Labor Code: Book III — Conditions of Employment; Title I — Working Conditions and Rest Periods; Chapter III — Holidays, Service Incentive Leaves and Service Charges (September 19, 2023)
Book III — Conditions of Employment
Title I — Working Conditions and Rest Periods
Chapter III — Holidays, Service Incentive Leaves and Service Charges
Q: What is holiday pay?
Q: Are managers entitled to holiday pay?
Q: Is there a law requiring paid sick leave and paid vacation leave?
Art. 94. Right to holiday pay.
- 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;
- The employer may require an employee to work on any holiday but such employee shall be paid a compensation equivalent to twice his regular rate; and
- As used in this Article, “holiday” includes: New Year’s Day, Maundy Thursday, Good Friday, the ninth of April, the first of May, the twelfth of June, the fourth of July, the thirtieth of November, the twenty-fifth and thirtieth of December and the day designated by law for holding a general election.
Notes:
Definition
- Holiday pay is a base pay given by law to an employee, even if he does not work on a regular holiday.
- The gift of a day's pay is limited to each of the regular holidays listed by law.
- It is not demandable for any kind of nonworking day.
- The regular or legal holidays are specified in DOLE Memorandum Circular No. 01-04.
- The list in paragraph c of Article 94 is obsolete.
Memo Circular No. 01, Series of 2004, E.O. No. 292
Reproduced below is Memorandum Circular No. 01 dated 08 March 2004, issued by the Secretary of Labor and Employment:
Pursuant to the provisions of the Labor Code, as amended in relation to the observance of declared holidays and in response to the queries received every time a Presidential Proclamation or a law is enacted by Congress which declares certain days either as a regular holiday, a special day or a special working holiday, the following guidelines shall be observed by all employers in the private sector:
1. For regular holidays as provided for under EO 203 (incorporated in EO 292) as amended by RA 9177:
New Year's Day — January 1
Maundy Thursday — Movable Date
Good Friday — Movable Date
Araw ng Kagitingan — April 9
Labor Day — May 1
Independence Day — June 12
National Heroes Day — Last Sunday of August
Bonifacio Day — November 30
Eidul Fitr — Movable Date
Christmas Day — December 25
Rizal Day — December 30
the following rules shall apply:
a. If it is an employee's regular workday
＞ If unworked — 100%
＞ If worked
1st 8 hours — 200%
excess of 8 hours — plus 30% of hourly rate on said day
Ex: Regular daily rate: P400.00; hourly rate: P50.00
November 30, 2023 (Thursday)
＞ If unworked — P400.00
＞ If worked
1st 8 hours — P400.00 (2) = P800.00
2 hours OT — P800.00 + 2(2)(P50.00)(1.3) = P1060.00
b. If it is an employee's rest day
＞ If unworked — 100%
＞ If worked
1st 8 hours — plus 30% of 200%
excess of 8 hours — plus 30% of hourly rate on said day
Ex: Regular daily rate: P400.00; hourly rate: P50.00
April 9, 2023 (Sunday)
＞ If unworked — P400.00
＞ If worked
1st 8 hours — P400.00 (2) (1.3) = P1040.00
2 hours OT — P1040.00 + 2(2)(P50.00)(1.3)(1.3) = P1378.00
2. For declared special days such as Special Non-Working Day, Special Public Holiday, Special National Holiday, in addition to the two (2) nationwide special days (November 1, All Saints Day and December 31, Last Day of the Year) listed under EO 203, as amended, the following rules shall apply:
a. If unworked
＞ No pay, unless there is a favorable company policy, practice or collective bargaining agreement (CBA) granting payment of wages on special days even if unworked.
