Payroll for Labor Day in the Philippines

Employers – Do you know your payroll obligations and considerations for Labor Day in the Philippines? 

Labor Day was 1 May, 2021 and is considered a Regular Holiday in this country. 

That means that all companies with employees in the Philippines must understand what their obligations are from the perspective of managing payroll for Labor Day! 

This article outlines all you need to know!

As always, if you require payroll services for your business in the Philippines, feel free to Contact Our Payroll Team to discuss your specific payroll needs! 

Labor Advisory No. 07, Series of 2021

As always, for public holidays in the Philippines, the Department of Labor and Employment, otherwise known as DOLE, has just released a new Labor Advisory. 

Labor Advisory No. 07, Series of 2021, entitled “Payment of Wages for the Regular Holiday on May 1, 2021 in Observance of Labor Day”, does exactly what it says on the tin! 

The Advisory sets out the rules, requirements and exemptions for the payment of wages to relevant employees in respect of Labor Day, 1 May 2021. 

Computing Wages

Actually, the mechanism for computing wage payments is the same as with previous days that are considered “Regular Holidays” in the Philippines. 

As such, the various factors for computing wage payments for Labor Day are quite similar to the factors identified in previous DOLE Advisories.

Employers in the Philippines must consider all of the following factors when determining their payroll obligations for each employee who worked or who did not work during Labor Day: 

• What are the employee’s actual rights in relation to Labor Day? Is there a company policy or standard practice that provides for payment? Is there a collective bargaining agreement in place? Or does the company just rely on DOLE and existing labor laws?
• Did the employee actually work on Labor Day? Did they work the full day? Or just part of the day?
• Did the employee work longer on Labor Day than their usual working day? 
• Labor Day fell on a Saturday this year. Would the employee normally be resting on Saturdays? Or is Saturday a usual working day for the employee? 

COLA = Cost of Living Allowance 

COLA is also known as the “Cost of Living Allowance”. COLA should be included in the computation of holiday pay for the purposes of computing in accordance with DOLE guidelines.

Regular Holidays – May 1, 2021 (Labor Day) 

Case 1 – If an employee didn’t work on Labor Day, they are entitled to 100% of their wage for that day, subject to any other relevant labor laws that might apply. I.e. [(Basic Wage + COLA) x 100%]

Case 2 – If an employee worked on Labor Day, they are entitled to 200% of their basic wage for the first 8 hours of work on that day. i.e. [(Basic Wage + COLA) x 200%]. 

Case 3 – Where an employee worked for more than 8 hours on Labor Day, they are entitled to receive an additional 30% of their hourly rate for the day. i.e. [Hourly rate of basic wage x 200% x 130% x number of hours worked]. 

Case 4 – If an employee worked on Labor Day, but that day (Saturday) is normally a rest day for that employee, they are entitled to receive an additional 30% of their basic wage of 200% i.e. [(Basic Wage + COLA) x 200%] +[30% (Basic Wage x 200%)].

Case 5 – Where an employee worked for longer than 8 hours on Labor Day and that day (i.e. Saturday) was usually a rest day for that employee, they are entitled to receive 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). 

Exempted Establishments for Regular Holiday Labor Day

Under Labor Advisory No. 07, Series of 2021, establishments that have completely closed or ceased operations during the period of the community quarantine (arising from COVID-19) are exempted from the obligation to pay employees for Labor Day. 

Updates and Insights on Payroll in the Philippines 

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