Below is a comprehensive discussion on how holiday pay is computed under a commission-based compensation scheme in the Philippine setting. This article focuses on the rules and principles set out by the Labor Code of the Philippines, the Department of Labor and Employment (DOLE), relevant rules and regulations, as well as pertinent jurisprudence. It is meant to provide general legal information and not formal legal advice. For case-specific concerns, it is prudent to seek professional counsel or guidance from DOLE.

1. Legal Basis for Holiday Pay

Article 94, Labor Code of the Philippines
The Labor Code provides that every worker shall be paid their “regular daily wage” during regular holidays, except certain categories of employees who are excluded under the law’s implementing rules (e.g., managerial employees, field personnel, and other similar exclusions under the Omnibus Rules Implementing the Labor Code).
DOLE’s Implementing Rules and Regulations
- The Omnibus Rules Implementing the Labor Code (Book III, Rule IV) detail how holiday pay is computed.
- The Handbook on Workers’ Statutory Monetary Benefits issued by DOLE gives practical guidance on how holiday pay is determined for different types of workers, including those on commission or piece-rate arrangements.
Coverage
Generally, holiday pay is a statutory benefit unless the employee is validly excluded under the Labor Code’s implementing rules. Commission-based employees who do not fall under any exclusion (e.g., they are not managerial employees, not field personnel excluded from coverage, etc.) remain entitled to holiday pay.

2. Types of Holidays in the Philippines

It is important to distinguish between two types of holidays, because the pay computation differs:

Regular Holidays
Examples (as declared by law) include New Year’s Day (January 1), Araw ng Kagitingan (April 9), Maundy Thursday, Good Friday, Labor Day (May 1), Independence Day (June 12), National Heroes’ Day, Bonifacio Day (November 30), Christmas Day (December 25), Rizal Day (December 30), and others declared by law.
- No Work, Pay
  The general rule: If you do not work on a regular holiday, you are still entitled to receive 100% of your daily wage for that day.
- Work on a Regular Holiday
  The general rule: If you do work on a regular holiday, you receive at least 200% of your daily wage for the first eight hours of work.
Special Non-Working Days
Examples include EDSA People Power Anniversary (February 25, usually a special holiday in many years), Black Saturday (occasionally declared), Ninoy Aquino Day (August 21), All Saints’ Day (November 1), Feast of the Immaculate Conception (December 8), Last Day of the Year (December 31), and others declared by proclamation.
- No Work, No Pay
  The general rule for special non-working days: If you do not work, you do not receive pay, unless there is a company policy, contract, or collective bargaining agreement (CBA) granting payment on special days.
- Work on a Special Non-Working Day
  The general rule: You receive an additional 30% of your daily wage on top of your basic day’s wage (or 130% for the first eight hours of work).

3. Commission-Based Compensation: Overview

Commission-based employees earn all or part of their wages through commissions, i.e., a percentage of sales or transactions they generate. While such employees may receive a basic salary plus commissions or may rely entirely on commissions, they are still considered employees under labor laws so long as an employer-employee relationship exists (i.e., the employer has the power to control not only the results but also the means and methods by which the work is done).

Are Commission-Based Employees Entitled to Holiday Pay?

Yes, generally they are covered by holiday pay, unless they are among the specific exclusions (e.g., managerial employees, field personnel whose hours of work are not determined by the employer, etc.).
If a commission-based employee is not among the exclusions, the employer is required to pay them holiday pay in accordance with Article 94 of the Labor Code.

4. General Formula for Holiday Pay

For Daily-Paid Employees (Non-Commission)

By way of background, for a typical daily-paid rank-and-file employee who is not on commission, the pay for an unworked regular holiday is computed as:

Holiday Pay (Unworked) = Daily Rate × 100%

For work on a regular holiday:

Holiday Pay (Worked, 8 hours or less) = Daily Rate × 200%

However, for employees who are paid by results (e.g., piece-rate, task-basis, commission), the Labor Code and DOLE rules provide a special method.