b. If worked
＞ 1st 8 hours — plus 30% of the daily rate of 100%
＞ excess of 8 hours — plus 30% of hourly rate on said day
Ex: Regular daily rate: P400.00; hourly rate: P50.00
August 21, 2023 (Monday)
＞ If worked
1st 8 hours — P400.00 (1.3) = P520.00
2 hours OT — P520.00 + 2(1.3)(P50.00)(1.3) = P689.00
c. Falling on the employee's rest day and if worked
＞ 1st 8 hours — plus 50% of the daily rate of 100%
＞ excess of 8 hours — plus 30% of hourly rate on said day
Ex: Regular daily rate: P400.00; hourly rate: P50.00
December 31, 2023 (Sunday)
＞ If worked
1st 8 hours — P400.00 (1.5) = P600.00
2 hours OT — P600.00 + 2(1.5)(P50.00)(1.3) = P795.00
3. For those declared as special working holidays, the following rules shall apply:
For work performed, an employee is entitled only to his basic rate.
No premium pay is required since work performed on said days is considered work on ordinary working days.
R.A. No. 9492 (June 25, 2007) and R.A. No. 9849 (2009)
- E.O. No. 292 mentioned above was amended by R.A. No. 9492, approve by the President on July 25, 2007.
- This law adopting the "holiday economics" initiated by the Executive Department, moved to the nearest Monday seven of the 14 nonworking national holidays.
- The names of the holidays and the numbers (11 regular and three special) remain the same as under E.O. No. 292.
- The list is as follows:
- Regular Holidays:
- New Year's Day — January 1Maundy Thursday — Movable DateGood Friday — Movable DateEidul Fitr — Movable DateAraw ng Kagitingan — Monday nearest April 9(Bataan and Corregidor Day)Labor Day — Monday nearest May 1Independence Day — Monday nearest June 12National Heroes Day — Last Sunday of AugustBonifacio Day — Monday nearest November 30Christmas Day — December 25Rizal Day — Monday nearest December 30
- Nationwide Special Holidays:
- Ninoy Aquino Day — Monday nearest August 21All Saint's Day — November 1Last Day of the Year — December 31
- In the event, the holiday falls on a:
- Wednesday, the holiday will be observed on the Monday of the week
- Sunday, the holiday will be observed on the Monday that follows
- Provided, that for moveable holidays, the President shall issue a proclamation at least six months prior to the holiday concern, the specific date that she will be declared as a nonworking day.
- Eidul Adha, which used to be a holiday in the ARMM only, has been added as a national holiday by R.A. No. 9849, approved on December 11, 2009, thus, bringing to 12 the legal holidays for which holiday pay should be paid.
- Eidul Adha is the 10th day of the Muslim Pilgrimage month to Mecca.
Conditions to Entitlement
- To receive the holiday pay, the employer should meet certain conditions as explained in Book III Rule IV of the Implementing Rules.
- An employee who is on leave of absence without pay on the day preceding the holiday is not entitled to the holiday pay if he has not worked on such regular holiday.
Q: Supposing he worked only half day on the day preceding the holiday, is he entitled to a full holiday pay or only half of it? To the full holiday pay. (DOLE's Opinion dated 31 May 2000 and 11 April 2007)
- "The Implementing Rules did not categorically state that the work performed on the immediate preceding work should be a full day's work."
- But the opinion itself states that the Bureau's opinion does not establish a binding rule.
- It is "a mere opinion on how a particular profession of the labor code may apply to a given situation."
- The listed regular holidays apply nationally, in Christian and non-Christian areas, to covered workers regardless of faith.
Monthly-Salaried Employees
Q: Are monthly-salaried employees entitled to holiday pay?
The fact that that employee is monthly-salaried does not by itself exclude him from entitlement to holiday pay, subject, of course would exclusions under Article 82.
- Supreme Court: Section II, Rule IV, Book III of the Implementing Rules and Policy Instruction No. 9 issued by the Secretary of Labor are null and void.
- In the guise of clarifying the Labor Code's provisions on holiday pay, they in effect, amended them by excluding from coverage the monthly paid employees.
- Such act of the Secretary said the court is ultra vires (beyond one's power).
- In determining whether or not holiday pay is already included in the monthly salary, the divisor is significant.
