What some call as “holiday economics” will be felt, doubly felt, this month of August. Congress passed a new law (RA 9492), providing for “movable holidays”. Two movable holidays fall on the month of August – Ninoy Aquino Day Monday nearest August 21, which is August 20) and National Heroes Day (last Monday of August, which is August 27). (Update: Please note Proclamation No. 1353, which is conspicuously silent regarding the National Heroes Day).
The computation of wages or salaries of workers (RA 9492, read together with Memorandum Circular No. 1), are computed as follows:For National Heroes Day, the following rules shall apply:
a. If it is an employee’s regular workday:
* If unworked – 100%
* If worked– 1st 8 hours – 200%
– excess of 8 hours – plus 30% of hourly rate on said dayb. If it is an employee’s rest day:
* If unworked – 100%
* If worked– 1st 8 hours – plus 30% of 200%
– excess of 8 hours – plus 30% of hourly rate on said day
For Ninoy Aquino Day, being a nationwide special holiday, the following rules shall apply:
a. If unworked, no no pay, unless there is a favorable company policy, practice or collective bargaining agreement (CBA) granting payment of wages on special days even if unworked.
b. If worked:
– 1st 8 hours – plus 30% of the daily rate of 100%
– excess of 8 hours – plus 30% of hourly rate on said dayc. Falling on the employee’s rest day and if worked:
– 1st 8 hours – plus 50% of the daily rate of 100%
– excess of 8 hours – plus 30% of hourly rate on said day
The same law, however, provides that the holidays may be modified “by law, and/or proclamation”, the latter referring to an act of the President. The law also requires that for movable holidays, the President shall issue a proclamation, at least 6 months prior to the holiday concerned, the specific date that shall be declared as a nonworking day.
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**MONTHLY-PAID EMPLOYEES AND SPECIAL NON-WORKING HOLIDAYS**
I have 3 office employees. In their contract, it is specified that their working days are from Monday to Saturday and that their Monthly Basic Salary is P15,000. Because of this stipulation in their contract, THEY automatically identified themselves as Monthly-Paid employees. I have read the Labor Code and looked at other labor-related websites. The typical definition of Monthly-Paid Employees is: those paid every day of the month INCLUDING unworked rest days, special days and regular holidays. This definition honestly does not provide a lot of helpful information.
Because my staff considered themselves as monthly-paid employees, they used 365 as the divisor in getting the rate to be used for OT, absences, leave credits, holiday pay and premium pay computation.
I never really bothered to review their payroll computation because in a way I trusted that they knew what they were doing. I just ordered them to follow the basic requirements of the labor code. One time, I decided to check their computation for the period of June 16 – 30. As we all know, June 30 was declared a Special Non-Working Holiday.
I am well aware that employees who worked on this day are given an additional 30% PREMIUM (assuming it is not their rest day). One of my employees did not go to work on this special non-working day. She did not deduct P493.15 ((P15000 x 12 months)/365 days) from her pay for this payroll period claiming that as a monthly-paid employee, all her UNWORKED holidays (regular AND special) are PAID.
I did not agree with her on this stating that under the Labor Code “The no-work, no-pay principle applies during special days.” In addition, the Labor Code does not mention that monthly-paid employees are EXEMPT from this “no-work, no-pay” principle. The mere fact that the Labor Code does not specify the kind of pay that an employee should receive on an UNWORKED special day is already an indication that there is no pay to be received by an employee who does not go to work on a special day (as opposed to the pay an employee gets on an UNWORKED REGULAR holiday which is specifically called HOLIDAY PAY). This is just my own analysis.
Unfortunately, my employee does not want to agree with me by always pointing out the Labor Code’s definition of monthly-paid employees.
So who is correct in this case? (I hope it’s me.) If ever I prevail in this case, is the 365 factor still the correct divisor to use? My employees argue that if ever I am right, then their divisor should also be corrected. Using 365 as the divisor assumed that even the UNWORKED special days are paid. In my opinion, I would like to stick with the 365 divisor as this would also prevent us from always adjusting the divisor for new legal and special holidays that are proclaimed yearly. Is sticking with 365 as the factor legal? And kindly expound on what really is a monthly-paid employee. Avoid giving definitions already found in the labor code and other HR books because these definitions are not helpful at all. They are rather confusing. Kindly enlighten me. Thank you.