Every December, Filipino employees look forward to something more than holiday breaks: the 13th-month pay. For many, it’s a significant financial boost that helps cover year-end expenses and meet savings goals, and more importantly, purchase gifts for relatives and friends. Beyond the Filipino tradition, every rank-and-file employee in the Philippines has a legal right to this compensation.

Under Presidential Decree No. 851, all employers must grant 13th-month pay to their rank-and-file employees by December 24 each year. Understanding how employers compute this benefit and who qualifies ensures that every worker receives the benefit they earn through a year of hard work.

What Is 13th-Month Pay?

In the Philippines, employers must provide the 13th-month pay, a mandatory benefit entitled to all rank-and-file employees. This amount equals one-twelfth (1/12) of an employee’s total basic salary earned within a calendar year.

This is not the same as a Christmas bonus, which is typically optional and given at the employer’s discretion. The law guarantees the 13th-month pay as part of fair compensation practices in the country.

Only an employee’s basic salary factors into the computation. Other forms of pay, such as overtime, allowances, and incentives, are excluded.

Who Is Entitled to Receive 13th-Month Pay?

All rank-and-file employees are entitled to this benefit, regardless of their employment type, whether they are paid monthly, weekly, or daily.

To qualify, an employee must have worked for at least one month during the calendar year. Employees who resign or are terminated receive a prorated amount based on their total months of service.

Managerial employees may also receive it if their company policy allows it, but it’s not required under the law.

How to Compute Your 13th-Month Pay

The computation is straightforward:

13th-Month Pay = Total Basic Salary Earned ÷ 12

Here’s how it works in real-life scenarios:

Example 1 – Full-Year Employee

If your monthly basic salary is ₱20,000 and you worked the entire year:
₱20,000 × 12 months = ₱240,000
₱240,000 ÷ 12 = ₱20,000 (13th-month pay)

Example 2 – Resigned Midyear

If you earned ₱120,000 in total over six months:
₱120,000 ÷ 12 = ₱10,000 (pro-rata 13th-month pay)

For additional accuracy, you can check your computation using the Department of Labor and Employment National Wages and Productivity Commission’s BWC Handbook – Workers’ Statutory Monetary Benefits, specifically pages 40 to 44.

When Should It Be Given?

The law mandates that employers release 13th-month pay on or before December 24 of each year. However, many companies opt to pay it in two installments, with half due around June or mid-year and the remainder due in December.

How Taxes Apply to 13th-Month Pay

Under the Tax Reform for Acceleration and Inclusion (TRAIN) Law, a Philippine legislation enacted in 2017 for the country’s tax system reform, the 13th-month pay, along with other bonuses, is tax-free up to ₱90,000.

If the total amount (including bonuses and incentives) exceeds ₱90,000, the excess becomes taxable. For most employees, this means their 13th-month pay will be received in full, without deductions.

Employers should issue clear payslips showing the gross amount, any deductions, and the net amount received to promote transparency.

Frequently Asked Questions (FAQs)

Do part-time employees get 13th-month pay?

Part-time employees get 13th-month pay as long as they are considered rank-and-file and have worked at least one month within the calendar year. The law does not distinguish between full-time and part-time employment for this benefit.

Are freelancers and project-based workers entitled to 13th-month pay?

Freelancers and project-based workers are entitled to 13th-month pay only if their contracts specifically include a clause granting it. If they do not meet the requirements, the provisions of Presidential Decree No. 851 do not automatically cover them.

What about resigned or terminated employees? Are they still entitled to 13th-month pay?

Resigned or terminated employees are entitled to 13th-month pay on a pro-rata basis, meaning they will receive an amount corresponding to the total months they have worked during the calendar year.

Is the 13th-month pay the same as a Christmas bonus?

The 13th-month pay is not the same as a Christmas bonus. The law requires employers to provide the 13th-month pay as a mandatory benefit, while they voluntarily offer a Christmas bonus at their discretion.

What should I do if my employer fails to give 13th-month pay?

If your employer fails to give 13th-month pay, you should report the non-compliance to the Department of Labor and Employment (DOLE) through your nearest regional office. DOLE can conduct inspections or mediation to ensure employees receive their rightful benefits.

Why 13th-Month Pay Matters Beyond the Holidays

For many Filipino employees, the 13th-month pay is a recognition of their efforts and loyalty. It encourages better financial planning and helps offset rising living costs, while also keeping the government’s commitment to fair labor practices.

The pay is a reflection of how deeply Filipino labor culture values a balance between rewarding hard work and supporting workers’ financial well-being. For employers, timely and accurate compliance fosters trust and enhances retention, thereby reinforcing their reputation as responsible organizations.

Final Thoughts

The 13th-month pay stands as one of the most important rights of Filipino workers. As a celebration of productivity and partnership between employees and employers, the pay becomes more than just a legal obligation.

As the year ends, take time to understand how you compute your 13th-month pay so you can verify your payslip and make the most of this well-earned benefit.

Would you like to verify if your 13th-month pay is calculated correctly? Try out Sweldong Pinoy’s Thirteenth Month Calculator to easily compute your compensation and ensure you’re receiving what you deserve.

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