Critical Workdays after Holidays

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Summary

▪ Non-payment of holiday pay for being absent on a declared critical workday is contrary to labor law.

▪ Holiday pay is a legally mandated benefit which is required to be paid to covered employees and subject only to limitations provided for by law.

1. Concept

There are several establishments which consider certain days as “critical workday”, which means that employees are expected to report for work or else be penalized or undergo disciplinary action.

These critical workdays may include days before and after a pay day, as well as days before and after a regular holiday. These are the days when employees tend to be absent for work for many reasons, which is usually attributable to them spending their compensation or taking a vacation.

a. Day after regular holiday

Insofar as regular holidays are concerned, the Labor Code allows for a penalty in terms of non-payment of holiday pay if a covered employee is unpaid on the workday immediately preceding a regular holiday. An employee is unpaid because he/she is either absent or has not applied his/her leave credits.

However, the Labor Code did not provide for a similar provision in case an employee is absent on the workday immediately succeeding a regular holiday. No other labor laws nor regulations provide for such a rule.

Thus, in the exercise of management prerogative, many establishments have resulted to making it a policy for employees to report for work on the working day after a regular holiday. The penalty for being absent is usually non-payment of regular holiday pay.

2. Validity of policy

Such a policy is contrary to labor laws.

Holiday pay is a legally mandated benefit which is required to be paid to covered employees and subject only to limitations provided for by law.

Since the law does not authorize non-payment of holiday pay for being absent on the working day immediately succeeding are regular holiday, the employer has no justification nor legal basis for non-payment of holiday pay.

The employer cannot invoke management prerogative since it is limited by: (a) good faith, and (b) with due regard to the employee’s rights. It is not in good faith for an employer to deny payment of holiday pay when it is a legally mandated benefit and it has already been earned by the employee who is presumably paid on the day immediately preceding the regular holiday to be entitled to holiday pay. It is also the employee’s right to receive the holiday pay since, as the term suggests, it is legally mandated or required by law.

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References

▪ Presidential Decree No. 442, a.k.a. Labor Code

▪ Omnibus Rules Implementing the Labor Code

▪ Jurisprudence or Supreme Court Decisions