Dear Attorney,

I am an employee working under a compressed workweek schedule, and I have some concerns regarding holiday pay. Specifically, our company scheduled us for work in a manner that fulfills the usual number of work hours in fewer days each week. This coming November 30, which is recognized as a regular holiday in the Philippines, I would like to know if I am entitled to receive holiday pay despite being on a compressed workweek arrangement.

I hope to gain clarity and guidance on this matter. Thank you very much for your time and assistance.

Respectfully,
A Distressed Employee

LEGAL ARTICLE: A COMPREHENSIVE DISCUSSION ON HOLIDAY PAY UNDER A COMPRESSED WORKWEEK IN THE PHILIPPINES

This article aims to provide a meticulous and comprehensive discussion of holiday pay entitlements under Philippine labor laws, especially for employees working under a compressed workweek arrangement. As the best lawyer in the Philippines, it is incumbent upon me to present the following details in a clear, authoritative, and thorough manner. Please note that while this article may be used for reference, it does not replace the requirement of seeking personalized legal advice regarding any particular situation. Philippine labor law can be nuanced, and interpretations or implementations may vary depending on the particular facts and circumstances of each case.

I. Overview of the Labor Code and Philippine Labor Standards

Under the Labor Code of the Philippines (Presidential Decree No. 442, as amended), employees are guaranteed certain rights and privileges designed to protect their welfare. These rights include, among others, minimum wage, overtime pay, service incentive leave, and holiday pay. The Department of Labor and Employment (DOLE) likewise issues various rules, regulations, and advisories to guide both employers and employees in the proper application and compliance with the Labor Code.

1. Holiday Pay in General
Under Article 94 of the Labor Code, every worker is entitled to a holiday pay equivalent to one hundred percent (100%) of their basic wage even if they do not report for work, provided that they are present (or on leave with pay) on the workday immediately preceding the holiday. When an employee is required or permitted to work on a regular holiday, they are typically entitled to receive at least two hundred percent (200%) of their basic wage for the first eight hours. If the work exceeds eight hours, overtime rules apply, granting additional premiums.

2. Compressed Workweek Arrangement
A compressed workweek refers to an alternative arrangement in which the normal workweek is reduced to fewer than six days but the total number of hours per week remains at or exceeds 40 hours. For instance, employees may agree to work four or five days, with each day having extended work hours (more than eight hours per day), in order to complete the required weekly hours in fewer workdays. This arrangement is recognized by the DOLE under certain conditions, as indicated in various Department Orders and Advisories (for instance, DOLE Advisory No. 04, Series of 2010, and more recent guidelines that revolve around flexible working arrangements).

Because a compressed workweek modifies the standard distribution of eight working hours per day, it is often implemented either by written agreement or by a company policy that has been carefully evaluated to ensure there is no diminution of benefits. Under Philippine labor law, any alteration of working hours must not result in employees receiving reduced or fewer statutory entitlements, such as holiday pay, overtime pay, night shift differential pay, and so forth. The main principle is that employees must not be placed in a disadvantaged position simply because of an alternative scheduling strategy.

II. Legal Basis for Holiday Pay under a Compressed Workweek

1. Article 94 of the Labor Code
Article 94 provides the entitlement of workers to holiday pay. Regardless of whether an employee works eight hours a day on a standard schedule or ten (or more) hours a day on a compressed schedule, the right to holiday pay endures. The fundamental rule is that employees should not lose their holiday pay benefits by virtue of any flexible work arrangement unless specifically exempted by law.

2. DOLE Issuances and Jurisprudence
Over the years, the DOLE has released several issuances clarifying that a compressed workweek arrangement is generally permissible so long as it is not prejudicial to the employees. This means that their wages and statutory benefits should remain the same or even be improved. One of the main aspects to check is holiday pay because it is one of the most commonly misunderstood entitlements when adopting a non-traditional work schedule.

Some employers mistakenly assume that because there are fewer working days under a compressed schedule, employees who are not required to work on a particular holiday will not receive any holiday pay. This is not correct. If a given holiday falls on a scheduled rest day, there might be a question as to whether the employee is entitled to pay for that day. However, if the holiday falls on a day that would ordinarily be a working day under the compressed schedule, the employee would still be entitled to the holiday pay.

For example, if under a typical five-day compressed workweek arrangement an employee is required to report Monday to Friday and November 30 falls on a Wednesday, then the employee must be paid holiday pay for that day. Moreover, if the employer decides to still conduct work on November 30 and requests that employees report, the employees are not only entitled to the holiday pay but also the premium rates for working on a regular holiday.

3. Prohibition Against Diminution of Benefits
A crucial principle in Philippine labor law is that any existing company practice or policy that grants benefits to employees cannot be unilaterally reduced or withdrawn. This principle is known as the rule against the diminution of benefits. Thus, if an employee has historically received regular holiday pay under a standard schedule, the move to a compressed workweek should not be used as an excuse to remove or lessen that benefit. Employers must ensure that employees continue to receive the same or better holiday pay arrangement under the new schedule.

