It’s safe to say that Christmas season has arrived! The number of public holidays that fall during the Christmas period means that PH employers must give extra consideration when processing payroll in the Philippines over the coming months.
There are a significant number of public holidays in the Philippines each year.
A number of these public holidays fall in the last two months of the year and DOLE has just released a Labor Advisory outlining the requirements that PH employers must adhere to when computing payroll for the holidays that fall during November 2021.
Below is a summary of the key requirements as outlined in the DOLE Labor Advisory.
- 1 Labor Advisory No. 19, Series of 2021
- 2 Exemptions for Businesses Under Labor Advisory No. 19, Series of 2021
- 3 COLA
- 4 Computing Wages
- 5 Special (Non-Working) Day – 1 November 2021 (All Saints’ Day)
- 6 Special (Working) Day – 2 November 2021 (All Souls’ Day)
- 7 Regular Holiday – 30 November 2021 (Bonifacio Day)
- 8 Payroll Processing in the Philippines
- 9 CloudCfo – Payroll Processing Services for Small Businesses and SMEs
Labor Advisory No. 19, Series of 2021
Hard to believe, but we have now reached Labor Advisory No. 19, Series of 2021! It has been a busy few months and we are now up to the 19th DOLE Labor Advisory in this year alone!
“Payment of Wages for the Special (Non-Working) Day on November 1, Special (Working) Day on November 2, and Regular Holiday on November 30, 2021″ is the title of DOLE’s most recent Labor Advisory and as always – it does exactly what it says on the tin!
In short, Labor Advisory No.19, Series of 2021 specifies the correct and proper computation of employee wages for the Special Non-Working Holiday on 1 November, the Special Working Day on 2 November and the Regular Holiday on 30 November.
If own, run or manage a business that employs and pay employees here in the Philippines, make sure that you or your HR team are aware of your payroll compliance obligations for November’s payroll cycles!
Exemptions for Businesses Under Labor Advisory No. 19, Series of 2021
DOLE, as per usual, has considered the implications and made provision for employers in the Philippines who have been impacted by the Covid-19 pandemic.
In line with previous DOLE Advisories that were released during 2021 and which cover the requirements of payroll computations for various public holidays in the Philippines, certain establishments are referenced as being exempt from the payroll computations requirements contained in the Labor Advisory.
Specifically, Labor Advisory No. 19 has provided an exemption for establishments that have “totally closed or ceased operations” during the period of the community quarantine in the Philippines.
What does that mean?
It means that such establishments are exempted from having to pay employees holiday pay for the Regular Holiday that falls on 30 November, 2021, or Bonifacio Day.
As always, an important point to note when considering payroll computations for the relevant holidays is – what should the holiday pay or wages actually include?
Labor Advisory No. 19, Series of 2021 provides that, where applicable depending on the specific holiday (see further below), when computing payroll, the “Cost of Living Allowance”, known as COLA, should be included as part of that computation.
Again, there are a number of key factors that employers must consider when deciding how to computing payroll for their relevant employees for payroll cycles in which a public holiday falls due.
In this regard, employers in the Philippines must consider the following questions and factors:
- Does the employee in question have any specific or individual rights in relation to payment or wages for the specific pubic holiday? What kind of rights might apply? An employee could have rights under their employment contract. Thy could have rights under an existing company policy or, even just existing as a result of custom and practice within the company (i.e. even if it’s not written down anywhere). Finally, there might be a union agreement or a collective bargaining agreement in place which make specific provision for all public holidays or indeed, just specific public holidays.
- Was the employee actually at work on the relevant holiday?
- Was the employee required to work hours in addition to their standard daily hours on the relevant holiday?
- Was the relevant holiday a day in which the employee would usually be resting or at work?
Special (Non-Working) Day – 1 November 2021 (All Saints’ Day)
Outlined below are the various obligations for PH employers in relation to the computation and payment of wages for All Saints’ Day, this 1 November 2021:
- Where an employee doesn’t work on this day, the principle of “no work, no pay” shall apply. This is, of course, unless there exists a separate company policy, company practice, or other form of contract or collective agreement that requires payment on this Special (Non-Working) Day.
