As an employer, it is important to consider the holiday pay of each employee. Not only must it be properly calculated for reflection in your books, but proper calculation also ensures that your workers are properly and fairly compensated at all times. After all, happy and well-paid staff are likely to perform better and become more productive. Moreover, proper compensation of workers means a low likelihood of your company being sued for labor charges with the DOLE (Department of Labor and Employment).
If you are a new business and are just learning the ropes of how to handle everything from management to accounting, and payroll prep, here is a list of all the things you need to know. From tips to formulas, this article contains details so you can make accurate holiday pay computations. Remember, as a responsible employer, it is your duty to pay the correct wages whether you require your employees to render services during a public holiday or not.
What is a Holiday Pay?
Holiday pay in the Philippines is the amount that private, regular employees are entitled to receive on a regular or special holiday. In general, all employees who perform work on holiday are entitled to receive holiday pay as mandated by the government.
The requirement to claim this holiday pay is that the regular employee must have been present on the previous workday or must have been on paid leave the day before the holiday. Employees who choose to work on public holidays are entitled to extra pay depending on hours rendered and the type of holiday that occurs, whether special or regular.
Are There Any Exemptions to This Rule?
Do note that there are employees exempted from receiving holiday pay. This includes:
– Employees of a private company with less than 10 regular employees
– Managerial Staff
– Government employees
– House help
– Family members working in the business
– Contractual or commissioned staff
Though the Philippine Labor Code does not require that you pay the employees their full salary during holidays where they do not work, you still have the prerogative to hand out bonuses for that day.
How to Compute for the Holiday Pay?
The amount an employee receives on a public holiday will depend on whether they attend work or not. Though each employee of a private establishment is entitled to receive their full salary on holidays, those who still opt to go to work will be compensated for their time in addition to the holiday pay.
Below are the standard formulas based on what kind of non-working day it is:
- Regular Holiday Computation
Here are computation guidelines for Regular Holidays:
- Employees who do not report for work will receive 100% of their salary. You should receive 100% of your salary for that day regardless.
- Employees who reported for duty. (Basic Wage + COLA*) x 200%
- Employees who rendered (Hourly Rate x 200% x 130% x Number of Hours Worked)
- Employees who completed a full shift on their designated rest day. [(Basic Wage + COLA*) x 200%] + [30% (Basic Pay x 200%)]
- Employees who rendered overtime services on their rest day. (Hourly Rate x 200% x 130% x 130% x Number of Hours Worked)
- Special Non-Working Day Computation
As for Special Non-Working Holidays, here are the specific guidelines:
- The “no work, no pay” rule applies to employees who do not work, unless the employer has a prior agreement that requires compensation for this special non-working holiday.
- Employees who worked. (Basic Wage x 130%) + COLA*
- Employees who rendered overtime services. (Hourly Rate x 130% x 130% x Number of Hours Worked)
- Employees who completed a full shift on their rest day. (Daily Rate x 150%) + COLA*
- Employees who performed overtime services on their rest day. (Hourly Rate x 150% x 130% x Number of Hours Worked)
- Special Working Holidays
- The “no work, no pay” rule applies to employees who do not work.
- Employees who worked. (Basic Wage x 130%) + COLA*
- Employees who rendered overtime services. (Hourly Rate x 130% x 130% x Number of Hours Worked)
- Employees who performed a full shift on their rest day. [(Basic Wage x 150%) + COLA]
- Employees who rendered overtime services on their rest day. (Hourly Rate x 150% x 130% x Number of Hours Worked)
Below are the standard formulas based on what kind of non-working day it is:
- Regular Holiday Computation
Here are computation guidelines for Regular Holidays:
- Employees who do not report for work will receive 100% of their salary. You should receive 100% of your salary for that day regardless.
- Employees who reported for duty. (Basic Wage + COLA*) x 200%
- Employees who rendered (Hourly Rate x 200% x 130% x Number of Hours Worked)
- Employees who completed a full shift on their designated rest day. [(Basic Wage + COLA*) x 200%] + [30% (Basic Pay x 200%)]
- Employees who rendered overtime services on their rest day. (Hourly Rate x 200% x 130% x 130% x Number of Hours Worked)
Top Tips for Computing the Holiday Pay Correctly
As the employer, it is your moral obligation to give your workers the correct remuneration. To ensure you get that done, take note of the following tips:
1. Use Computing Software
For the accurate computation of holiday pay on top of base salary, it is best to utilize computation software. Carrying out computations manually will not only take more time but also leave a greater margin of human error. Avoid mistakes by leveraging technology.
2. Keep Proper Records
To properly carry out computations, you must also keep a proper record of time logs of employees. Without this, you will not get it right.
3. Hire a professional
Finally, seek payroll services from a professional. Managing and operating a business is tough work. Taking on the additional accounting role of computing for salaries will only add to your burdens as a business owner. For that reason, it is best to hire a professional accountant. Not only will the work be lifted off your shoulders, but you will be guaranteed that all transactions and amounts are properly accounted for.
Noteworthy, having a professional ally carry out tasks they were trained to do ensures less errors. Accountants are also familiar with Philippine business, labor, tax, and contract laws. If you need help accounting for proper compensation, give our team a call. We offer free 30-minute consultations to ensure your business’s financial health stay in tip-top shape.
