvador C. Medialdea issued Proclamation No. 944 which designated 25 May 2020, Monday, a regular holiday throughout the whole country in observance of Eidul Fitr (Feast of Ramadan) pursuant to the recommendation of the National Commission on Muslim Filipinos.
We take this opportunity to revisit some of the general and special rules concerning the Holiday Pay benefit to give some guidance and clarify some common misconceptions.
No Work No Pay is General Rule
The general rule is “No work, No pay.” Jurisprudence has been consistent in saying that, “the age-old rule governing the relation between labor and capital, or management and employee of a ‘fair day’s wage for a fair day’s labor’ remains as the basic factor in determining employees’ wages. If there is no work performed by the employee there can be no wage or pay.” In the words of the Supreme Court in the case of Aklan Electric Cooperative Incorporated v. NLRC, “it would neither be fair nor just to allow private respondents (the employees) to recover something they have not earned and could not have earned because they did not render services x x x during the stated period.”
The recognized exceptions to this “No work, No pay” rule are: a) “unless, of course, the laborer was able, willing and ready to work but was ILLEGALLY locked out, suspended or dismissed;” or b) the day is a “regular holiday”.
Regular Holidays v. Special Holidays
Note that not all government declared holidays are exceptions to the “No work, No pay” rule. Only “regular holidays” are paid a holiday pay premium if unworked. Other government or legally mandated holidays such as “special holidays” or “special non-working holidays” still follow the “No work, No pay rule.”
One key distinguishing characteristic of a regular holiday is that it should be classified as one by an act of Congress or the legislative department. It should be a law. On the other hand, special holidays or special non-working holidays are pronouncements made by the President or the Local Executive for a particular Local Government Unit.
In 2020, the following are the Regular and Special Holidays as enumerated and reaffirmed by Proclamation No. 845 Series of 2019.
The Regular Holidays
As of today, there are twelve (12) regular holidays in the Philippines per year and they are as follows:
- New Year’s Day (January 1)
- Araw ng Kagitingan (April 9)
- Maundy Thursday (Variable Date)
- Good Friday (Variable Date)
- Labor Day (May 1)
- Eidul Fitr (Variable Date)
- Independence Day (June 12)
- Eid’l Adha ((Variable Date)
- National Heroes’ Day (last Monday of August)
- Bonifacio Day (November 30)
- Christmas Day (December 25)
- Rizal Day (December 30)
Some of the regular holidays are already set on a fixed date, while some change depending on when the actual day is celebrated depending on their respective calendars.
The list of what constitutes a regular holiday is an exclusive list, unless Congress amends it by enacting a new law.
The Special Non-Working Holidays
On the other hand, the following are the special non-working holidays for 2020, as proclaimed by the President of the Philippines pursuant to Proclamation No. 845 issued on 15 November 2019:
- Chinese New Year (January 25, 2020)
- EDSA Revolution Anniversary (February 25, 2020)
- Black Saturday (April 11, 2020)
- Ninoy Aquino Day (February 25, 2020)
- All Saints’ Day (November 1, 2020)
- November 2, 2020
- Feast of the Immaculate Conception of Mary (December 8, 2020)
- December 24, 2020
- Last day of the year (December 31, 2020)
The list of Special Non-Working Holidays may be modified by mere proclamation of the President.
It has been clarified many times that as a general rule Valentine’s Day, Mother’s Day, and Father’s Day are not legally mandated holidays.
Who are entitled to the Holiday Pay Premium?
One common misconception is that ALL employees, without distinctions, are entitled to the holiday pay premium. While such is the general rule, the same does not however come without established exceptions.
The following employees are excluded from the benefit of holiday pay pursuant to Book III of the Labor Code (Articles 82 and 94), the Implementing Rules of the Labor Code, and as affirmed in the 2019 DOLE Handbook on Workers’ Statutory Monetary Benefits:
- Government employees, whether employed by the National Government or any of its political subdivisions, including those employed in government-owned and/or controlled corporations with original charters or created under special laws;
- Those of retail and service establishments regularly employing less than ten (10) workers;
- Kasambahay and persons in the personal service of another;
- Managerial employees, if they meet all of the following conditions:
- Their primary duty is to manage the establishment in which they are employed or of a department or subdivision thereof;
- They customarily and regularly direct the work of two or more employees therein; and
- They have the authority to hire or fire other employees of lower rank; or their suggestions and recommendations as to hiring, firing, and promotion, or any other change of status of other employees are given particular weight;
- Officers or members of a managerial staff (example Supervisors), if they perform the following duties and responsibilities:
- Primarily perform work directly related to management policies of their employer;
- Customarily and regularly exercise discretion and independent judgment;
- (a) Regularly and directly assist a proprietor or managerial employee in the management of the establishment or subdivision thereof in which he or she is employed; or (b) execute, under general supervision, work along specialized or technical lines requiring special training, experience, or knowledge; or (c) execute, under general supervision, special assignments and tasks; and
- Do not devote more than twenty percent (20%) of their hours worked in a workweek to activities which are not directly and closely related to the performance of the work described in paragraphs (i), (ii), and (iii) above.
