6 Things You Need to Know About Your 13th-Month Pay

13th-Month Pay

Christmas season is one of the most awaited time in the Philippines. Aside from hearing the voice of Jose Mari Chan, most Filipinos are looking forward to their 13th-month pay. You can’t blame them because this is the time of the year where Filipinos share their blessings as well as reward themselves for all their hard work. Speaking of which, why not reward yourself with a brand-new car? Carmudi Philippines has several car promos to make your car buying more convenient. However, before you get into that, here are six things you need to know about your 13th month pay.

  1. What is the 13th-month pay?

The 13th-month pay is a form of monetary benefit given to every employee. According to the provisions of Presidential Decree No. 851, employers in the private sector have to pay their rank-and-file employees a 13th-month pay. To put things in perspective, the 13th-month pay means one twelfth (1/12) of the basic salary of an employee within a calendar year.

  1. What is the coverage of the 13th-month pay?

It covers the basic salary of an employee. This means that the 13th-month pay does not include allowances such as unused vacation and sick leave credits, and monetary benefits which are not considered, or integrated as part of the regular or basic salary of the employee. In simpler terms, the 13th-month pay is only based on your basic salary–let’s not complicate things.

  1. How to compute your 13th-month pay?

With that in mind, the 13th–month pay is computed based on 1/12 of the total basic salary of an employee within a calendar year. In other words, the 13th-month pay is computed based on your basic monthly salary for the the whole year and it will be divided by 12 months. To make it even simpler, it’s the equivalent of a month’s pay for employees who have been with the company for a year. If you’ve just joined the company that year, it will be prorated based on the number of months you’ve been with the company.

  1. Who’s entitled to receive a 13th-month pay?

A hardworking employee like you is entitled to a 13th-month pay provided that you’ve worked for the company for at least one month during the calendar year. The 13th-month pay is tax free as stated in the Republic Act 10653. Yes, that money is all yours and is not subject to tax provided that your gross salary does not exceed PHP82,000. So, don’t leave your company just yet in search for greener pasture—hang in there and think about your 13th-month pay.

  1. When should you receive your 13th-month pay?

The 13th-month pay should be given to employees on or before December 24 of each year. On the other hand, an employer may give one-half of the thirteenth-month pay before the opening of the regular school year and the remaining half on or before December 24 of every year. Moreover, every employer is required to make a report of compliance to the nearest Department of Labor and Employment (DOLE) office not later than January 15 of each year.

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

In case you’re wondering, the 13th-month pay is different from a Christmas bonus. The latter is not required by the law and the employer is the one who decides if its employees will receive a Christmas bonus. A Christmas bonus may come in cash but it may also be in a form of gift certificates, food packages, among others.

With all those things in mind, the bottomline is every employee is entitled to receive a 13th-month pay. Employers should make sure that their employees receive such payment on or before December 24. As a whole, the 13th-month pay is something most Filipinos look forward to other than hearing Jose Mari Chan’s Christmas carols. Why? Well, we Pinoys love to share our blessings and make ourselves and other people happy.