- If the formula to get the daily rate is = (monthly rate x 12) ÷ 251
- Ex: 30 000 (pesos/month) x 12 (months/year)
- 360 000 (pesos/year) ÷ 251 (days/year)
- 1 434.26 pesos/day
- the divisor 251 indicates that all Saturdays, Sundays and 10 legal holidays are subtracted from the total number of calendar days in a year.
- 365 days - 52 Saturdays - 52 Sundays - 10 legal holidays = 251 working days
- It is logical to argue that if indeed the employees are already paid for all already paid for all those nonworking days, the divisor should have been 365 and not 251.
- But 251 yields a bigger daily equivalent which is "favorable" if to be paid to employee but "unfavorable" if to be deducted from pay.
- The parties may stipulate if it is true, that the monthly salary meets at least the legal rate for all days of the month, including the holidays, even if the divisor for conversion to daily rate is 251.
Hourly-paid Teachers
- Hourly-paid teachers in private schools are obliged to work and consent to be paid only for work actually done except an emergency or fortuitous events.
- Regular holidays or "no class" days.
- The hourly-paid teachers may not be paid for regular holidays, whether it be during the regular semesters or during the semestral, Christmas or Holy Week vacations. But the hourly pay teachers should be paid their regular hourly rate on days declared as special holidays:
- The school should pay the faculty members their regular hourly rate on days declared as special holidays or for some reason classes are called off or shortened for the hours they are supposed to have taught, whether extensions of class days be ordered or not; in case of extensions said faculty members shall likewise be paid their hourly rates should they teach during said extension. (Jose Rizal College, December 1, 1987)
Jose Rizal College v. NLRC & National Alliance of Teachers/Office Workers, December 1, 1987
- The National Alliance of Teachers and Office Workers (NATOW) filed a complaint against Jose Rizal College for alleged non-payment of holiday pay for its faculty and personnel from 1975 to 1977.
- The Labor Arbiter initially ruled that:
- monthly salaried employees were presumed to be paid for holidays,
- daily wage workers were entitled to holiday pay, and
- hourly-paid collegiate faculty were not entitled to holiday pay.
- The NLRC later modified the decision, stating that teaching personnel paid by the hour should receive holiday pay.
- (a) exempting petitioner from paying hourly paid faculty members their pay for regular holidays, whether the same be during the regular semesters of the school year or during semestral, Christmas, or Holy Week vacations;
- (b) but ordering petitioner to pay said faculty members their regular hourly rate on days declared as special holidays or for some reason classes are called off or shortened for the hours they are supposed to have taught, whether extensions of class days be ordered or not; in case of extensions said faculty members shall likewise be paid their hourly rates should they teach during said extensions.
Double Holiday; Holiday-Sunday
- On a double regular holiday, ex: April 9 1998. Araw ng Kagitingan and Maundy Thursday.:
- An employee who is entitled to holiday pay should receive at least 200% of his basic wage even if he did not work on the day, provided, he was present or on leave with pay on the preceding Wednesday.
- If he worked, he is entitled to 300% of his basic wage.
- The 100%, in addition to 200%, represents his basic pay for eight-hour work.
- Ex: Regular daily rate: P400.00; hourly rate: P50.00April 9, 1998 (Double Holiday Thursday)＞ If worked1st 8 hours — P400.00 (3) = P1 200.002 hours OT — P1 200.00 + 2(3)(P50.00)(1.3) = P1 590.00
- When a regular holiday falls on Sunday, the following Monday shall not be holiday unless a proclamation is issued declaring it a special day. (BWS DOLE, 2014. Handbook on Women' Statutory Monetary Benefits, p. 12)
- Hence, the court shall the court has ruled that a legal holiday falling on a Sunday creates no legal obligation for the employer to pay extra, aside from the usual holiday pay, to its monthly-paid employees. (Wellington Investment, July 3, 1995)
Wellington Investment, July 3, 1995
- A routine inspection was conducted in Wellington Flour Mills, owned by Wellington Investment and Manufacturing Corporation.