5. Computing Holiday Pay for Commission-Based Employees

Under Book III, Rule IV, Section 8 of the Omnibus Rules Implementing the Labor Code, employees who are paid by results (including those paid by piece-rate, task, commission, etc.) are entitled to receive holiday pay based on their average daily earnings:

“For employees who are paid by results, e.g., those who are paid on piece-work, the holiday pay shall not be less than their average daily earnings for the last seven (7) actual work days preceding the regular holiday, exclusive of overtime pay, and premium pay for work performed on Sundays and holidays.”

This is the guiding principle generally followed by DOLE. In simpler terms:

Identify the last 7 working days the employee actually worked before the holiday.
Sum up the total earnings over those 7 days (excluding any extra pay from overtime, holiday pay, or premium pay).
Divide the total by 7 to get the employee’s average daily earnings.
Use that result as the daily rate for computing holiday pay.

Hence, if the commission-based employee does not work on the holiday (and it is a regular holiday), they would receive:

Holiday Pay (Unworked, Commission-Based) 
= Average Daily Earnings (last 7 days) × 100%

If the employee does work on the regular holiday:

Holiday Pay (Worked, Commission-Based) 
= Average Daily Earnings (last 7 days) × 200%

Note: This formula is used when the law specifically applies the “average daily earnings” approach to employees paid by results. Some employers opt to track an equivalent daily rate that forms part of an employee’s pay structure for ease of computation. However, absent a clear daily rate, or if the employee earns purely through sales commissions without a fixed daily wage, the standard approach is the “7-day average daily earnings.”

6. Step-by-Step Example

Assume:

A commission-based salesperson in a retail company.
They are not excluded from holiday pay coverage.
Over the last 7 actual workdays preceding the holiday, the sales commissions (excluding overtime or premium) are as follows:

Day 1: 1,000 PHP
Day 2: 1,500 PHP
Day 3:   800 PHP
Day 4: 2,000 PHP
Day 5: 1,200 PHP
Day 6:   900 PHP
Day 7: 1,600 PHP

Sum: 1,000 + 1,500 + 800 + 2,000 + 1,200 + 900 + 1,600 = 9,000 PHP
Average Daily Earnings = 9,000 ÷ 7 = 1,285.71 PHP

If employee does not work on a regular holiday:
- Holiday Pay = 1,285.71 × 1 = 1,285.71 PHP
If employee works on the regular holiday (8 hours or less):
- Holiday Pay = 1,285.71 × 2 = 2,571.42 PHP

In practice, some employers round off to the nearest peso.

7. Special Non-Working Holidays vs. Regular Holidays for Commission-Based Employees

For special non-working days, there is generally a “no work, no pay” policy unless a company policy or agreement provides otherwise. When the commission-based employee works on a special non-working holiday, the common rule is to pay an additional 30% of the average daily earnings (or an additional 50% if it falls on a rest day and is also a special day, depending on circumstances). The DOLE usually references a daily wage for that purpose, which, for commission-based employees, is again derived from the 7-day average rule or a predetermined daily conversion.

8. Are Commissions Included in the Basis for Holiday Pay?

Yes. For workers paid by results, including commissions, the holiday pay is derived from the total commissions or piece-rate earnings in the last 7 working days. It is important not to exclude commission from the computation if it is the main component of the employee’s wages. The Labor Code’s implementing rules clarify that the computation is based on the employee’s “average daily earnings,” which include commissions because these commissions are the wage.

Important Caveat: Some employers pay a “basic” daily wage plus commission. In these cases:

The base daily rate is readily determined from the basic salary;
The commission component (or at least the portion integrable as part of wage) may also be considered if the employer does not keep a separate classification of “overtime pay” or “premium pay.”

If the employee’s primary or sole compensation is commission-based, the approach is the average daily earnings formula explained above.

9. Excluded Employees

Not all commission-based workers automatically receive holiday pay. The law enumerates specific categories that are excluded:

Managerial Employees: Those whose primary duty is to manage the establishment or department thereof, and who customarily and regularly direct the work of two or more employees, etc.
Field Personnel: Those who perform their work away from the principal place of business and whose actual hours of work cannot be determined with reasonable certainty (e.g., traveling salesmen who set their own work hours, unsupervised).
Members of the family of the employer dependent on the latter for support.
Domestic helpers and persons in the personal service of another.

