The Department of Labor and Employment, or DOLE, has issued an Advisory to outline the rules for the payment of wages by employers in relation to the Regular Holiday on 25 May 2020 in observance of Eid’l Fitr.
If you are a business owner, employer or manager in the Philippines, below are the rules for the payment of wages for this regular holiday. Importantly, DOLE has also provided for the deferment of these payments due to COVID-19.
Remember – payroll is an important element of the accounting, bookkeeping and tax compliance function for startups and SMEs here in the Philippines. Don’t hesitate to Contact Us if your business needs support with accounting, bookkeeping and finance services!
Labor Advisory No. 20, Series of 2020
Labor Advisory No. 20, Series of 2020, entitled “Payment of Wages for the Regular Holiday on May 25, 2020 in Observance of Eid’l Fitr (Feast of Ramadan)”, was issued by DOLE and dated 20 May 2020. The Advisory was released pursuant to Proclamation No. 944, which was issued by the President on 19 May 2020.
This DOLE Advisory outlines the rules for wage payments relating to the Regular Holiday of 25 May 2020 (Eid’l Fitr).
What are the DOLE rules?
The DOLE Advisory provides for wage payments across five employee scenarios. The scenarios depend on certain criteria, including if the employee worked during the Regular Holiday, how many hours the employee worked and whether or not the Regular Holiday fell on a normal rest day for the particular employee.
Under this Advisory, the “Cost of Living Allowance” is included in the computation of holiday pay (where applicable below) and shall be referred to, within the five scenarios, as “COLA”.
Employee Scenario 1
If the employee did not work on the holiday, they shall be paid 100% of their wage for that day, in accordance with the various requirements under the Implementing Rules and Regulations of the Labor Code of the Philippines, as amended. This equates to [(Basic Wage + COLA) x 100%].
Employee Scenario 2
If the employee worked on the holiday, they shall be paid 200% of their wage for that day for the first eight hours of work. This equates to [(Basic Wage + COLA) x 200%].
Employee Scenario 3
Where an employee works overtime on the holiday (i.e. in excess of eight hours), they shall be paid an additional 30% of their hourly rate for that day. This equates to [Hourly Rate of the Basic Wage x 200% x 130% x number of hours worked].
Employee Scenario 4
Where an employee works on the holiday, but this day is usually the employee’s rest day, they shall be paid an additional 30% of their basic wage of 200%. This equates to [(Basic Wage + COLA) x 200%] + [30% (Basic Wage x 200%)].
Employee Scenario 5
Where an employee works overtime on the holiday (i.e. in excess of 8 hours) and the day is usually the employee’s rest day, they shall be paid an additional 30% of their hourly rate for the day. This equates to (Hourly Rate of Basic Wage x 200% x 130% x 130% x number of hours worked).
Payment Deferments for Employers
Within the Advisory, DOLE has made provision for the current national emergency circumstances arising in the Philippines under COVID-19.
DOLE is allowing employers to defer this payment for the Regular Holiday of 25 May “until such time that the present emergency situation has been abated and the normal operations of the establishment is in place”.
Companies Exempt from Labor Advisory No. 20, Series of 2020
Establishments that have entirely closed or ceased operations during the community quarantine period are exempt from having to pay the holiday payments outlined under this DOLE Advisory.
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