Holiday Pay Benefits Affecting Daily Paid Employees who are on Compressed Workweek (CWW)

Normally, establishments require work from Monday to Saturday at eight-hour work per day. Filipinos prefer to spend Saturdays and Sundays with family and for leisure activities among others. Employers would also like to save cost. Hence, the idea came out to compress the work days in a week from six days to five thereby eliminating the Saturday work. But the effect is an increased work hours from Monday to Friday where such excess hours are not compensable under overtime rules. This is the profile of the compressed workweek scheme. (See page 47, Guide on Employee Compensation and Benefits Volume 1, 2^nd Edition, Villanueva)

Compressed Workweek refers to one where the normal workweek is reduced to less than six (6) days but the total number of work-hours of 48 hours per week shall remain. The normal work- day is increased to more than eight hours but not to exceed twelve hours, without corresponding overtime premium. The concept can be adjusted accordingly depending on the nor- mal workweek of the company pursuant to the provisions of Department Advisory No. 02, series of 2004, dated 2 December 2004. (See page 45, Guide on Employee Compensation and Benefits Volume 1, 2^nd Edition, Villanueva)

The idea behind compressed workweek is best elucidated in Department Order No. 21 in 1990. The compressed workweek scheme was originally conceived for establishments wishing to save on energy costs, promote greater work efficiency and lower the rate of employee absenteeism, among others. Workers favor the scheme considering that it would mean savings on the increasing cost of transportation fares for at least one (1) day a week; savings on meal and snack expenses; longer weekends, or an additional 52 off-days a year, that can be de- voted to rest, leisure, family responsibilities, studies and other personal matters, and that it will spare them for at least another day in a week from certain inconveniences that are the normal incidents of employment, such as commuting to and from the workplace, travel time spent, exposure to dust and motor vehicle fumes, dressing up for work, etc. Thus, under this scheme, the generally observed workweek of six (6) days is shortened to five (5) days but prolonging the working hours from Monday to Friday without the employer being obliged to pay overtime premium compensation for work performed in excess of eight (8) hours on weekdays, in exchange for the benefits abovecited that will accrue to the employees.” (Department of Labor and Employment Department Order (D.O.) No. 21, Series

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of 1990, Guidelines on the Implementation of Com- pressed Workweek)

The question is, for daily-paid employees who are made to work Monday to Friday instead of Monday to Saturday, will they be entitled to holiday pay falling on a Saturday? The impression of most practitioners is that the employees are deemed working on such Saturday the eight hours simply being distributed among the five days, Monday to Saturday.

In answer this query, it is best to first understand the nature of holiday pay. There is no doubt that regular holidays which are 12 days currently, are mandatory even though unworked. In the case of special day however, it is different. It follows the rule on “no work, no pay.”

Holiday pay is a legislated benefit enacted as part of the Constitutional imperative that the State shall afford protection to labor. (Asian Transmission Corporation vs. CA, G.R. No. 144664, March 15, 2004). This is the overall view of the SC with respect to regular holiday pay. It even anchors the entitlement of employees to Constitutional precept of protection to labor.

Regular holiday is now the term used for the old reference of “legal holiday.” The term used for special holidays is now “special days” as set forth in R.A. 9492. Although in practice these two terms have the same meaning if used.

Holiday pay refers to the payment of the regular daily wage for any unworked regular holiday (2, A, DOLE Handbook 2020). The DOLE here refers to regular holiday pay and not special day pay.

Every worker should, according to the Labor Code, be paid his regular daily wage during regular holidays, except in retail and service establishments regularly employing less than ten (10) workers; this, of course, even if the worker does not work on these holidays. (Wellington Investment and Manufacturing Corporation vs. Trajano, G.R. No. 114698 July 3, 1995)

There are two kinds of holiday granting benefits under the law:

1. Regular Holiday
2. Special Day

Regular holidays are governed by Article 94 of the Labor Code (PD 442), as amended. It states that the Labor Code, as amended, affords a worker the enjoyment of ten paid regular holidays.

There are now twelve (12) regular holidays. There was ten (10) when the Labor Code was enacted in 1974. Afterwards, Eid’l Fit’r and Eid’l Adha were the recently added.

Regular holiday as a benefit is mandatory in nature insofar as the first 100% is concerned. Unlike a bonus, which is a management prerogative, holiday pay is a statutory benefit demandable under the law. (Asian Transmission Corporation vs. CA, G.R. No. 144664, March 15, 2004). It is mandatory, regardless of whether an employee is paid on a monthly or daily basis. (Ibid.)

An employee is entitled to at least 100% of his/her minimum wage rate even if he/she did not report for work, provided he/she is present or is on leave of absence with pay on the work day immediately preceding the holiday. (2, C, DOLE Handbook 2020)

Considering that the regular holiday is a mandatory benefit even if unworked, the date that it falls is irrelevant for the benefit to accrue. The fact that any of the regular holidays falls on a rest day, Saturday, Sunday, or another holiday will not remove it from its mandatory nature. The date it falls becomes material only to determine when the employee should be paid.

In the case of Asian Transmission Corporation vs. CA (G.R. No. 144664 March 15, 2004), the Supreme Court held that since a worker is entitled to the enjoyment of paid regular holidays, the fact that two holidays fall on the same date should not operate to reduce holiday pay benefits a worker is entitled to receive. This means that at the end of the calendar year, an employee should have been paid 100% of the 12 regular holidays even if they did not work. The date where they fall becomes relevant only when the payment should actually be made. It does not control the entitlement.

The rule is different when it comes to special day. The rule is that if the employee did not work on any of the special days or special holidays, he is not entitled to any compensation under the doctrine of “no work, no pay.” (DOLE Memorandum Circular No. 01, March 8, 2004.) The “no work, no pay” principle applies during special days and on such other special days as may be proclaimed by the President or by Congress. (3, C, DOLE Handbook 2020)

These special days are clearly identified by DOLE issuances stating that the following are the four (4) special days in a year under Executive Order No. 292, as amended by Republic Act 9849, as further amended by Republic Act No. 10966l that shall be observed in the Philippines:

1. Ninoy Aquino Day Monday nearest August 21
2. All Saints Day November 1
3. Feast of Immaculate December 8 Conception of Mary

4. Last Day of the Year December 31

Hence, if there is no actual work on said days, there should be no special day pay. As DOLE puts it, workers who are not required or permitted to work on special days are not entitled to any compensation. (Ibid.) This year 2021, Recently, Proclamation 1107, amending Proclamation No. 986, declared December 31, 2021 as special working day. Also, under the same proclamation, Black Saturday, 3 April 2021, was added as a special day.

In accordance with this principle, insofar as the first 100% of the pay pertaining to the regular holiday, it is a benefit that is in the normal course of business. While the special day pay and the second 100% of the regular holiday are not in the normal course of business.

Thus, even if the day falling on regular holiday is unworked (first 100%), it should be paid. While unworked special day and the 2^nd 100% of the regular holiday are not compensable.

Given the above rules, special day that falls on a Saturday for employees on CWW, there shall be no premium pay if they did not work on such Saturday considering that holidays are reckoned on a calendar day basis.

While if that holiday is a regular holiday then the employee is entitled to 100% of the pay even if they did not work on such day considering that the 12 regular holidays are mandatory in nature. This is subject to disqualification such as when the employee is absent without pay on the day before the regular holiday.

As to the additional 100% of the regular holiday however, it requires actual work since this is a premium pay which follows the rule on benefit that is not incurred in the normal course of business.