How to compute the 13th Month Pay in the Philippines? For business owners who utilize the help of employees to run their business, assuring that adequate benefits are given to their people is vital in maintaining a motivated and productive work force. Thus, every employer should know the correct and lawful amounts of benefits they should give to their employees. These mandated monetary employee benefits, which are covered by the Philippine Labor Code, include overtime pay, separation pay and 13th month pay. Let’s start on the discussion of computing the 13th month pay.
Computation of 13th Month Pay
According to Section 2(a) of PD No. 851 known as the 13th Month Pay Law issued by former president Ferdinand E. Marcos on December 16, 1975:
“Thirteenth-month pay” shall mean one twelfth (1/12) of the basic salary of an employee within a calendar year.”
The basic salary according to the Revised Guidelines on the Implementation of the 13th Month Law issued on November 16, 1987 by then Labor Secretary Franklin Drilon is described as follows:
“The “basic salary” of an employee for the purpose of computing the 13th month pay shall include all remunerations or earning paid by this employer for services rendered but does not include allowances and monetary benefits which are not considered or integrated as part of the regular or basic salary, such as the cash equivalent of unused vacation and sick leave credits, overtime, premium, nigh differential and holiday pay, and cost-of-living allowances. However these salary-related benefits should be included as part of the basic salary in the computation of the 13th month pay if by individual r collective agreement, company practice or policy, the same are treated as part of the basic salary of the employees.”
Thus, we can conclude that 13th month pay is computed as:
13monthpay = total basic salary within the calendar year / 12
Employees who are entitled to 13th Month Pay
According to the Memorandum Order No. 28 issued by former President Corazon C. Aquino on August 13, 1986, which has modified Section 1 of PD No. 85:
“All employers are hereby required to pay all their rank-and-file employees a 13th month pay not later than December 24 of every year.”
“All rank and file employees are entitled to a 13th month pay regardless of the amount of basic salary that they receive in a month if their employers are not otherwise exempted from the application of P.D. No. 851. Such employees are entitled to the benefit regardless of their designation or employment status, and irrespective of the method by which their wages are paid, provided that they have worked for at least one (1) month during a calendar year.”
Definition of Rank-and-file employees
According to the Labor code, all employees not falling within the definition of a managerial employee are considered rank-and-file employees. A managerial employee is one who is vested with powers of 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.
13th Month due to resigned and separated employees
Based on the Labor code, an employee who has resigned or whose services were terminated at any time before the time for payment of the 13th month pay is entitled to this monetary benefit in proportion to the length of time he worked during the year, reckoned from the time he started working during the calendar year up to the time of his resignation or termination from the service. Thus, if an employee, who receives P10,000 basic salary per month, resigns at the end of September and has earned a total basic salary amounted to P90,000 (P10,000 x 9) for that period during the calendar year, his proportionate 13th month pay should be equivalent to 1/12 of P90,000 or P7,500.
The payment of the 13th month pay may be demanded by the employee upon the cessation of employer-employee relationship. This is consistent with the principle of equity that as the employer can require the employee to clear himself of all liabilities and property accountability, so can the employee demand the payment of all benefits due him upon the termination of the relationship.
Is 13th Month Pay taxable?
According to the Bureau of Internal Revenue (BIR), Thirteenth month pay and other benefits amounting to P 30,000 and below are not subject to income tax. This means, if you receive P 50,000, the P20,000 excess is already taxable.
Employers who are not covered by the 13th month pay law
The following employers are still not covered by P.D. No. 851:
a. The Government and any of its political subdivisions, including government-owned and controlled corporations, excepts those corporations operating essentially as private subsidiaries of the Government;
b. Employers already paying their employees a 13th month pay or more in a calendar year or its equivalent at the time of this issuance;
c. Employers of household helpers and 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 where the workers are paid on piece-rate basis in which case the employer shall grant the required 13th month pay to such workers.
As used herein, workers paid on piece-rate basis shall refer to those who are paid a standard amount for every piece or unit of work produced that is more or less regularly replicated, without regard to the time spent in producing the same.
The term “its equivalent” as used on paragraph (b) hereof shall include Christmas bonus, mid-year bonus, cash bonuses and other payments amounting to not less than 1/12 of the basic salary but shall not include cash and stock dividends, cost of living allowances and all other allowances regularly enjoyed by the employee, as well as non-monetary benefits. Where an employer pays less than required 1/12th of the employees basic salary, the employer shall pay the difference.
When should employers give the 13th Month Pay to their employees?
The required 13th month pay shall be paid not later than December 24 of each year. An employer, however, may give to his employees one half (½) of the required 13th month pay before the opening of the regular school year and the other half on before the 24th of December of every year. The frequency of payment of this monetary benefit may be the subject of agreement between the employer and the recognized/collective bargaining agent of the employees.
Our responsibility
To protect the Filipino workers, the 13th Month Pay Law was created. Though, business owners and employers should not just take this law as mandatory. They should also consider it as an obligation that should always be observed by responsible business leaders. Besides, the employees, who help a business grow and help earn its daily success, deserve not just 13th Month Pay, but all the monetary and nonmonetary benefits they need to be happy, motivated and productive.
