How to Compute 13th Month Pay: Detailed Guide

For employees, when “ber” months are approaching, you know what’s coming – 13th-month pay. But the question is, do you know how much you’re getting? Here’s how to compute 13th month pay.

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How to Compute 13th Month Pay

To compute your 13th month pay, simply take your total basic salary for the year and divide it by 12. This will give you the amount that you’ll receive as your 13th month pay.

For example, if an employee has a basic salary of PHP 30,000 per month, their total basic salary for the year would be PHP 360,000 (PHP 30,000 x 12 months). Dividing this by 12 would give you a 13th month pay of PHP 30,000.

Take note: Allowances (rice allowance, transportation allowance, optical allowance, etc) and monetary benefits (commissions, overtime, sick leave, holiday pay) are NOT part of the basic pay computation.

What is the 13th Month Pay?

The 13th Month’s Pay is a mandatory benefit for all employees in the Philippines. It is equivalent to one-twelfth (1/12) of the employee’s total basic annual salary. The 13th-month pay must be paid on or before December 24 of each year as specified in the Labor Code of the Department of Labor and Employment (DOLE).

Is 13th Month Pay mandatory for employers?

It is important to note that the 13th month pay is a mandatory benefit, and as such, all employers must comply with the law and ensure that their employees receive this benefit. Employers who fail to do so may be subject to penalties under the law.

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Who are Qualified for the 13th Month Pay?

All rank-and-file employees are qualified to receive the 13th-month pay, regardless of how long they have been with the company or how much they earn. This benefit is mandated by law and cannot be waived by any employee, regardless of position.

Exemptions to the 13-Month Pay Law

There are some exemptions to the 13-month pay law. The following employees are not entitled to a 13th-month pay:

  • those who are already receiving more than PHP 30,000 per month in basic salary
  • those who are working on a commission basis
  • those who are working on a project basis (with a specific duration)
  • those who are employed for a period of less than one month
  • those whose employment is terminated before the end of the year
  • those who are considered casual employees

In addition, the 13th-month pay is not required to be given to managerial and supervisory employees, as they are already receiving a higher basic salary than rank-and-file employees. However, some companies still give their managerial and supervisory employees a 13th-month pay as a gesture of goodwill.

Employees who are already receiving more than PHP 30,000 per month in basic salary are not entitled to a 13th month pay. This includes executive and managerial employees, as well as those who are paid on a commission basis. The same goes for those who are employed for a period of less than one month or whose employment is terminated before the end of the year.

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Casual employees are also not entitled to a 13th-month pay, as they are not considered regular employees. Regular employees are those who have an ongoing and indefinite employment contract, while casual employees are those who are hired for a specific project or task with a definite end date.

Managerial and supervisory employees are not required to be given a 13th-month pay, as they already receive a higher basic salary than rank-and-file employees. However, some companies still give their managerial and supervisory employees a 13th-month pay as a gesture of goodwill.

Frequently Asked Questions

  • Do I need to give my employees a 13th-month pay if I’m already giving them bonuses?

    It’s important to note that the 13th-month pay and bonuses are two different things.

    Bonuses are given at the discretion of the employer and are not mandated by law. On the other hand, the 13th month pay is a mandatory benefit that all employees are entitled to receive.

  • Can I deduct my employee’s 13th month pay if they resign before December?

    No, you cannot deduct an employee’s 13th month pay if they resign before December. The 13th month pay is a mandatory benefit, and as such, it must be paid in full regardless of when the employee resigns.

  • What happens if I don’t give my employees a 13th month pay?

    If you don’t give your employees a 13th-month pay, you may be subject to penalties under the law. In addition, your employees may file a complaint with the Department of Labor, which could result in an investigation and fines.

  • How do I compute my employee’s 13th month pay?

    The easiest way to compute your employee’s 13th-month pay is to determine your monthly basic pay. Your basic pay excludes bonuses and allowances, if any, hence not part of your 13th month pay.

  • What is the deadline for giving my employees their 13th month pay?

    The deadline is December 24 of each year.

Final Thoughts

The 13th-month pay is a mandatory benefit all employees are entitled to receive in the Philippines. Some people use their 13th-month pay for a vacation, while others use it to pay for their debts. Whatever the case, spend your extra money wisely!

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