- The labor inspector reported non-payment of regular holidays falling on a Sunday for monthly-paid employees.
- Wellington argued that their monthly salaries already included payment for all regular holidays and, therefore, no additional pay was required.
- Wellington paid its monthly employees according to the "314 factor," which covered 314 days of the year, including holidays and non-working days except Sundays.
- The Regional Director ruled that when a regular holiday falls on a Sunday, an extra working day is created, and the employer must pay employees for that extra day.
Apparently the monthly salary was fixed by Wellington to provide for compensation for every working day of the year including the holidays specified by law — and excluding only Sundays. In fixing the salary, Wellington used what it calls the "314 factor;" that is to say, it simply deducted 51 Sundays from the 365 days normally comprising a year and used the difference, 314, as basis for determining the monthly salary. The monthly salary thus fixed actually covers payment for 314 days of the year, including regular and special holidays, as well as days when no work is done by reason of fortuitous cause, as above specified, or causes not attributable to the employees.
What the law requires of employers opting to pay by the month is to assure that "the monthly minimum wage shall not be less than the statutory minimum wage multiplied by 365 days divided by twelve," and to pay that salary "for all days in the month whether worked or not," and "irrespective of the number of working days therein." That salary is due and payable regardless of the declaration of any special holiday in the entire country or a particular place therein, or any fortuitous cause precluding work on any particular day or days (such as transportation strikes, riots, or typhoons or other natural calamities), or cause not imputable to the worker. The legal provisions governing monthly compensation are evidently intended precisely to avoid re-computations and alterations in salary on account of the contingencies just mentioned, which, by the way, are routinely made between employer and employees when the wages are paid on daily basis.
ECOLA on a Legal Holiday
- An Emergency Cost-Of-Living Allowance is additional to, but not considered pan of, the employee's regular basic wage.
- It is not included for computing the overtime rate, the SSS premium and other wage-based benefits.
The DOLE answers this query affirmatively, i.e., whether or not the employee works on a legal holiday, he is entitled to his regular wage that includes ECOLA. (Letter-Opinion of the DOLE Secretary to Well-Fit Industrial. Corp., September 9, 2003; also: BWC, DOLE: 2006·
Handbook on Workers' Statutory Monetary Benefits, p.11)
Holiday Proclamation
- A presidential proclamation can declare a special day.
- Proclamation No. 831, July 17 2014: listed the regular and special holidays for 2015.
- It likewise declared February 29, 2015 as a special (non-working) day, it being the Chinese New Year.
Local Holiday
- Only the President is empowered to declare any local special day for a particular date, group or place according to the Administrative Code of 1987 (E.O. No. 292).
- Alternatively, Congress may pass the needed law.
- Local executive officials may declare holidays such as a town fiesta, but such they cannot be treated as a holiday contemplated in the Labor Code.
- Hence, work performed on that day does not entitle the worker to additional or premium payment.
- If the employee does not work, the "no work-no pay" principle applies. (BWC Opinion, 17 October 2007 and 26 April 2002)
Swapping of Holidays
Q: May the holiday pay be swapped with a U.S. holiday?
If an employee worked on a regular holiday, he may be paid only 100% of his basic wage (instead of 200%), but he will be paid 100% without working on another which is a U.S. holiday?
Yes, the arrangement must be based on a written voluntary agreement with the employees and in no case result in diminution of existing benefits of employees.
- DOLE Advisory No. 4, Series of 2010 allows flexi-schedule holiday. (BWC Opinion, 30 September 2014)
"Bad Weather Days"
- The Labor Code has no word on how to treat employees' pay on bad weather or calamity days.
- The law apparently leaves to the enterprise the way to handle the situation.