For employees, it’s your responsibility to know and exercise your rights. However, workers should not just focus on the monetary benefits they can get in doing their jobs to their companies, but they should also pay attention to the quality of their services. It must be noted that employees and employers share the same organization and even share the same roof. Thus, everyone should see to it that “everyone” is happy.
Note:
Please check and inquire with the Department of Labor and Employment (DOLE) for more information.
Disclaimer: New and subsequent issuances, rulings, or laws may cause the whole or part of the article inaccurate or obsolete. It is advised to make inquiries with the Department of Labor and Employment for more information.
Victorino Q. Abrugar is a marketing strategist and business consultant from Tacloban City, Philippines. Vic has been in the online marketing industry for more than 7 years, practicing problogging, web development, content marketing, SEO, social media marketing, and consulting.
I like the way you explain it in layman’s term. Thanks for making it easier to understand. By the way, are part time workers like tutors can still demand 13th month pay? The paying condition is 50-50 and it doesn’t have fixed schedule on tutorials.Please enlighten me. Thank you.
hi,
i just want to clarify regarding the computation of 13th month is there a cut off for instance the computation should only be this coming november for example i started working to our company this february 2012 and still here but the cut off for computation is from feb. to november only so if my salary is 15,000 x 10 / 12 is this right computation. Please help me.
thanks & best regards
15,000/12 then multiply to 10 (month rendered) = 12500 should be ur 13th month pay
well explained….
Hi,
What if I was getting 15k from January to March then 18k from April to July then 30k from August to December. How will I compute for my 13th month pay? I am really confused with how this is computed. Also, this will be based on your salary right? And not actual amount they paid you every month right?
Thank you.
Regards,
gim
jan-March 3750
April-July 6000
Aug-Dec 12,500
22,250 ur 13th month.
(Rate /12 = x month rendered)
I would like to know how the tax for 13th month pay is computed.
Lets say an employee recieves 50,000 a month and has complete work hours in the entire year.
Taxable for 13th month is now then 20,000.
Given an employee with ME 3 status (Married with 3 dependents).
What would be the total tax deducted from the 13th month?
Is there a fixed percentage that is deducted from 20,000?
Please provide information regarding this.
Thanks.
same here, Im not sure how they compute the tax on that taxable 13th month. What I do know is how to compute the semi-monthly salary e.g. 50k -25k(m3 exemption) – sss and other dedcutions *.32 + 5,208. But if taxable 13th is lets say 10k, should i still follow the computation above? kindly advise
how to compute 13th month of shifting schedule??? and for those who have double sked in one day for example i have an schedule is from 7am-2pm then 2pm-11pm same day…
May i know if i am exempted to pay 13th month pay to my staff since they are rated by per day to perform such task even they are working only for less than 4 hours during the task and they are still paid in 8 hours.
Do i need to give 13th month pay to my workers since they are working with me in a contract basis ,meaning pakyawan..
saloon workers are also entitled a 13th pay does the saloon owner is oblige to give them a 13th month pay?
Sir,
I would like to as this, can i claimed tax exemption with one dependent as single mom.
Hi Sir, No fixed amount of monthly salary. Minimum salary wages rate for a per day project + per piece rate project, no work no pay! How can i compute my 13 month? Thanks and God bless!
Good afternoon.. my salary is 7000 per month..
I just want to ask if
how much is my 13th month?
Sir Hello, help me. my employer did not gave me 13th month pay due that my item (appointement) was on last July 23, 2015. I did not suffice daw the requirements (months) in giving 13 months pay.
Does they are correct sir?
Tnx
Hi,
My rate before last January 2014 per month is 12,000. Now I was increased to 15,000 per month started january 2015. How will I compute my 13month? So my total length of stay in our company is almost 2 years. Thanks.
what if ? 14300k mothly basic salary and she started her work Feb.24, 2015 then resigned last sept. 1, 2015, how much her salary? thank you sir
good day.poh.ma’am @ sir
I want to.asking.may right 13th month pay f may salary.monthly is
11,600 mothly How much my 13th month pay right given to.me I need ur help ma’am and sir please god bless
hello sir,
is it legal to deduct one year’s absences and tardiness from the 13th month pay? thanks.
Good eve mam/sir,
Tanung lang po sana. My salary is per day. Minsan my work ako s sunday. Bali s loob ng isang buwan my 2 sundays po ako magpsok evry month. Now i asking, kasali ba yan sa computation ng 13th month. Please help.. thank you
Good Day!
I just want to ask if our company is required to pay those employee who end their contracts (5months) on Dec. 13 (which is before Dec. 24). Our company requires those end of contract to wait for at least 30days to verify if they still have any accountability. Are we reuired to pay their 13th month before Dec. 24 of that year even if 30 days are not yet finished or it has some connections with the above mentioned statement :
“The payment of the 13th month pay may be demanded by the employee upon the cessation of employer-employee relationship. This is consistent with the principle of equity that as the employer can require the employee to clear himself of all liabilities and property accountability, so can the employee demand the payment of all benefits due him upon the termination of the relationship.”
