Here’s what you need to know about 13th month pay in the Philippines

Jobstreet content teamupdated on 13 April, 2022
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Everything from its creation to what it entails

It’s the three words every Filipino loves to hear: 13th month pay. Just before December begins to roll in, the chant for the words become a little bit louder, until we finally see it credited to our paycheck. But what is 13th month pay exactly, and how did it come to be?

What is 13th month pay?
13th month pay is a mandatory benefit in accordance to Presidential Decree No. 851. This requires employers to grant the pay to all its rank-and-file employees. It’s different from a “bonus,” which is not required by law. A bonus is simply an amount granted to an employee, depending on his/her employer, as well as his/her performance on the job.

Am I entitled to a 13th month pay?
If you’re a rank-and-file employee, meaning you’re not in a managerial position, and you’ve been working at your company for at least one (1) month during the calendar year, then you’re eligible to receive your 13th month pay! It doesn’t matter if you’re probationary or have been regularized.

Which employers are exempted from granting a 13th month pay?
According to the Decree, a few employers are:

a) 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;

b) Employers who are already paying their employees 13th month pay or more in a calendar year or its equivalent at the time of the issuance of PD 851;

c) Employers of persons in the personal service of another in relation to such workers; and d) Employers of those who are paid on purely commission, boundary, or task basis, and those who are paid a fixed amount for performing specific work, irrespective of the time consumed in the performance thereof, except those workers who are paid on piece-rate basis, in which case the employer shall grant such workers the required 13th month pay.

How is the 13th month pay computed?
According to the Decree, the 13th month pay shouldn’t be less than half of the total basic salary earned by an employee within a calendar year. That means your total basic salary earned for the year divided by 12 months.

Are maternity leave benefits included in the computation of 13th month pay?
No, they are not.

What does “basic salary” mean?
Your basic salary is all your earnings paid your employer for services you’ve rendered. This doesn’t include allowances or monetary benefits.

When should I expected my 13th month pay?
The Decree states that it should be paid not later than December 24 of each year. But it’s possible that your employee gives half of the pay earlier in the year (to prepare for the opening of the academic year) and the other half just before Christmas eve.

I’ve resigned from my company. Am I still entitled to my 13th month pay?
Yes. If you resigned or left before the time for the payment of the 13th month, you’re still entitled to the benefit.

If I’ve resigned or been terminated, how much will my 13th month pay be?
The 13th month pay of a resigned or separated/terminated employee is proportionate to the length of time he/she has worked during the year, either from the time he/she has starting working during the calendar year or the time the last 13th month pay was given, up to the time of his/her resignation or separation/termination from the company.

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For more information about this article, or to schedule an interview with JobStreet.com Philippines, please call Paola Savillo, Marketing Supervisor, at 286-6222.

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