Daily-paid v. monthly-paid employees

Summary

▪ The general rule of no work, no pay, applies to both daily-paid and monthly paid-employees, with only one exception during regular holidays when both are paid despite no work.

▪ If there is a favorable stipulation or agreement, monthly-paid employees may be paid for un-worked days such as rest days and special non-working days.

1. Concepts

Daily-paid employees – refer to those whose wages/salaries are computed on a daily basis.

Monthly-paid employees – refer to those whose wages/salaries are computed annually then divided via certain divisors.

2. No work, no pay principle

GENERAL RULE: The general rule of no work, no pay, applies to both daily-paid and monthly paid-employees. Meaning, if an employee is absent and is not covered by any leave, no wage/salary is due for that workday.

EXCEPTION: … with only one exception during regular holidays when both are paid despite no work.

a. No difference

By default, there is no difference between daily-paid and monthly paid employees.

Both are subject to the rule of no work, no pay. Hence, they are paid on days when they rendered or performed work, with the single exception of regular holidays even if no work was done.

However, due to a void regulation by the then Ministry of Labor and Employment (now DOLE), confusion resulted when a regulation was passed providing the definition of monthly-paid employees as those that are paid by the month “irrespective of the number of working days therein”.

This rule was found in Section 2, Rule IV of Book III of the Omnibus Rules Implementing the Labor Code, which again has been declared void by the Supreme Court.

Case Law

Insular Bank of Asia and America Employees’ Union v. Inciong, Insular Bank of Asia and America G.R. No. L-52415, 23 October 1984

• “Sec. 2. Status of employees paid by the month. — Employees who are uniformly paid by the month, irrespective of the number of working days therein, with a salary of not less than the statutory or established minimum wage shall be presumed to be paid for all days in the month whether worked or not. x x x For this purpose, the monthly minimum wage shall not be less than the statutory minimum wage multiplied by 365 days divided by twelve.”

• HELD: Section 2, Rule IV, Book III of the implementing rules and Policy Instruction No. 9 issued by the then Secretary of Labor are null and void.

..

Thus, in a separate case involving monthly-paid complainants seeking to be paid for un-worked days, including rest days and special non-working days, the Supreme Court denied the claim citing: (a) the rule on no work, no pay; and (b) equal protection clause in the 1987 Constitution. The case also reiterated its previous declaration that Section 2, Rule IV, Book III of the implementing rules and Policy Instruction No. 9, were void.

Case Law

Odango v. NLRC, Antique Electric Cooperative, Inc.

G.R. No. 147420, 19 June 2004

• The basic rule in this jurisdiction is “no work, no pay.” The right to be paid for un-worked days is generally limited to the (regular) legal holidays in a year. (The complainants’) claim is based on a mistaken notion that Section 2, Rule IV of Book III gave rise to a right to be paid for un-worked days beyond the (regular) legal holidays (such as unworked rest days and unworked special non-working days). In effect, (the complainants) demand that (the Company) should pay them on Sundays, the un-worked half of Saturdays and other days that they do not work at all. (The complainants’) line of reasoning is not only a violation of the ‘no work, no pay’ principle, it also gives rise to an insidious classification, a violation of the equal protection clause. Sustaining (the complainants’) argument will make monthly-paid employees a privileged class who are paid even if they do not work.

..

Summary

Both daily-paid employees and monthly-paid employees are only paid for days worked and thus they are not paid on un-worked days, including rest days and special non-working days, with one single exception on regular holidays when both are entitled to holiday pay even if no work was rendered or performed.

For monthly-paid employees, they may be paid for rest days and special non-working days if and only if there is a favorable stipulation or agreement as explained hereunder.

3. Employment contract, company policies, CBA

The above discussions may be superseded by any stipulation or agreement favorable to the employee via an employment contract, company policies, collective bargaining agreement, or analogous thereto.

a. Monthly-paid formula and divisors

If there is such a favorable stipulation or agreement, then monthly-paid employees may be paid for un-worked days, such as rest days and special non-working days. This is the time when the formula and divisors are used depending on what was agreed upon. This is what many are familiar now about monthly-paid employees because of the favorable stipulation or agreement.

References

▪ Jurisprudence or Supreme Court Decisions