If a commission-based worker is, for instance, a genuine “field personnel” whose hours the employer does not control or monitor, that worker may be validly excluded from holiday pay.

10. Holiday Pay vs. 13th Month Pay for Commission-Based Employees

Though it is a separate benefit, it helps to clarify the distinction:

13th Month Pay under Presidential Decree No. 851 typically includes commissions that form part of an employee’s basic remuneration.
Holiday Pay is calculated as explained above—on the basis of daily rate or average daily earnings for commission-based employees.

In short, for holiday pay, you generally use the 7-day average approach. For 13th month pay, you typically include the commissions that are part of the “basic salary” in computing the total compensation for the calendar year, then divide by 12.

11. Practical Tips for Employers and Employees

Maintain Clear Records
- Employers should keep detailed daily, weekly, or monthly records of commissions earned by employees. This ensures clarity on how holiday pay is computed, especially if the worker is purely on commission.
Set a Standard Daily Rate
- Some companies agree with their commission-based staff to designate a “basic daily salary” for statutory benefits calculations. Commission then serves as an additional or variable component.
Consult DOLE for Clarification
- The local DOLE offices often provide guidance on how to properly compute statutory benefits.
State the Agreement in Writing
- To avoid disputes, the employment contract or policy manual should explain how commissions are calculated, how daily rates are derived (if any), and how holiday pay is computed.

12. Relevant Jurisprudence

Metropolitan Bank & Trust Company vs. NLRC (G.R. No. 152928) – While not specifically for commission-based workers, it reaffirms principles on statutory benefits and coverage.
Various Supreme Court rulings on “paid by results” employees – Reiterate that these employees are entitled to holiday pay unless specifically excluded.
Asiaworld Publishing House, Inc. vs. Ople (G.R. No. 56398) – Touches on the scope of coverage for holiday pay and reaffirms the broad coverage of rank-and-file employees.

These cases emphasize that the right to holiday pay is fundamental unless the Labor Code expressly excludes the employee from coverage.

13. Frequently Asked Questions

If my commissions vary greatly from one day to another, do I average over 30 days?
- The Labor Code’s implementing rules specify 7 actual workdays preceding the holiday, not 30. You must follow the DOLE formula unless there is a more favorable company practice.
Do overtime pay or holiday premiums get included in the average daily earnings?
- No. The rules expressly exclude overtime pay, holiday pay from previous holidays, or premium pay from the calculation. Only the commissions or piece-rate amounts that correspond to regular working days get summed up.
What if I have no “work days” prior to the holiday?
- If the employee is newly hired or took a long leave and had no earnings in the last 7 days, how to compute can be tricky. In practice, some employers use the daily average from the partial data available. If truly zero, the law does not clearly cover that scenario, and the matter may be resolved by agreement or DOLE guidance.
Can an employer offset or deduct holiday pay from commissions?
- No. Holiday pay is a statutory benefit separate from any commissions earned. Commissions correspond to sales/performance results, while holiday pay is mandated by law.
If a regular holiday falls on my rest day, how is it computed?
- For employees who are paid by results, they are still entitled to holiday pay. If the employee is required to work on a holiday that also coincides with their rest day, applicable DOLE rules on holiday pay plus rest day premiums come into play (typically an additional 30% on top of the regular holiday pay rate, but always check updated DOLE guidelines).

14. Conclusion

Computing holiday pay for commission-based employees in the Philippines hinges on whether the employee is covered or excluded from holiday pay under the Labor Code. If covered, the default rule for “paid by results” employees applies: use the average daily earnings from the last 7 actual workdays preceding the holiday. This ensures the employee receives statutory compensation that reflects their usual rate of earnings. Employers and employees alike should maintain accurate records, clarify compensation structures, and consult official DOLE guidelines or legal experts in cases of doubt.

Holiday pay protects the welfare of employees by ensuring they are paid even on days they do not or cannot work due to recognized national holidays—reinforcing the public policy goal of giving workers time to rest and celebrate important national events without sacrificing income. For commission-based workers, the law’s approach balances their variable earnings with the principle that they, too, deserve the benefit of holiday pay, unless validly excluded.