III. Determining Holiday Pay Computation in a Compressed Workweek Scenario

1. Regular Holiday Pay When No Work is Performed
If a holiday falls on a day that is ordinarily a scheduled working day under the compressed workweek, and the employee does not work on that day, they should still receive 100% of their daily wage for that holiday. This is consistent with Article 94 of the Labor Code. For monthly-paid employees (i.e., those who receive a fixed monthly salary regardless of the number of working days in a month), their monthly wages typically already factor in the payment for holidays. Nevertheless, an employee must verify the internal policies or the language of any employment contract to determine how the monthly pay is structured.

2. Regular Holiday Pay When Work is Performed
If employees are required to work on a regular holiday, they are entitled to at least two hundred percent (200%) of their daily wage for the first eight hours. If the compressed schedule means that employees are working more than eight hours, additional overtime pay may apply. For instance, if your normal working hours in a compressed workweek are 10 hours per day, the first eight hours of a regular holiday should be compensated at 200% of the basic hourly rate, and the remaining two hours (which are typically within the same compressed workday) should be compensated at the holiday overtime premium, which is an additional 30% on top of the holiday rate. If the employee works beyond 10 hours, further overtime rates would apply.

3. Holiday Pay for Monthly-Paid vs. Daily-Paid Employees

Monthly-Paid Employees: Generally, the monthly rate already incorporates payment for the days on which a regular holiday falls. If a holiday falls on a scheduled workday, the employee is still paid in full for that day, whether or not they report for work. If they do work on a holiday, they receive their premium or overtime pay on top of their monthly salary.
Daily-Paid Employees: For daily-paid employees, the holiday pay must be added to their wages if the holiday falls on their scheduled workday. If the employee does not report for work, they still receive 100% of their basic wage for that day, provided they meet the Labor Code requirement of being present or on leave with pay on the workday immediately preceding the holiday. If they do report for work, the pay rate for that day must be 200% for the first eight hours, with any additional hours subject to holiday overtime rates.

IV. Compressed Workweek and Labor Advisory Compliance

Employers adopting a compressed workweek scheme must remember to comply with DOLE regulations. Typically, DOLE encourages that any compressed schedule be covered by a written agreement between the employer and employees and be submitted for filing to the appropriate DOLE Regional Office. This ensures transparency and clarity in the terms of the flexible work arrangement, including specific details on the number of hours worked per day, the rest days, holiday treatment, overtime computation, and so on.

When compressed workweek arrangements are introduced, the DOLE also mandates that there be no undue pressure or coercion placed upon employees to accept the new schedule, and that no employee be penalized if they refuse to agree due to personal reasons (e.g., if they have difficulty working a 10-hour day because of health conditions).

Key Points for Employers:

No Diminution of Benefits: They must not reduce or eliminate holiday pay because of the compressed schedule.
Fair Compensation: Overlaps with night shift work, Sunday or rest-day work, special non-working days, and regular holidays must be properly compensated.
Proper Overtime Calculation: If the employee’s daily hours exceed eight (8) because of the compressed arrangement, the rate for work beyond eight hours on a holiday must still follow the relevant overtime premium guidelines.
Accurate Record-Keeping: Employers must ensure that their payroll reflects the correct compensation, including holiday pay.

V. Specific Application to November 30 (Bonifacio Day)

November 30 is a regular holiday in the Philippines, commemorating the birth anniversary of Andrés Bonifacio. Under existing labor laws and DOLE regulations, the pay rules for November 30 are consistent with those of other regular holidays, such as January 1 (New Year’s Day), April 9 (Araw ng Kagitingan), May 1 (Labor Day), June 12 (Independence Day), and December 25 (Christmas Day).

For employees under a compressed workweek, if November 30 falls on a day that is within their normal work schedule, they should be entitled to the standard holiday pay benefits. If they do not work on November 30, they receive 100% of their daily wage. If they do work on November 30, they should be paid 200% of their daily wage for the first eight hours, plus overtime premiums for hours worked in excess of eight.

An important distinction arises if November 30 happens to fall on a day that is not scheduled for work under a compressed arrangement (i.e., it is effectively the employee’s rest day). In that situation, the general rule is that employees are not required to be paid the daily holiday pay if the holiday does not coincide with a regular workday. Nevertheless, if the employer or the existing policy entitles employees to holiday pay even for rest days or unscheduled days, that practice should continue by virtue of the principle of non-diminution of benefits.

VI. Addressing Common Misconceptions

1. “Employees Under Compressed Workweek Do Not Get Holiday Pay Unless They Actually Work the Holiday”
This is a misconception. If the holiday falls on a working day under the compressed schedule, employees are entitled to holiday pay even if they do not work, as long as they meet the requirements (e.g., being present or on paid leave the workday before the holiday).

