Payroll Considerations for Easter and April Holidays in the Philippines
Payroll Considerations for  Easter and April Holidays in the Philippines

Payroll Considerations for Easter and April Holidays in the Philippines

Posted on March 30, 2021
4 mins read

The Department of Labor and Employment, DOLE, has released a new Labor Advisory!

This most recent DOLE Advisory outlines the payroll obligations for employers in the Philippines regarding the work holidays that fall in early April 2021.

We outline the key requirements below!

As always, don’t hesitate to contact the CloudCfo Team if you require payroll services for your business here in the Philippines!

Labor Advisory No. 04, Series of 2021

Labor Advisory No. 04, Series of 2021, is entitled “Payment of Wages for the Regular Holidays on April 1, 2 and 9, 2021 and Special (Non-Working) Day on April 3, 2021”.

This Labor Advisory outlines the payroll requirements for employers when paying employees in the Philippines for the Regular Holidays and Special (Non-Working) Days that fall during the first half of April 2021.

Computing Wages

The factors for computing wage payments for the four days in April 2021 is no different than required in previous DOLE Advisories.

Employers need to consider the following:

a) What are the employee’s actual rights on the relevant day? Is there a company policy or standard practice? Is there a collective bargaining agreement in place?

b) Did the employee actually work on the day in question? Or did they take the day off completely or partially?

c) Did the employee actually work more than their usual working day on the day in question?

d) Would the particular day in question have been a day that the employee would normally be resting?

Cost of Living Allowance

Under this DOLE Advisory, the “Cost of Living Allowance” should be included in the computation of holiday pay.

This is referred to as the COLA in the below summary.

Special (Non-Working) Day – April 3 (Black Saturday)  

Below are the employer payroll obligations and considerations in relation to employees working, or not working, on April 3:

Scenario 1 – If employee did not work, the “no work, no pay” principle applies unless there is a company policy, practice, contract or collective agreement requiring payment on a Special (Non-Working) Day.

Scenario 2 – If employee works during the Special (Non-Working) Day, they are entitled to an additional 30% of their basic wage for the first 8 hours of time worked. i.e. [(Basic Wage x 130%) + COLA]. 

Scenario 3 – If employee works more than 8 hours, they should receive an additional 30% of their hourly rate for that day. i.e. [Hourly rate of basic wage x 130% x 130% x number of hours worked]. 

Scenario 4 – If employee works on the Special (Non-Working) Day but it would normally be the employee’s rest day, they should receive an additional 50% of their basic wage for the first 8 hours worked. i.e. [(Basic Wage x 150%) + COLA].

Scenario 5 – If employee works more than 8 hours on the day and the day is usually a rest day for the the employee, they should receive 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 – April 1 (Maudy Thursday), April 2 (Good Friday) and April 9 (Araw ng Kagitingan)

Scenario 1 – If employee didn’t work, they should receive 100% of their 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%]

Scenario 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%]. 

Scenario 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]. 

Scenario 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% i.e. [(Basic Wage + COLA) x 200%] +[30% (Basic Wage x 200%)].

Scenario 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). 

Exemptions from Labor Advisory No. 04, Series of 2021

As with previous similar issuances from DOLE, in light of COVID-19, there are exemptions for establishments that have completely closed or ceased operations during the period of the community quarantine.

Such establishments are exempted from having to pay employees for the Regular Holidays that fall on April 1, April 2 and April 9 2021.

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CloudCfo – Outsourced Payroll Services in the Philippines

CloudCfo supports companies in the Philippines achieve full compliance in relation to their payroll obligations. We also help develop and implement processes to ensure that your payroll function works as smoothly and as efficiently as possible!

Visit www.cloudcfo.ph to know more about our outsourced payroll services for startups and small businesses in the Philippines!

DISCLAIMER: This article is strictly for general information purposes only. Nothing in this article constitutes or intends to constitute financial, accounting, regulatory or legal advice and must not be used as a substitute for professional advice. It is still necessary to consult your relevant professional adviser regarding any specific matter referenced above.

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If you want to know more about our tailored services and processes, drop us a line to discuss how we can help you to grow your business. We will respond to you within 24 hours.