- Field personnel and other employees whose time and performance is unsupervised by the employer, including those who are engaged on task or contract basis, purely commission basis or those who are paid a fixed amount for performing work irrespective of the time consumed in the performance thereof.
Book 3, Rule IV, Section 8, of the Omnibus Rules to Implement the Labor Code of the Philippines provides for additional special Holiday pay rules of certain employees, to wit:
- Private school teachers, including faculty members of colleges and universities, may not be paid for the regular holidays during semestral vacations. They shall, however, be paid for the regular holidays during Christmas vacation;
- Where a covered employee is paid by results or output, such as payment on piece work, his holiday pay shall not be less than his average daily earnings for the last seven (7) actual working days preceding the regular holiday; Provided, however, that in no case shall the holiday pay be less than the applicable statutory minimum wage rate;
- Seasonal workers may not be paid the required holiday pay during off-season when they are not at work; and
- Workers who have no regular working days shall be entitled to the benefits provided in this Rule.
What is the compensation or premium paid on a holiday day?
The general rule is still “No work, No pay”, but as earlier discussed, one of the established exceptions is in the case of a regular holiday established by law.
Compensation for holiday work on a regular holiday
Article 94 of the Labor Code provides that “every worker shall be paid his regular daily wage during regular holidays, except in retail and service establishments regularly employing less than ten (10) workers” or if otherwise excluded by the Labor Code.
The same Labor Code provision allows an employer to require an employee to work on any regular holiday but such employee shall be paid a compensation equivalent to twice his regular rate.
Thus, any employee who is permitted or suffered to work on any regular holiday, not exceeding eight (8) hours, shall be paid at least two hundred percent (200%) of his regular daily wage.
If the holiday work falls on the scheduled rest day of the employee, he shall be entitled to an additional premium pay of at least 30% of his regular holiday rate of 200% based on his regular wage rate.
For work performed in excess of eight hours on a regular holiday, an employee shall be paid an additional compensation for the overtime work equivalent to his rate for the first eight hours on such holiday work plus at least 30% thereof.
Where the regular holiday work exceeding eight hours falls on the scheduled rest day of the employee, he shall be paid an additional compensation for the overtime work equivalent to his regular holiday-rest day for the first 8 hours plus 30% thereof. The regular holiday rest day rate of an employee shall consist of 200% of his regular daily wage rate plus 30% thereof.
Compensation for work on a special non-working holiday (not a regular holiday)
In computing the compensation for a special non-working holiday, the rules applied to scheduled rest days are followed. Unlike regular holidays, if the special non-working holiday is unworked, an employee does not get paid any wage or premium following the “No work, No pay “ rule.
Covered employees who are however made or permitted to work on a special non-working holiday shall be paid with an additional compensation of at least 30% of his regular wage. Note again that the 100% regular holiday pay premium does not apply for special non-working holidays.
Where such holiday work falls on the employee’s scheduled rest day, he shall be entitled to additional compensation of at least 50% of his regular wage. This is the only time that the Labor Code gives a premium of 50%; note also that an employee is not given separate premiums for the rest day and the special non-working holiday but rather he is given a special rate for that particular worked holiday permutation.
Needless to state, the above-mentioned rules do not apply to: a) employees who are not covered by the holiday pay premium rules; or b) where the collective bargaining agreement or other applicable employment contract stipulates the payment of a higher premium pay than that prescribed by the Labor Code and its implementing rules, in such case the employer shall pay such higher rate.
Payment of Holiday Pay for 25 May 2020
As earlier mentioned, the President through Proclamation No. 944 and as recommended by the National Commission on Muslim Filipinos designated 25 May 2020, Monday, as the regular holiday for the whole country to observe Eidul Fitr (Feast of Ramadan). The observance and celebration of Eidul Fitr is a regular holiday pursuant to Republic Act No. 9177.
