Philippines
Global
In early December 2020, The Department of Labor and Employment, or DOLE, released a Labor Advisory which outlines the rules for paying the wages of employees in the Philippines during the Special (Non-Working) Days and Regular Holidays that fall over the Christmas and New Year period in 2020.
The Labor Advisory also contains certain exemptions for businesses that have entirely closed or ceased operations during the COVID-19 community quarantine period in the Philippines.
So if you own, run or manage a business in the Philippines, make sure to check out the rules below to understand your payroll obligations to employees during the Christmas holidays!
As always, if you are seeking outsourced payroll services in the Philippines, don’t hesitate to Contact our Team! Our specialist in-house Payroll Team would be happy to discuss your payroll requirements for your PH business!
Contents
Labor Advisory No. 32, Series of 2020
Labor Advisory No. 32, Series of 2020, entitled “Payment of Wages for the Special (Non-Working) Days on December 8, 24, & 31, 2020 and Regular Holidays on December 25 & 30, 2020” was issued by DOLE and dated 7 December 2020.
The Advisory was released pursuant to Proclamation No. 845, which was issued by the President of the Philippines on 15 November 2019.
This Labor Advisory outlines the rules for paying employees in the Philippines for Special (Non-Working) Days and Regular Holidays that fall during the 2020 Christmas and New Year holiday period.
Basis of Wage Computations
Labor Advisory No. 32, Series of 2020 outlines the mechanism for computing wage payments across five distinct situations that might apply to an employee in relation to a particular day. The five situations depend on various factors, including:
a) The status of the employee (e.g. subject to a policy, company practice or bargaining agreement);
b) If the employee worked or not on the particular day;
c) If the employee worked more hours than their standard working day on the particular day; and
d) Whether or not the employee would usually work or rest on the particular day.
The DOLE Advisory provides that the “Cost of Living Allowance” should be included in the computation of holiday pay (where applicable below). This is referenced as “COLA” below.
Special (Non-Working) Days – December 8, 24 and 31 of 2020
Situation No. 1 – Where an employee didn’t work on the Special (Non-Working) Day, the principle of “no work, no pay” shall apply unless there exists a company policy, practice, contract or collective agreement which provides for payment on a Special (Non-Working) Day.
Situation No. 2 – Where an employee does work on the Special (Non-Working) Day, they are entitled to an additional 30% of their basic wage for the first eight hours of work on that day. i.e. [(Basic Wage x 130%) + COLA].
Situation No. 3 – Where an employee works more than 8 hours on the Special (Non-Working) Day, they are entitled to an additional 30% of their hourly rate on the day. i.e. [Hourly rate of basic wage x 130% x 130% x number of hours worked].
Situation No. 4 – If an employee works on the Special (Non-Working) Day, and that day is usually a rest day for the employee, they are entitled to an additional 50% of their basic wage for the first 8 hours of the day worked. i.e. [(Basic Wage x 150%) + COLA].
Situation No. 5 – Where an employee works more than 8 hours on the Special (Non-Working) Day and the day would usually be the employee’s rest day, the employee is entitled to an additional 30% of their hourly rate for that day. i.e. (Hourly Rate of Basic Wage x 150% x 130% x number of hours worked).
Regular Holidays – December 25 (Christmas Day) and 30 (Rizal Day) 2020
Situation No. 1 – Where an employee didn’t work on the Regular Holiday, they are entitled to 100% of their wage for that day, subject to any applicable requirements under the Implementing Rules and Regulations of the Labor Code of the Philippines (amended from time to time). I.e. [(Basic Wage + COLA) x 100%]
Situation No. 2 – Where an employee does work on the Regular Holiday, they are entitled to 200% of their basic wage for the first eight hours of work on that day. i.e. [(Basic Wage + COLA) x 200%].
Situation No. 3 – Where an employee works more than 8 hours on the Regular Holiday, they are entitled to an additional 30% of their hourly rate on the day. i.e. [Hourly rate of basic wage x 200% x 130% x number of hours worked].
Situation No. 4 – If an employee works on the Regular Holiday, but that day is usually a rest day for the employee, they are entitled to an additional 30% of their basic wage of 200% (see Situation No.2 above) i.e. [(Basic Wage + COLA) x 200%] +[30% (Basic Wage x 200%)].
Situation No. 5 – Where an employee works more than 8 hours on the Regular Holiday and the day is usually a rest day for that employee, the employee is entitled to an additional 30% of their hourly rate for that day. i.e. (Hourly Rate of Basic Wage x 200% x 130% x 130% x number of hours worked).
Companies Exempt from Labor Advisory No. 32, Series of 2020
Due to the national emergency arising from the COVID-19 pandemic, establishments in the Philippines that have entirely closed or ceased operations during the community quarantine period are exempt from the payment for the Regular Holidays on 25 December 2020 and 30 December 2020.
Related Articles
For further information and regular updates on all things payroll in the Philippines, including payroll services, deductions, government contributions, payroll taxes and much more, check out our Blog Resource for Payroll in the Philippines.
Below are just some of the resources from our Payroll Blog that you might find helpful!
- Attention! Employers in the Philippines – These are the mandatory payroll deductions and contributions that you must know
- New DOLE Advisory on 13th Month Pay: Requirements for Employers in the Philippines in 2020
- The SSS contribution rate will increase in April 2020: What does this mean for you?
You can sign up to receive our Monthly Insights by clicking here and ensure that you constantly receive regular updates and insights from the world of Payroll in the Philippines!
CloudCfo – Outsourced Payroll Services in Metro Manila and the Philippines
At CloudCfo, we have our own in-house team of expert Payroll Specialists. We support companies in the Philippines achieve compliance in relation to their payroll-related obligations. We also help develop and implement processes to ensure that the payroll function is as efficient as possible!
Payroll services are just one element of CloudCfo’s range of services. We are a provider of outsourced end-to-end accounting services, bookkeeping services and compliance services for startups and SMEs in Manila and the Philippines.
Contact us at enquire@cloudcfo.ph or visit www.cloudcfo.ph to understand more about our outsourced accounting services and payroll services!
