As we perform payroll services for a large number of startups and SME businesses here in the Philippines, our Payroll Team is constantly monitoring any changes in legislation or working practices that might affect payroll computations for Filipino employees.
Employers and their payroll processing teams will need to ensure that they are aware of the recent Government declaration that could impact payroll in July.
The Government has just declared a Regular Holiday on 20 July!
We want employers in the Philippines to understand their obligations and the specific requirements when computing payroll while taking into account this Regular Holiday.
Below, we have reviewed the latest Proclamation by the President and identified what it means for businesses in the Philippines when computing payroll for their employees this month!
So, feel free to read on and find out!
Background – Working Holidays in the Philippines
There are a large number of public holidays scheduled on the working calendar in the Philippines each year.
Many working holidays are already confirmed and set in stone from the start of the year (or even, from many years in advance!). This makes it easier for payroll processing teams in the Philippines to plan and optimize their payroll systems to take into account the impact of holidays on monthly payroll.
However, on occasion, DOLE or the Government will issue communications throughout the year which declares a new holiday.
Payroll teams and payroll providers in the Philippines must therefore act quickly to understand the potential impact.
Yesterday, on the 15th July, the Government issued Proclamation No. 1189 which declared a Regular Working Holiday during the month of July 2021.
Background to Proclamation No. 1189
Proclamation No. 1189 was issued by the President of the Philippines on 15th July 2021, in observance of Eid’l Adha (Feast of Sacrifice).
The Proclamation notes that Republic Act No. 9849 already provided that Eid’l Adha (Feast of Sacrifice) shall be observed as a regular holiday in the Philippines.
The National Commission on Muslim Filipinos, earlier this year, recommended that Tuesday, 20 July 2021, be declared a national holiday across the Philippines.
The Proclamation also notes that Eid’l Adha, or the Feast of Sacrifice, “is one of the two greatest feasts of Islam”.
As such, under Proclamation No. 1189, Tuesday, 20 July, has now been declared a Regular Holiday across the Philippines in observance of Eid’l Adha.
Regular Holiday and Community Quarantine
Evidently, the Philippines is still under various levels of community quarantine throughout the country as a result of the Covid-19 pandemic.
As such, Proclamation No. 1189 makes specific provision for the observance of Eid’l Adha during the community quarantine around the country.
The Proclamation provides that any observance of Eid’l Adha shall be subject to the existing quarantine and social distancing measures in place around the Philippines.
Payroll Computations for Eid’l Adha
As Eid’l Adha has now been declared a Regular Holiday, the standard requirements and rules will apply for computing payroll in respect of a Regular Holiday in the Philippines.
Below are the standard requirements for payroll computations for employees during a month in which a Regular Holiday falls:
- If an employee does not work on the Regular Holiday, they should receive 100% of their wages for that day (subject always to any applicable labor law or DOLE laws in place. [(COLA + Basic Wage) x 100%].
- If the employee worked on the Regular Holiday, the employee should receive 200% of their basic wage for their first eight hours of work. [(COLA + Basic Wage) x 200%].
- If the employee worked for more than eight hours (i.e. overtime) on the Regular Holiday, they should receive an additional 30% of their usual hourly rate. [Hourly rate of basic wage x 200% x 130% x number of hours worked].
- If the employee worked on the Regular Holiday but they would not usually work on that day if it was an ordinary day (i.e. its normally their rest day), the employee should receive an additional 30% of their basic wage of 200%. [(Basic Wage + COLA) x 200%] +[30% (Basic Wage x 200%)].
- Where the employee worked overtime (i.e. for more than eight hours) on the Regular Holiday and the particular day was usually a rest day for the employee, they should receive an additional 30% of their hourly rate. (Hourly Rate of Basic Wage x 200% x 130% x 130% x number of hours worked).
*Note: In previous Labor Advisories, DOLE specifically required that the Cost of Living Allowance (COLA) shall be included in wage payment computations for a Regular Holiday.
CloudCfo – Top Payroll Services Provider in Manila and the Philippines
CloudCfo is one of the leading Payroll Processing and Payroll Service Providers in the Philippines.
Our Specialist Payroll Team works with companies with diverse work forces and varying payroll structures. We define payroll processes and controls to ensure that our clients have a fully optimized payroll function that they can rely on for 100% accuracy – every payroll cycle!
Contact Us and speak to our Payroll Team about your needs for payroll support for your business here in the Philippines!