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13th Month Pay Philippines
13th Month Pay in the Philippines is 1/12 of the basic salary of an employee within a calendar year [DOLE 13th Month Pay Guidelines, Labor Advisory No 18, 2021]
This article discusses everything about 13th Month Pay:
- Who is eligible for 13th Month Pay in the Philippines
- How to compute 13th Month Pay with absences, salary increases, etc
- FAQs on 13th Month Pay
Make sure you understand how your 13th month is paid and discuss it with your HR.
Most 13th-month issues can be ironed out without needing a Philippine Labor Lawyer.
Who is entitled to 13th Month Pay in the Philippines?
13th Month Pay in the Philippines is paid to most employees, although there are exemptions.
DOLE 13th Month Pay Guidelines on exempted employees:
- Government employees
- Employees are paid purely on commission, task or fixed amounts irrespective of the time involved
- Managerial employees are not entitled to 13th Month Pay although many employers still choose to provide it.
- Employees who have worked less than 1 month
If you do not fall in one of these categories, you are entitled to 13th-month pay.
Is 13th Month Pay Mandatory?
Yes, 13th-month pay is a mandatory benefit that all employees must be given by all qualified employers.
When should 13th Month Pay be given?
13th Month Pay should be given on the 24th of December every year.
It may be partially advanced but it should not be later.
DOLE 13th Month Pay Rules mention one example of advancing 13th Month pay, with one-half of the 13th month given before the opening of the regular school year and the remaining half on or before December 24 of every year.
What is the 13th Month Pay Computation in the Philippines?
The 13th month pay is 1/12 of the total basic salary earned by an employee in 1 calendar year.
13th Month Pay Philippines Sample Calculation:
Take as an example, Jane Gomez.
She was hired on June 1, 2022, on minimum wage and has perfect attendance.
She will have a total basic salary for 2022 of 87,210 pesos.
Jane’s 13th Month Calculation is
87,210 / 12 = 7,267.50 Pesos in total.
As you can see, the 13th-month pay computation is very simple.
It is just the total basic wage divided by 12.
What forms part of the basic salary in the 13th Month Pay Calculation?
The basic salary that is used for 13th Month Pay Calculation is really just the basic salary.
It does not include:
- Cost of living allowance (COLA)
- Profit-sharing payments
- Cash benefit of unused vacation and sick leave
- Maternity leaves
- Overtime pay
- Holiday Pay or work done on rest days and special holidays
- Night Shift Differential
- Other allowances and monetary benefits
This is as per DOLE 13th Month Pay Rules this in Section 2(b) of the Implementing Guidelines of PD 851.
It was also confirmed in GR 49774, where Coca-Cola Union argued that all of the above (COLA, overtime, holiday pay, etc.) should have been included in the 13th Month Pay Computation.
The Supreme Court denied this and quoted PD 851 and its implementing Rules, as well as clarification from a set of Supplementary Rules by Labor Secretary Blas Ople.
It’s safe to conclude then that the basis for 13th Month Pay is the employee’s basic salary.
There is an exception.
If the benefits have been treated as part of the basic salary then that should be included in the 13th Month Pay Calculation.
For example, GR 188949 reaffirms that basic salary excludes the list of items named above.
However, the Supreme Court also stated in that case that the employer Central Azucerera De Tarlac should include as part of the 13th Month Pay Computation the first eight (8) hours of overtime pay on Sunday and legal/special holiday, night premium pay, and vacation and sick leaves for each year since it had been doing so for 30 years.
Thus, these normally excluded items formed part of the 13h Month Pay Computation.
(Note that the situations can be very determinative to understand this so first speak to your HR before consulting with a Philippine Labor Lawyer.)
Is Overtime included in the 13th Month of Pay in the Philippines?
No, Overtime is not included in the 13th Month of Pay in the Philippines.
This is very clear in the above section with its detailed citing of DOLE 13th Month Pay Guidelines, the Labor Code of the Philippines and its implementing rules.
13th Month Pay Philippines: How to compute absences without pay/paid leave/maternity leave
So, the basic salary is the basis for the 13th Month and includes leave with pay but does not include leave without pay.
If you were absent for 2 days without pay, then the basic salary for those 2 days is not included in your 13th-month pay calculation.
13th Month Pay Philippines: How to compute 13th month pay with a salary increase
A frequently asked question is how to compute 13th-month pay with a salary increase, but it is really just the same calculation including the effect of the salary increase on basic pay.
If you receive basic pay of 15,000 per month and had a salary increase in basic pay to 16,000 starting July, your 13th-month pay calculation is:
Jan to June: 6 months x 15,000 = 90,000
Jul to Dec: 6 months x 16,000 = 96,000
Total annual basic salary divided by 12 = 186,000 / 12
13th Month: 15,500
Are Contractual Employees entitled to 13th Month Pay in the Philippines?
Yes, Contractual Employees are entitled to 13th Month Pay.
In 2017, DOLE Overtime Pay Rules were discussed in DO 174, where contracting and subcontracting were taken up.
In Section 10 (b), contractual employees are entitled to security of tenure and all rights and privileges including the payment of the 13th month pay.
Are Probationary Employees entitled to 13th Month Pay in the Philippines?
Yes, so long as the probationary employee worked for at least 1 month, he is entitled to 13th Month Pay.
If you look at the Implementing Rules of PD 851 – which mandated the distribution of 13th Month Pay – you will see in Section 4 that all employees of covered employers should be entitled … regardless of their position, designation or employment status.
Are piece rate workers (pakyaw) entitled to 13th Month Pay in the Philippines?
Yes, piece rate workers or pakyaw workers are entitled to 13th-month pay.
The difference between 13th Month Pay Philippines vs Christmas bonus
Christmas bonus is based on the employer’s discretion and is not a mandatory benefit.
However, 13th-month pay is a mandatory benefit.
Is 13th Month Pay in the Philippines taxable?
When the total amount of the 13th Month Pay plus other benefits exceeds Php 90,000, then the amount of the 13th Month Pay in excess of Php 90,000 is taxable.
However, if the 13th Month Pay plus other benefits do not exceed Php 90,000.
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