- "Accordingly, the policy on whether work shall be suspended or not in the private sector during bad weather or emergency situation lies on the sound judgment of the employer on the premise that appropriate rules, policy or practice are in place insofar as payment of wages or leave credit deduction and absences are concerned." (BWC Opinion, 23 November 2006)
- Under existing laws, the employer is not obliged to pay its employees during unproductive days; however, this department had occasion to issue a policy/opinion relating to absences incurred due to typhoons and other unavoidable circumstances which factors are not due to the employee's omission.
- As such no deduction should be made from their salaries if it has been the practice or policy of the employer to pay their salaries in such situations or when an individual or collective agreement stipulates the payment of wages during such calamities.
- If there is no practice, policy or agreement, the employer may charge said absence against the employee's accrued or future leave credits. (BWC Opinion, 23 November 2006)
Muslim Holidays
While the regular holidays are observed in the whole country, the Muslim holidays (except Eidul Fitr) are true only in specified areas. P.D. No. 1083, in its Book V, Title I, recognizes five Muslim holidays:
- Amun Jadid (New Year) — first day of the lunar month of Muharram;
- Maulid-un-Nabi (Birthday of the Prophet Muhammad) — twelfth day of the third lunar month of Rabi-ul-Awwal;
- Lailatul Isra Wal Mi Raik (Nocturnal Journey and Ascension of the Prophet Muhammad) — twenty-seventh day of the seventh lunar month of Rajab;
- Id-ul-Fitr (Hari Raja Puasa) — first day of the tenth lunar month of Shawwal commemorating the end of the fasting season; and
- Id-ul-Adha (Hari Raha Haji) — tenth day of the twelfth lunar month of Dhu'l-Hijja.
- These official holidays shall be officially observed in the
- provinces:
- Basilan
- Lanao del Norte
- Lanao del Sur
- Maguindanao
- North Cotabato
- Sultan Kudarat
- Sulu
- Tawi-Tawi
- Zamboanga del Norte
- Zamboanga del Sur and
- cities:
- Cotabato
- Iligan
- Marawi
- Pagadian
- Zamboanga
- and in such other Muslim provinces and cities as may be created.
- Upon proclamation by the President of the Philippines, Muslim holidays may also be officially observed in other provinces and cities.
- The dates of Muslim holidays shall he determined by the Office of the President of the Philippines in accordance with the Muslim Lunar Calendar (Hijra).
- Muslim employees working outside of the Muslim provinces and cities shall be excused from reporting for work during the observance of the Muslim holidays as recognized by law, without diminution of salary or wages during the period.
- Not only Muslim but also Christian employees in the designated provinces and cities are entitled to holiday pay on the Muslim holidays. Wages and other emoluments granted by law to the working man are determined on the criteria laid down by laws and certainly not on the basis of the worker's faith or religion. (San Miguel Corp., January 30, 2002)
San Miguel Corp. v. CA, January 30, 2002
- The Department of Labor and Employment (DOLE) conducted a routine inspection at San Miguel Corporation (SMC) in Iligan City and found that SMC underpaid its employees for regular Muslim holiday pay.
- SMC contested the findings but failed to provide proof of payment for regular Muslim holidays during summary hearings conducted by DOLE.
- DOLE Iligan District Office issued a compliance order directing SMC to pay holiday pay for both Muslim and non-Muslim employees within 30 days.
- SMC appealed to the DOLE Main Office but was initially dismissed for late filing, though later reconsidered. However, the appeal was dismissed for lack of merit.
- SMC filed a petition for certiorari with the Court of Appeals.
- CA: Modified the order; reduced Muslim holiday pay from 200% to 150% of the employee's basic salary.
The Court finds no reason to reverse the decision of the Court of Appeals.
Petitioner asserts that Article 3(3) of Presidential Decree No. 1083 provides that "(t)he provisions of this Code shall be applicable only to Muslims x x x." However, there should be no distinction between Muslims and non-Muslims as regards payment of benefits for Muslim holidays. The Court of Appeals did not err in sustaining Undersecretary Español who stated:
Assuming arguendo that the respondent’s position is correct, then by the same token, Muslims throughout the Philippines are also not entitled to holiday pays on Christian holidays declared by law as regular holidays. We must remind the respondent-appellant that wages and other emoluments granted by law to the working man are determined on the basis of the criteria laid down by laws and certainly not on the basis of the worker’s faith or religion.
