- Personal Finance
- How to Compute 13th Month Pay (Plus FAQs)
How to Compute 13th Month Pay (Plus FAQs)
Published: October 19, 2021 | Updated: October 24, 2021 | Posted by: Ricky Publico | Personal Finance
Published: October 19, 2021
Updated: October 24, 2021
Posted by: Ricky Publico | 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 bonus and 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, especially how to compute 13th month pay, 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
- 13th Month Pay FAQs
- 1. Is 13th month pay taxable?
- 2. When will I receive my 13th month pay?
- 3. Why should I receive a 13th month pay?
- 4. What’s the difference between a 13th month pay and a bonus?
- 5. Are maternity leaves included in the 13th month pay computation?
- 6. Are managers entitled to a 13th month pay?
- 7. Are government employees entitled to 13th month pay?
- 8. If I resigned/was terminated from my company, am I still entitled?
- 9. When is the 13th month pay given to resigned/terminated employees?
- 10. I’ve never received my 13th month pay. How do I report it?
- 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’s a mandatory benefit provided to employees under 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 pay, regardless of the nature of their employment and how they receive their wages.
How to Compute 13th Month Pay
Basic 13th Month Pay Formula in the Philippines
Monthly Basic Salary x Employment Length ÷ 12 months
If you want to know how calculate your 13th month pay, just multiply your basic monthly salary by the number of months you’ve worked for the entire year, then divide the result by 12 months.
How to Compute Prorated 13th Month Pay
For employees who worked less than 12 months, you’ll 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 = PHP 5,000
Remember that your monthly basic salary doesn’t include allowances or other monetary benefits such as the cash equivalent of your unused leaves, allowances, overtime pay, premium pay, and night shift differential.
Go back to the main article: Holidays in the Philippines and Long Weekends Guide for 2021
13th Month Pay FAQs
1. 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 than the previous tax-exempt rate, which was PHP 82,000.
2. 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.
3. Why should I receive a 13th month pay?
The law dictates that you 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.”
4. 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 your management decides to give everyone a bonus, then great! But your employer can also choose not to give you one.
5. Are maternity leaves included in the 13th month pay computation?
No, maternity leaves are excluded from the 13th month pay computation. For example, if you missed two months from the calendar year as part of your maternity leave, you should include only the months when 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
6. Are managers entitled to a 13th month pay?
The 13th month law covers only 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.
7. Are government employees entitled to 13th month pay?
Government workers are not eligible, along with freelancers, contractual workers, household helpers, and employees who are paid solely on commission (real estate brokers, etc.) under Presidential Decree No. 851 Section 3.
The said law states that the 13th month pay law should apply to all types of employers, except for the following:
(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.
However, this doesn’t mean government employees get nothing during the holiday season. In fact, they receive two types of bonus each year: a mid-year bonus paid around June to July and a year-end bonus (also called 14th month pay and Christmas bonus) paid around November to December.
Each of these bonuses are equivalent to one-month basic salary. Government employees are also entitled to a PHP 5,000 cash gift, which is paid together with their year-end bonus.
Under the Salary Standardization Law (Republic Act 11466), these bonuses are given to regular, contractual, casual, full-time, and part-time employees in the government sector, from the President down to the lowest-paid janitor or clerk.
8. If I resigned/was terminated from my company, am I still entitled?
Yes, resigned and terminated employees should still receive their 13th month pay, as long as they worked for the 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.
9. 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 pay or final pay. This might take a month or two upon the employee’s resignation date. Make sure to check with your HR department to verify the release date.
10. I’ve never received my 13th month pay. How do I report it?
You may call the DOLE 24/7 hotline at 1349. Alternatively, you may fill out the DOLE online query form.
The 13th month pay rules in the Philippines were set so that the working Filipino class can “properly celebrate Christmas and New Year.” Now that you know how to compute your 13th month pay, take this opportunity to plan your expenses and save more money. Try not to splurge and spend it all in one go. As much as possible, keep it so that you still have money to spend in the future.
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