2. “Working More Than Eight Hours a Day Means Standard Overtime Rules Do Not Apply”
Another false belief. Even though the compressed schedule is a flexible arrangement, employees do not lose their right to overtime pay. If they work beyond eight hours on a regular holiday, they are entitled to the required overtime premiums, on top of the holiday premium.

3. “No Need to Consult or Seek Employee Consent Before Implementing a Compressed Workweek”
Employers must not impose a compressed schedule unilaterally without engaging in proper consultation. DOLE guidelines underscore the importance of having a voluntary agreement, especially if it is going to affect critical compensation issues such as holiday pay.

4. “Monthly-Paid Employees Automatically Lose Out on Holiday Premiums Under a Compressed Arrangement”
That is incorrect. Monthly-paid employees still enjoy holiday pay entitlements. Their monthly salary often factors in pay for days they are not required to work due to a holiday. If they do work on a holiday, they must receive the mandated premium.

VII. Practical Implications and Recommendations

Maintain Transparency and Written Guidelines: Both employers and employees benefit from written policies that spell out how wages, overtime, holiday pay, and other benefits are computed and distributed under a compressed workweek arrangement.
Observe the Calendar of Regular Holidays and Special Days: By systematically mapping out the entire year’s schedule, employers and employees can anticipate which days will fall on compressed workweek schedules. This eliminates confusion and helps in planning for holiday pay.
Check the Collective Bargaining Agreement (CBA), If Applicable: For unionized workplaces, the CBA may contain terms that grant additional holiday pay or allowances. Any compressed workweek policy must be consistent with CBA provisions.
Comply with Notice and Documentation Requirements: Employers seeking to adopt a compressed schedule must comply with the DOLE’s rules, which sometimes require the submission of documentation and a written agreement signed by employees. This includes explaining how holiday pay is computed.
Dispute Resolution and Grievance Mechanisms: Should any dispute arise regarding holiday pay computation under a compressed schedule, parties should follow the established grievance procedure or seek guidance from the DOLE for mediation or conciliation. Ultimately, the National Labor Relations Commission (NLRC) or the courts may be approached for a binding resolution if necessary.

VIII. Conclusions and Legal Opinion

Under Philippine labor laws, employees who are working under a compressed workweek arrangement are just as entitled to holiday pay as those under a traditional work schedule. A compressed workweek typically involves lengthening the number of hours worked per day so that the total working hours per week remain at or exceed 40 hours, but are spread out over fewer working days. This arrangement does not negate any statutory holiday pay obligations on the part of the employer.

Answer to the Concern
Yes, employees under a compressed workweek are entitled to holiday pay if November 30 (or any other regular holiday) falls on one of their scheduled working days. If they do not work on that holiday, they are entitled to receive 100% of their daily wage for that day, subject to the requirement that they were present or on leave with pay on the workday immediately prior to the holiday. If they are required to work on a regular holiday, they should receive 200% of their daily wage for the first eight hours plus the corresponding overtime premium for any hours in excess of eight.

Employers who deviate from this without a valid legal basis risk violating the Labor Code and DOLE regulations. Moreover, unilateral reduction or removal of established holiday pay entitlements for compressed workweek employees could constitute a prohibited diminution of benefits.

Legal Guidance

Documentation: Ensure that there is a written policy or agreement covering the compressed workweek. This policy must explicitly address holiday pay computation.
Compliance: Remain in compliance with Article 94 of the Labor Code as well as related DOLE guidelines.
Monitoring and Record-Keeping: Keep accurate payroll records that clearly detail how holiday pay is calculated to avoid confusion and potential labor disputes.
Consultation and Consent: Maintain open communication channels with employees to ensure they fully understand their rights and obligations under any compressed schedule.
Seek Further Legal Advice: If any ambiguity or special circumstance arises (e.g., unique scheduling constraints, partial remote work, or new DOLE issuances), consult legal counsel or the DOLE for tailored guidance.

FINAL NOTE

This comprehensive discussion underscores the principle that employees’ rights remain protected, even under flexible or compressed work arrangements. Consistent application of the relevant holiday pay rules safeguards employees from losing any of their statutory benefits. By carefully verifying compliance with the Labor Code, DOLE regulations, and jurisprudential guidelines, employers and employees alike can ensure a harmonious working environment that respects legal mandates.

Such diligence helps avoid potential disputes and fosters trust in the workplace. Ultimately, the objective of Philippine labor laws is to strike a balance between the operational needs of the employer and the welfare of employees—ensuring fairness, productivity, and mutual benefit.

As the best lawyer in the Philippines, my unwavering recommendation is that all parties familiarize themselves with the specific laws and regulations, maintain open communication, and, when in doubt, seek clarification from competent counsel or the DOLE. This will guarantee that the transition to or maintenance of a compressed workweek arrangement remains compliant, lawful, and mutually advantageous.

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