Are you an employer who wishes to understand the holiday pay rules mandated by the Philippine Labor Code? Or an employee who wants to know if you’re being paid correctly for work done on a holiday? Well, this article is definitely for you.
I would try my best to simplify this topic based on my years of a stint as a corporate and tax lawyer and a business owner who aims to pay my people correctly, following the red letter of the law.
Every year, Filipino workers and employers alike highly anticipate the announcement of the official Philippine holidays. Once the dates are determined, workers will start to plan their vacations, and companies will begin to plan shift rosters (where applicable).
As an employer, I wish you to pay attention to the extra-long weekends that follow the holidays since employees will work to make the most of them. It would be best if you also consider other regional holidays, such as founding anniversaries of a city or a festival, and several unplanned holidays, which the President may declare from time to time at his discretion.
Many human resource managers need to know the holidays and the rules to compute the holiday pay. It is in the interest of companies to comply with holiday pay mandates since it is written in the national law.
Likewise, workers would want to have these holiday pays computed so they get the premium pay for hours worked when they’re supposed to be resting at home or traveling.
Here’s everything you need to know about Philippine holidays, including how to calculate holiday pay.
Table of Contents
What is Holiday Pay?
Holiday pay is the amount that eligible private sector employees receive, regardless of whether or not they worked on a regular or special non-working holiday.
According to the Philippine Labor Code, employees entitled to holiday pay should receive at least 100 percent (100%) of their salary even if they did not report for work, as long as they were present or on paid leave the day before the holiday.
Employees may be required to work on holidays depending on the firm’s operational policy. Shopping malls, business process outsourcing (BPO) companies, media outlets, and various public service entities like hospitals and disaster risk management offices are most likely to operate during holidays.
BPO companies would remain open during Philippine holidays as they service clients whose operations are abroad. They usually follow the holidays of their outsourcing clients instead.
Employees are paid for services rendered during these holidays in addition to their regular salary.
Exclusion from Holiday Pay
This type of payment is not available to all employees in the Philippines.
Excluded from receiving this government-mandated benefit are employees who belong to any of the following groups:
- Retail and service employees with fewer than ten regular employees
- Officers and members of management
- Employees of the government
- Kasambahays
- Employer’s family members who rely on the employer for financial support
- Employees who work on a task, contract, or commission basis
Holidays in the Philippines
There are two types of holidays in the Philippines: (1) regular holidays and (2) special non-working holidays. You can check the updated list of holidays in the Official Gazette of the Philippines.
Below are the lists of the Regular Holidays and Special Non-working Holidays in the Philippines:
Regular Holidays
The following are the regular holidays:
- New Year’s Day – January 1
- Araw ng Kagitingan – April 9
- Maundy Thursday – will vary
- Good Friday – will vary
- Labor Day – May 1
- Eid’l Fitr
- Independence Day – June 12
- Eid’l Adha
- Bonifacio Day – November 30
- Christmas Day – December 25
- National Heroes’ Day – last Monday of August
- Rizal Day – December 30
Special Non-working Holidays:
The following are the special non-working holidays:
- Tuesday, February 1, 2022 – Chinese New Year
- EDSA People Power Revolution Anniversary – February 25
- Black Saturday – will vary
- Ninoy Aquino Day – August 21
- All Saints’ Day – November 1
- Feast of the Immaculate Conception of Mary – December 8
The President will issue proclamations to announce the dates for Eid’l Fitr, marking the conclusion of the month-long Ramadan, and Eid’l Adha, the Feast of the Sacrifice, after determination by the National Commission on Muslim Filipinos based on the Islamic calendar.
Other special non-working holidays will also be announced for All Souls’ Day (November 2), Christmas Eve (December 24), the last day of the year (December 31), and the day following the new year (January 2).
There are also regional and local festivals and celebrations that would be declared special non-working holidays, but the observation is only within the localities.
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Holiday Pay Computation
General Rule
The Philippines Labor Code mandates that an additional 100% of the worker’s daily rate will be paid for working on a regular holiday. It means that since the worker is already paid 100% for the day’s work and then an additional 100% as holiday pay, the worker receives 200% of his daily rate during a regular holiday. Hence, it’s commonly called double pay.
On the other hand, if it is a special non-working holiday, an additional 30% of the daily rate will be paid. Similar to the above, the holiday pay will be on top of the 100% that the worker will already receive for the day’s work. In effect, a worker will receive 130% of his daily date during a special non-working holiday.
Overtime on holidays
Overtime refers to when workers clock in for more than eight hours on holiday. For their holiday pay computation, the workers with overtime will receive an additional 30% of their hourly rate, regardless of whether the holiday is a regular (200%) or special non-working (130%) holiday.
Night Shift Differential on Holidays
Employees are entitled to a night differential of at least 10% of their hourly rate for working between 10:00 PM and 6:00 AM, in addition to their holiday pay, whether regular (200%) or special non-working (130%) holiday.
Computation Illustration
Regular Holiday Computation
1. Calculation for Non-Working Employees
Employees who did not report during the holiday will still get paid for that day. In short, there should be no deduction for non-working employees for the holidays.
2. Calculation for 8-Hour Workday
You should receive double your compensation (base wage plus Cost of Living Allowance or COLA) for the first eight hours if you come to work on a regular holiday.
