Understanding the 13th month pay in the Philippines is essential for every employee and employer. This required benefit ensures fair compensation during the holiday season. This guide explains how to calculate it, who qualifies, exemptions, and payment deadlines.
What is the 13th Month Pay?
The 13th month pay is equal to one-twelfth (1/12) of an employee’s basic annual salary. It applies to all rank-and-file employees who have worked at least one month in a calendar year, regardless of employment status.
Presidential Decree No. 851 requires it.
For official information, visit the Department of Labor and Employment (DOLE).
How to Calculate the 13th Month Pay
Formula:
13th Month Pay = Total Basic Salary Earned for the Year ÷ 12
Example 1 – Full Year Work
- Monthly Basic Salary = ₱20,000
- Worked for 12 months
- Total Basic Salary = ₱240,000
13th Month Pay = ₱240,000 ÷ 12 = ₱20,000
Example 2 – 6 Months Work
- Monthly Basic Salary = ₱20,000
- Worked for 6 months
- Total Basic Salary = ₱120,000
13th Month Pay = ₱120,000 ÷ 12 = ₱10,000
For example, if you worked only part of the year, your 13th month benefit is calculated proportionally.
Who Can Receive the 13th Month Pay?
All rank-and-file employees who worked for at least one month can receive this year-end bonus. This includes:
- Probationary, contractual, or part-time employees
- Employees who resigned or were terminated after working at least one month
Additionally, all eligible employees receive a pro-rated amount if they worked less than a full year.
Who Are Exempted?
Some employers are not required to provide the 13th month benefit:
- Government agencies
- Employers already providing bonuses equal to 1/12 of salary
- Households employing domestic helpers
- Employers of persons in personal service (e.g., private drivers not covered by RA 10361)
Payment Deadline
Employers must release the 13th month pay on or before December 24 of each year.
Therefore, it is important to check your payslip before the holidays.
Frequently Asked Questions (FAQ)
1. Is overtime included in 13th month pay?
No. Only the basic salary counts. Overtime, night differential, holiday pay, and allowances are excluded.
2. Is 13th month pay taxable?
Yes, but only if it exceeds ₱90,000 per year. Amounts below this threshold are tax-free under the TRAIN Law.
3. Do resigned employees get 13th month pay?
Yes. Resigned or terminated employees who worked at least one month can still receive a pro-rated 13th month pay.
4. What about maternity or sick leave?
Only actual salary earned is counted. Periods without salary are excluded.
For tax rules, see the BIR website.
Why 13th Month Pay Calculation Matters
Knowing how to calculate your 13th month pay protects your rights and ensures you receive the correct amount. Additionally, it helps with holiday budgeting and verifying your payslip.
You can also try our Suweldo Calculator to compute your 13th month pay and net salary online.
References
- DOLE – 13th Month Pay Guidelines
- BIR – TRAIN Law on Tax Exemptions