- Where an employee does work during this Special (Non-Working) Day, the employee should receive an additional 30% of their basic wage for the initial 8 hours worked. i.e. [(Basic Wage x 130%) + COLA].
- Where employee works in addition to their standard 8 hours, they should receive an additional 30% of their standard hourly rate. i.e. [Hourly rate of basic wage x 130% x 130% x number of hours worked].
- Where an employee works on the Special (Non-Working) Day but they would normally have that day as a rest day, the employee should receive an additional 50% of their basic wage for the initial 8 hours that they worked. i.e. [(Basic Wage x 150%) + COLA].
- Where the employee works for more than the standard 8 hours AND the day would usually be a rest day for them, the employee should receive an additional 30% of their hourly rate on that day. i.e. (Hourly Rate of Basic Wage x 150% x 130% x number of hours worked).
Special (Working) Day – 2 November 2021 (All Souls’ Day)
Payment of wages for this particular day is actually quite straightforward from a payroll processing perspective!
Under DOLE’s Labor Advisory, if an employee works on a day that has been declared a Special (Working) Day, such as All Souls’ Day, the employee will simply be entitled to their standard daily wage that they would ordinarily receive for working on that day.
There is no obligation on employers to pay premium pay during this day for the reason that any work performed on this day is considered to be the same as work on an ordinary work day.
Of course, employers should always check any employment contracts, company policies or other forms of agreements which might require additional payments for work performed on a Special (Working) Day!
Regular Holiday – 30 November 2021 (Bonifacio Day)
Outlined below are the various obligations for PH employers in relation to the computations and payment of wages for Bonfacio Day, this 30 November 2021:
- Where the employee does not work, they are entitled to receive 100% of their standard wage for that day, subject to any other relevant labor laws that might apply 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%]
- Where an employee does in fact work on the Regular Holiday, they would be entitled to receive 200% of their basic wage for the initial 8 hours of work on that particular day. i.e. [(Basic Wage + COLA) x 200%].
- Where an employee works for more than the initial 8 hours on the Regular Holiday, they should receive an additional 30% of their hourly rate for that day. i.e. [Hourly rate of basic wage x 200% x 130% x number of hours worked].
- Where an employee does work on the Regular Holiday but that day would usually be a rest day for that employee, they would be entitled to an additional 30% of their basic wage of 200% i.e. [(Basic Wage + COLA) x 200%] +[30% (Basic Wage x 200%)].
- Where an employee works for more than 8 hours on the Regular Holiday AND the day would usually be 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).
Payroll Processing in the Philippines
The computation and processing of payroll in the Philippines can be complex!
There is a lot to consider even after the standard payroll computations have been performed.
From payroll taxes to the submission of government mandatory contributions with SSS, Pag-IBIG and PhilHealth to payroll annualization at the end of each year – payroll compliance in the Philippines really never stops!
Feel free to check out the Payroll Section of our CloudCfo Insights Blog for regular updates and insights on all aspects of payroll in PH!
For ease of reference, here are just a few of our recent payroll-related articles which might provide extra guidance for PH employers as we come towards the end of 2021 and the beginning of 2022:
- 13th Month Pay in the Philippines
- Subscribing to a Payroll System for your PH Business
- Payroll for Startups and SMEs in the Philippines
- BIR2316 – Annualization and Payroll Compliance for Businesses
If you want to receive PH payroll updates directly to your inbox each month, Sign Up to our Monthly Insights Newsletter!
CloudCfo – Payroll Processing Services for Small Businesses and SMEs
CloudCfo can support your company with the computation and processing of payroll for your employees here in the Philippines!
Our very own Specialist Payroll Team helps ensure that PH businesses can achieve full compliance with the BIR, Pag-IBIG, PhilHealth, SSS and DOLE every month, quarter and year!
Our Team will also support with the development and implementation of payroll processes and payroll controls so your business can have a fully optimized, efficient and streamlined payroll function – ready for scale!
Visit www.cloudcfo.ph to know more about our outsourced payroll services for startups and small businesses in the Philippines!