The formula is: Basic wage x 200%
For example, if the worker’s daily rate is Php500, the double pay for that holiday should be calculated as follows: Php500 x 2 = Php1,000
3. Calculation for Workday with Overtime
Workers should receive an additional 30% of their hourly wage for any work in excess of eight hours. (Note: That overtime pay on a non-holiday is paid with an overtime premium of 25%.)
The formula is: Hourly rate x 200% x 130% x total hours of overtime
Let’s say the worker’s hourly rate is Php150, and he worked overtime for two hours (a total of 10 hours) on a regular holiday. The holiday pay is computed as follows:
Regular shift: Php150 x 2 x 8 hours = Php2,400
Overtime pay: Php150 x 2 x 1.30 X 2 hours = Php780
Total Pay: Php3,180
4. Calculation for an 8-Hour Workday on a Rest Day
If a regular holiday falls on a rest day, the worker will be paid 200% of his daily wage plus 30% of your 200 percent salary if you worked on a regular holiday that also fell on your rest day (such as a Saturday or Sunday).
The formula is: Basic wage x 200% x 130%
Assuming that the daily rate of ₱500, the holiday rest day pay is computed as follows:
Php500 x 2 x 1.3 = Php1,300
5. Calculation for Holiday with Overtime on a Rest Day
The worker would be paid an additional 30% of his hourly rate if he worked longer than eight hours on a holiday that falls on a rest day. The 30% is on top of the 30% that the worker shall be paid for working on a rest day.
The formula is:
For the 8-hour shift: Hourly rate x 8 x 200% x 130%
For the overtime shift: (Overtime hours x 200% x 130%) x 130%
Let’s say the worker’s hourly rate is Php150, and he worked overtime for two hours (a total of 10 hours) on a regular holiday that falls on a rest day. The holiday pay is computed as follows:
For the 8-hour shift: Php150 x 8 x 2 x 1.3 = Php3,120
Overtime shift: (Php150 x 2 x 1.3) x 1.3 = Php507
Total: Php3,627
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Special Holiday Pay Computation
1. Calculation for Non-Working Employees
If you choose not to report to work on a special non-working day, the “no work, no pay” rule will apply unless your employer has a policy that mandates payment on such a holiday.
2. Calculation for 8-Hour Workday
Workers must be paid 30% of their base wage for the first eight hours if they work on a special non-working day.
The formula for non-working holiday pay calculation is as follows:
Basic Wage x 130%
If the worker’s daily rate is Php1,000, the holiday pay is computed as follows:
Php1,000 x 1.30 = Php1,300
3. Calculation for Workday with Overtime
Workers should receive an additional 30% of their hourly wage for work over eight hours. (Note: That overtime pay on a non-holiday is paid with an overtime premium of 25%.) This 30% is on top of the 30% premium for working on a special non-working holiday.
The formula for the overtime is: Hourly rate x 130% x 130% x total hours of overtime
Let’s say the worker’s hourly rate is Php150, and he worked overtime for two hours (a total of 10 hours) on a regular holiday. The holiday pay is computed as follows:
Regular shift: Php150 x 1.3 x 8 hours = Php1,560
Overtime pay: Php150 x 1.3 x 2 hours x 1.3 = Php507
Total Pay: Php2,067
4. Calculation for an 8-Hour Workday on a Rest Day
Workers would receive an extra 50% of their basic wage for the first 8 hours if they worked on a special non-working day that falls on their rest day.
The formula to compute the holiday pay is: Basic wage × 150%
Assuming that the daily rate of a worker is Php500. To compute the holiday pay:
Php500 x 1.50 = Php750
5. Calculation for Holiday with Overtime on a Rest Day
A worker would be paid an extra 30% of his hourly rate for any hours worked above 8 hours on a special non-working day that falls on a rest day. The 30% is on top of the 30% premium paid for working on a special holiday and a rest day.
The formula to compute the holiday is:
For the 8-hour shift: Hourly rate x 8 x 150%
For the overtime shift: Overtime hours x 150% x 130%
Here’s how to compute the holiday pay that falls on a rest day with overtime of two hours, assuming the hourly rate is Php150:
For the 8-hour shift: Php150 x 8 x 1.50 = Php1,800
For the overtime shift: (Php150 x 2 x 1.50) x 1.30 = Php585
Total = Php2,385
Are holiday salaries taxed?
Only the so-called minimum wage earners (MWE) are exempt from taxes withheld from their holiday compensation. The same exemption applies to an MWE’s overtime pay, night differential pay, and hazard pay.
Conclusion
The list above enumerates the traditional holidays in the Philippines and the upcoming holidays in 2022. Familiarizing these holidays can help foreign and domestic businesses, employees, and freelancers plan their schedules and business transactions in the Philippines.
The list is subject to change based on the implementation of the national government of the so-called “holiday economics.” The holiday economics involve moving holidays near a weekend to give workers “long weekends,” which allows for maximization of the holidays.
In a more localized application, local governments of cities and municipalities may also add to the list of special non-working holidays.
Holiday pay rules exist to protect workers’ rights to deserved compensation. Employees must review their pay slips and report incorrect holiday pay computations to HR or the Accounting Department.
Employers, for their part, should ensure that their employees’ holiday pay is computed correctly. The holiday pay computation guide above can be a helpful reference for employers to calculate the holiday pay of their workers in the Philippines. This is especially true for employees in many BPO firms who observe their clients’ national holidays instead.