Thank you.
God bless!
Good day! I Just want to ask if I’ll receive a 13th month pay even if i only worked for 2 months? or any bonus/es besides my salary ? Thanksss
How to compute my 13th month pay If I started working on March 10, 2016 and resigned September 15, 2016? Thank you.
Hi! I’m currently employed at a private company, I’m just wondering the way how they compute 13th month pay.I’m saying this because in my previous employer they compute 13th month pay based on Basic Gross pay, but in my current employer computed it based on basic salary wherein (basic pay-Php 9,074.00, temporary allow.-Php 1,500.00) less lates and absences. The basis of computation is only on Php9,074.00 but actually the temporary allow is also part of our basic pay, then they will less the equivalent amount of employees’ late. Is it accordingly to the Labor Code/DOLE the way they computed 13th month pay? Hope you will help me on this matter..Thanks.
Tanong ko lang po sana., ako po at isang private caregiver at 3years na po ako dito sa amo ko,. Sa 3years ko po dito hindi ako binigyan ng 13the month pay., pwede ko pa po bang makuha any 13the month last 2years?., pag hindi po ibibigay ng amo ko yung 13the month na 2years,. Ano po ang gagawin ko,. Thank you po
sorri dun sa explanation ng 13 month dko masyado naintindihan,pero eto lang ang pagkaintindi ko,ang 13 month ,magbabayad ng 1 month salary ang employeer, then minus ang absenses, my small business kasi ako,tatlo lang ang tao ko,ganito ginawa ko sa pagbigay ng 13th month,binawas ko ang absent nila,halimbawa 10 days absent, din ang 30 days na 13month binawasan ko ng 10 days, sorri egnorante talaga ako dito,tama ba etong computation ko na ganito,pls sir mam i need your assestance,thank you more power
sir mam i need your reply regarding my question
Hi, What is the basis in computing for the 13th month pay? Is it the taxable income? We have workers whose rates are P800 per day. But the taxable income we declared (and as agreed with them) is on P600 per day. The balance P200 per day, we put it as allowance.
Is the 13th month pay based on the P600 per day or the P800 per day rate.
Thank and regards.
Hi sir, good day! what if an employee has been on a personal leave without pay for a month? Would that still be included on the number of months rendered? Thank you for your reply.
Hello, basically the 13th Month Pay is based on the total basic salary worked or earned by the employee within the Calendar day. Hence, if you only worked and earned for 11 months, then that would also be basis of the computation, unless you have a special agreement with your employer.
I’ve worked in a company from March 31st to July 15th of the same calendar year, am I still entitled to a 13th month pay? My basic salary was 12K for a month. thank you for answering my question
Hello, generally yes if you’re a rank and file employee and your employer is not exempted, since you worked for at least one (1) month during a calendar year. You 13th month pay will be proportionate to the period you worked for the year.
Hi, what if I got some lates and absents without pay, it will be deducted on the total basic salary then divide to the 12 months for 13th month pay?
Hello. Your employer will compute your 13th month pay based on your remunerations or earning paid for services you rendered for the calendar year. Thus, your absencens without pay can affect the computation of your 13th month pay.
Hi mam/sir, im in a commision basis employer do i obligue to give 13 th month pay for my 3 employees?
Hello, do you have an employment contract with them? Do you have an employee and employer relationship? Or are they just working with you as freelancers/professional? If you have an employer and employee relationship, then you might be obliged to give them 13th month pay.
Hi!
Just want to know if you rest day worked rendered includes on the computation of 13th month pay?
Hi Dindin, as stated in the article, the 13th month pay is computed based on the basic salary paid to the employee within the calendar year. Overtime, premium, nigh differential, holiday pay and other remunerations which are not considered or integrated as part of the regular or basic salary are not included in the computation, unless it is part of the collective agreement, a company practice or policy, or the same are treated as part of the basic salary of the employees by the employer.
Hi,
This year I was getting 38k from January to July then, 45k from August to November. How will I know if my employer is computing the right 13th month, if my employer releases our 13th month every 8th of December. On December 20, I have my annual merit increase how will this affect the computation of my 13th month if I follow DOLE guidelines. Do appreciate your help?
Hi Sir/Ma’am,
I have a small business in the Philippines and my niece was the one managing while I‘m here in Germany. Her job is to manage the incomes. Pay bills and taxes, pero Hindi siya talaga ang nag run errand ipasa niya sa caretaker ko. Meaning she‘s not working 8 hrs. a day 6 days a week. 3 yrs. and 2 months siyang nag serbesyo sa akin. Moreover, siya ang ni quit (due to dishonesty) Now she’s asking me to pay her separation pay and 13th. month pay. Am I obliged to pay her ?
Many thanks in advance for your reply….