At any rate, Article 3(3) of Presidential Decree No. 1083 also declares that "x x x nothing herein shall be construed to operate to the prejudice of a non-Muslim."
Art. 95. Right to service incentive leave.
- Every employee who has rendered at least one year of service shall be entitled to a yearly service incentive leave of five days with pay.
- This provision shall not apply to those who are already enjoying the benefit herein provided, those enjoying vacation leave with pay of at least five days and those employed in establishments regularly employing less than ten employees or in establishments exempted from granting this benefit by the Secretary of Labor and Employment after considering the viability or financial condition of such establishment.
- The grant of benefit in excess of that provided herein shall not be made a subject of arbitration or any court or administrative action.
Notes:
- No law requires the grant vacation leave (VL) or sick leave (SL) to private sector employees.
- Grant of VL/SL deqpends on voluntary employer policy or collective bargaining.
- What are legally required are service incentive leave (SIL) and other leaves under special laws.
- Establishment with less than ten employees, as shown by evidence, are not legally bound to give the five days SIL unless obliged by contract, policy or practice. See the IRR for the list of excluded employees.
The Implementing Rules of the Code excludes from the SIL rule, "field personnel and other employees whose performance is unsupervised by the employer including those who are on task or contract basis..."
- In one case, the teachers are "on contract basis," hence the employer declined to grant them service incentive leave.
- The court found the employer stand unsustainable. The phrase "on contract basis" should not be related with "field personnel" applying the rule on ejusdem generis that general and unlimited terms are restrained by particular terms that they follow.
- The teachers are not "field personnel" since their hours of work are determinable with reasonable certainty.
- The entitlement of piece-rate employees to holiday pay, service incentive leave and other specific benefits is explained under Article 101.
- Unused SIL at the end of the year should be converted to cash, according to the Implementing Rules. This requirement does not apply to other statutory lives or their leaves.
Other Leaves under Special Labor Laws
Parental Leave (Solo Parent's Leave)
- Solo Parent's Welfare Act of 2000, R.A. No. 8972 (November 28, 2000)
- Section 8. Parental Leave. - In addition to leave privileges under existing laws, parental leave of not more than seven (7) working days every year shall be granted to any solo parent employee who has rendered service of at least one (1) year.
"Battered Woman Leave"
- Anti-Violence Against Women and Their Children Act of 2004, R.A. No. 9262 (March 8, 2004)
- Allows a victim of violence which may be physical, sexual or psychological to apply for the issuance of a "protection order."
- It will shield her from further violence and provided are updated reliefs.
- If such a victim is an employee she's entitled to a paid leave of up to 10 days in addition to other paid leaves under the Labor Code, other laws and company policies.
- The leave is extendable and when necessity arise as specified in a protection order.
Maternity Leave and Paternity Leave
- See Article 131.
Special Leave
- Section 18 of The Magna Carta of Women, R.A. No. 9710 (August 14 2009)
- two months with full pay after surgery caused by gynecological disorders
Art. 96. Service charges.
All service charges collected by hotels, restaurants and similar establishments shall be distributed at the rate of eighty-five percent (85%) for all covered employees and fifteen percent (15%) for management. The share of the employees shall be equally distributed among them. In case the service charge is abolished, the share of the covered employees shall be considered integrated in their wages.
Notes:
- Under the Implementing Rules, all employees shall share in the service charges collected, regardless of position or employment status.
- Distribution should be equal and done twice a month.
- The 15% management share may answer for losses and breakages.
- At management's discretion, it may also be distributed to the managers.
- However, the 15% management share in the collected service charges has been abolished by R.A. No. 11360, passed in 2019.
- All such services are now shared by non-managerial employees effective September 4, 2019.
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