13th Month Pay in the Philippines: Computation and Other Questions Answered

Published: October 29, 2019 | Updated: March 17, 2020 | Posted by: Ricky Publico | Personal Finance

13th Month Pay Philippines: A Guide for Filipino Employees | Moneymax

This article was originally published on November 29, 2018 and was updated on October 29, 2019.

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.

Indeed, you should expect a lot of cash flow going straight to your bank account, courtesy of your 13th month pay. 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.

13th Month Pay in the Philippines

Why am I receiving a 13th month pay?

The law dictates that you should receive a monetary benefit before every year ends. All rank-and-file employees who have worked for at least one month in a company are eligible to receive their 13th month pay. Presidential Decree No. 851 (1) 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 (2).

When should I receive it?

As set by the Department of Labor and Employment (DOLE), you should receive your 13th month pay not later than December 24 of every year.

Is my 13th month pay taxable?

Yes, it is taxable, but only if it exceeds PHP 90,000. This amount is relatively higher as compared to last year’s tax exclusion rate which is PHP 82,000, courtesy of the TRAIN Law.

13th Month Pay Philippines: A Guide for Filipino Employees - Saving 13th Month Pay

How do I compute my 13th-month pay?

It’s actually simpler than you think. You can compute your 13th-month pay by multiplying your basic monthly salary to the number of months you have worked for the entire year, then dividing the result to 12 months. Here is the usual 13th-month pay computation in the Philippines.

Monthly Basic Salary x Employment Length ÷ 12 months

For example, if your basic monthly salary is PHP 20,000 and you started working for your company last September, your 13th-month pay 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.

Read more: Simple Investments to Make the Most of Your 13th Month Pay

Are managers eligible for a 13th month pay?

The 13th month pay 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 from my company, am I still eligible?

Yes, you will still receive your 13th month pay (3) 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.

Read more: Back Pay and Other Benefits You May Receive Upon Resignation

Are government employees eligible?

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.

Read more: Government-Mandated Employee Benefits in the Philippines

Are my maternity leaves included in the computation?

No, maternity leaves are excluded from your 13th month pay 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

Final Thoughts

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. You can have a great Christmas and still have enough money to enjoy the future.

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