13th Month Pay: What You Need to Know

The weeks leading up to Christmas are among the most anticipated in most offices in the Philippines, as these are the days when employers are releasing their employees’ 13th month pay and other bonuses. However, not every employee is eligible for the 13th month pay, so here’s what you need to know about this government-mandated benefit.

What is 13th month pay?

According to the Official Gazette, the official journal of the Republic of the Philippines, 13th month pay is “a form of monetary benefit equivalent to the monthly basic compensation received by an employee, computed pro-rata according to the number of months within a year that the employee has rendered service to the employer.”

All employers are mandated by law to pay their rank-and-file employees – regardless of the nature of their employment – this government benefit, provided that they have worked for at least a month during the year in question. The amount to be paid is one whole month’s basic pay of the employee; if the employee worked for less than 12 months, then the basic salary is divided into 12, and the result multiplied by how many months the employee worked with the company. The basic salary is not inclusive of allowances and other payments such as night differential and overtime pay, although it does include cost-of-living allowances.

The 13th month pay should be given to employees not later than December 24 of each year; however, some employers opt to pay half of the benefit earlier, such as before the opening of a school year, and the other half during the Christmas season, so that the additional funds to be received by employees can be put towards more pressing issues, such as Christmas preparations, tuition fees, and so on.

Not all employees are entitled to the 13th month pay. According to the Official Gazette, “Only rank-and-file employees are entitled to 13th month pay. The Labor Code distinguishes a rank-and-file employee from a managerial employee. A managerial employee is one who is vested with powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay off, recall, discharge, assign, or discipline employees, or to effectively recommend such managerial actions. All employees not falling within this definition are considered rank-and file employees.” Thankfully, most of the employers in the Philippines provide 13th month pay incentives to employees across the board, regardless of their position or standing.

All these and more are important points when it comes to the 13th month pay. If you wish to know more about the 13th month payments, please contact our certified payroll geniuses at genius@philpay.ph

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