This year’s holiday fell at a time that the country is under different types of community quarantines because of the Covid-19 pandemic thus slightly creating some peculiar circumstances which created gray areas in the application of previously establish rules. Accordingly, on 20 May 2020, the Department of Labor and Employment (“DOLE”) issued Labor Advisory No. 20, Series of 2020 (“LA No. 20-2020”) prescribing the rules for payment for the Regular Holiday on 25 May 2020.
Under LA No. 20-2020, the following payment rules for 25 May 2020 shall govern:
- If the employee did not work, he/she shall be paid 100% of his/her wage for that day, subject to certain requirements under the implementing rules and regulations of the Labor Code, as amended.
Formula : (Basic Wage + COLA) x 100%
Example : Php 537.00 x 100% = Php 537.00;
- For work done during the regular holiday, the employee shall be paid 200% of his/her wage for that day for the first eight hours.
Formula : (Basic Wage + COLA) x 200%
Example : Php 537.00 x 200% = Php 1,074.00
- For work done in excess of eight hours (overtime work), he/she shall be paid an additional 30% of his/her hourly rate on said day.
Formula : Hourly rate of the basic wage x 200% x 130% x number of hours worked
Example : Overtime of 3 hours; Php 67.125 x 200% x 130% x 3 hours = Php 523.575 overtime pay for 3 hours;
- For work done during a regular holiday that also falls on his/her rest day, he/she shall be paid an additional 30% of his/her basic wage of 200%.
Formula : [(Basic wage + COLA) x 200%] + [ 30% (Basic Wage x 200%)]
Example : [Php 537.00 x 200%] + [30% (Php 537.00 x 200%)] = Php 1,396.2
- For work done in excess of eight hours (overtime work) during a regular holiday that also falls on his/her rest day, he/she shall be paid an additional 30% of his/her hourly rate on said day.
Formula : [Hourly rate of the basic wage x 200% x 130% x 130% x number of hours worked]
Example : Php 67.125 x 200% x 130% x 130% x 3 hours = Php 680.65 overtime pay for 3 hours.
Deferment of Payment of Holiday Pay
In view of the existence of a national emergency arising from the Coronavirus Disease 2019 (COVID-19) situation, employers are allowed to defer payment of holiday pay for 25 May 2020 on the aforementioned holidays until such time that the emergency situation has been abated and the normal operations of the establishment is in place.
Rules in the event of closure, suspension of operation, or absence of employee
Totally closed or ceased operation during the community quarantine period
Private establishments who have totally closed or ceased operations during the community quarantine period are exempted from the payment of holiday pay for 25 May 2020.
According to DOLE, “totally closed or ceased operation” means that the establishment was forced to not operate because of the government’s directives in light of the ECQ. Upon inquiry with DOLE, we were informed that the term “establishment” does not mean that the whole Company must have closed or ceased its operations, it can be interpreted on a per branch basis.
DOLE Undersecretary Ana Dione (“USEC Dione”) explained that if the Company has multiple branches, deferment will only apply to those particular branches which continue to operate or has adopted Flexible Working Arrangements (“FWAs”), while branches which has totally closed or ceased its operations are exempt from holiday pay.
Temporary or periodic shutdown and temporary cessation of work
In cases of temporary or periodic shutdown and temporary cessation of work of an establishment voluntarily caused by the employer, as when a yearly inventory or when the repair or cleaning of machineries and equipment is undertaken, the regular holidays falling within the period shall be compensated in accordance with this Rule.
In cases of temporary or periodic shutdown and temporary cessation of work of an establishment involuntarily caused by the government or other factors not within the control of the employer, such as an enhanced community quarantine, it is our opinion that the regular holiday pay shall not be due.
The rules likewise provide that the regular holiday during the cessation of operation of an enterprise due to business reverses as authorized by the Secretary of Labor and Employment may not be paid by the employer.
Entitlement of Absent Employees
The rules provides that if the employees is on-leave of absence with pay on the day prior to the holiday, the employee shall be entitled to the holiday pay.
On the other hand, employees who are on leave of absence without pay on the day immediately preceding a regular holiday may not be paid the required holiday pay if he has not worked on such regular holiday.
Where the day immediately preceding the holiday is a non-working day in the establishment or the scheduled rest day of the employee, he shall not be deemed to be on leave of absence on that day, in which case he shall be entitled to the holiday pay if he worked on the day immediately preceding the nonworking day or rest day.
