13th-month Pay: Computation, Everything You Need To Know

>>> Shared from the Original Post at The Summit Express

MANILA, Philippines – December is almost here, and aside from the Christmas season, employees look forward to the 13th month pay. Aside from the fact that you are receiving this hard-earned financial benefit, how much do you know about your 13th-month pay? Are you getting the right amount based on the law? If you have any questions, this article will help give you the answers. Additionally, we’ll assist you in calculating your 13th month’s pay so you can be sure you’re getting paid fairly.

Learn the basics and computation of your 13th month pay
Learn the basics and computation of your 13th month pay | Photo Courtesy: DOLE/ Canva Pro

Is it mandatory?

According to the Department of Labor and Employment (DOLE), don’t confuse the 13th-month pay with the Christmas bonus. The latter is a non-taxable benefit that employers may or may not give their employees. On the other hand, the 13th month is a mandatory monetary benefit for rank-and-file or non-managerial employees. Employers are required by law under Presidential Decree No. 851 to provide 13th-month pay to their employees.

Is it taxable?

It only becomes taxable if your 13th-month pay exceeds P90,000.

Who are qualified and exempted to receive it?

Only rank-and-file employees and non-managerial employees are qualified under the law. It means those who hold managerial positions aren’t qualified, but it’ll be at the company’s discretion if they wish to also extend the benefit to them.

Exempted are government employees from various agencies, government employees who work part-time for private companies, and employees who work for multiple employers or freelancers. Contractual workers, household helpers, and employees paid solely by project or commission are exempted.

Am I still eligible if I quit my job or was fired from my company?

Yes! Even if you have resigned or been terminated, as long as you have rendered at least 1 month of service within the year, you are still entitled to your 13th-month pay. It is given as part of their back pay or final salary.

When can I expect to receive my 13th-month pay?

By law, eligible employees should receive their 13th-month pay “before, during, or after December 24.” Some employers simply add the full amount to the December 15 salary day. Meanwhile, some divide the amount and pay half in June and the other in December. Such actions are accepted, according to DOLE.

What if my employer fails to pay me for the 13th month’s benefit?

If your employer fails to give you your 13th month pay, you may file for charges or report to the DOLE hotline at 1349.

How do I compute my 13th month pay?

If you worked for a full year, the DOLE states that your 13th month’s pay should equal one month’s basic pay or salary.

If you resigned or were fired, you will be compensated on a prorated basis. This will also apply if you have only worked for a few months or got hired in the middle of the year; as long as you haven’t worked an entire year, you’ll be subject to a prorated 13th month. Your employer will compute a prorated amount based on the months you have worked within the year.

How to compute prorated 13th-month pay?

Computing your prorated 13th-month pay is pretty simple. First, take note of the number of months you have rendered service.

Take your basic monthly salary and multiply it by the number of months you’ve rendered service.

Example: Monthly salary x 5 months you worked. That’s P15,000 x 6 months = P90,000.

Now, divide that total by 12. That’s P90,000 / 12 = P7,500.

P7,500 is your prorated 13th money if you’ve worked for 6 months in a year.

Other details

It is significant to note that your salary deductions, allowances, unused leaves, overtime pay, and night shift differential are not included in the computation of your 13th month’s monthly basic salary.

Remember that 13th-month pay is your right! So, if you have questions or experience violations on your 13th-month pay, inform the DOLE. Call their hotline or visit www.dole.gov.ph or www.bwc.dole.gov.ph for more information.

— Sally, The Summit Express