13th Month Pay in the Philippines: Computation and Common Questions Answered
By: Ricky Publico
Published on: November 2, 2020 . Last updated: November 18, 2020 Category: Personal Finance
Aside from Jose Mari Chan’s inescapable soothing voice, there’s another artist we Filipinos usually associate with the holiday season: the exhilarating vocal prowess of Aegis. Specifically, when they emphatically ask all employers in the Philippines to give everyone their Christmas bonuses or 13th month pay.
Indeed, you should expect a lot of cash flow going straight to your bank account, courtesy of your 13th month. Have you received yours yet? It’s time to learn more about this year-end benefit, how to compute it, and all other related concerns. See them below.
Table of Contents
- What is 13th month pay in the Philippines?
- How to compute 13th month pay?
- Is 13th month pay taxable?
- When will I receive my 13th month pay?
- Why should I receive a 13th month pay?
- What’s the difference between a 13th month pay and a bonus?
- Are managers entitled to a 13th month pay?
- If I resigned/was terminated from my company, am I still entitled?
- When is the 13th month pay given to resigned/terminated employees?
- Are government employees entitled to this pay?
- Are maternity leaves included in the computation?
- Final Thoughts
What is 13th month pay in the Philippines?
13th month pay is an additional compensation given to employees in the Philippines typically at the end of a year. It is a mandatory benefit provided to employees pursuant to Presidential Decree No. 851. All rank-and-file employees who have worked for at least one month in a company are entitled to a 13th month, regardless of the nature of their employment and irrespective how they receive their wages.
How to compute 13th month pay?
To compute your 13th month pay, multiply your basic monthly salary to the number of months you have worked for the entire year then divide the result to 12 months. Here is the basic 13th month pay formula in the Philippines.
Monthly Basic Salary x Employment Length ÷ 12 months
For employees who worked less than 12 months, they will receive a prorated 13th month pay based on the number of months you worked for the company. For example, if your basic monthly salary is PHP 20,000 and you started working for your company last September, your 13th month computation should look like this:
(PHP 20,000 x 3 months) ÷ 12 months = P5,000
Remember that your monthly basic salary doesn’t include allowances or other monetary benefits such as the cash equivalent of your unused leaves, overtime pay, premium pay, and night shift differential.
Is 13th month pay taxable?
13th month pay is taxable if it exceeds PHP 90,000. Courtesy of the TRAIN Law, this amount is relatively higher as compared to last year’s tax exclusion rate which is PHP 82,000.
When will I receive my 13th month pay?
As set by the Department of Labor and Employment (DOLE), you should receive your 13th month not later than December 24 of every year.
Why should I receive a 13th month pay?
The law dictates that you should get a monetary benefit in a form of 13th month pay not later later than December 24. Presidential Decree No. 851 Section 1 states that:
“All employers are hereby required to pay all their employees receiving a basic salary of not more than P1,000 a month, regardless of the nature of their employment, a 13th month pay not later than December 24 of every year.”
What’s the difference between a 13th month pay and a bonus?
Unlike your 13th month pay, a Christmas bonus isn’t government-mandated. This means that a bonus should come from your company’s generosity. If they decide to give everyone a bonus, then great! But they can also choose not to give you one.
Read more: Here’s How to Compute Your Holiday Pay
Are managers entitled to a 13th month pay?
The 13th month law only covers rank-and-file employees, but it’s the company’s initiative if they want to give this yearly benefit to employees with a managerial position. If you’re a manager, make sure to confirm this with your office’s HR department.
If I resigned/was terminated from my company, am I still entitled?
Yes, resigned or terminated employees will still receive their 13th month pay as long as you worked for your employer or company for at least a month. The computation is still the same and the 13th month pay for resigned employees should be given as part of the back pay.
When is the 13th month pay given to resigned/terminated employees?
A resigned or terminated employee’s 13th month is usually given as part of their back or final pay. This might take a month or two months upon the employee’s resignation date. Make sure to check with your HR department to confirm the release date.
Are government employees entitled to this pay?
Unfortunately, they are not eligible, along with freelancers, contractual workers, household helpers, and employees who are paid solely on commission (real estate brokers, etc). As stated by Presidential Decree No. 851 Section 3, the 13th month pay law should apply to all types of employers except:
(b) The Government and any of its political subdivisions, including government-owned and controlled corporations, except those corporations operating essentially as private subsidiaries of the Government;
(c) Employers already paying their employees 13 month pay or more in a calendar year of its equivalent at the time of this issuance;
(d) Employers of household helpers and persons in the personal service of another in relation to such workers; and
(e) Employers of those who are paid on purely commission, boundary, or task basis, and those who are paid a fixed amount for performing a specific work, irrespective of the time consumed in the performance thereof, except where the workers are paid on piece-rate basis in which case the employer shall be covered by this issuance insofar as such workers are concerned.
Are maternity leaves included in the computation?
No, maternity leaves are excluded from your 13th month computation. For example, if you missed two months from the calendar year as part of your maternity leave, you should only include the months where you were present. Using the same example from earlier, your computation should look like this.
(PHP 20,000 x 10 months) ÷ 12 months = PHP 16,666.67
Go back to the main article: Holidays in the Philippines and Long Weekends Guide for 2021
The 13th month pay rules in the Philippines were set so that the working Filipino class can “properly celebrate Christmas and New Year.” Even so, you should still take this opportunity to save more money instead of splurging all your bonuses during the holidays. Make sure to keep money from this extra pay so you can enjoy your future as well.
-  Presidential Decree No. 851
-  Everything you need to know about 13th month pay (Bilar, 2016)
-  Resigned employee can still get 13th month pay (Acosta, 2014)
Ricky is the zaniest Senior Content Writer at Moneymax, with over five years of writing experience in the digital marketing industry. He is a huge fan of pro wrestling, smartphones, and binge-watching. Follow Ricky on LinkedIn.