13th Month Pay: Who Gets It and How Much

Who Gets It

Every private-sector worker who is not a manager gets 13th month pay, whatever their salary, as long as they worked at least one month in the calendar year. The law calls these workers rank-and-file employees. This comes from PD 851 and its revised implementing guidelines (the rules DOLE wrote to carry out the law). DOLE's guidelines say it covers workers whatever their job title or type of contract, including:

• regular, probationary, contractual, project and seasonal employees;
• employees paid by piece rate (per piece of work done), and those paid a fixed wage plus commission;
• employees who resigned or were dismissed before the payment date;
• employees on maternity leave who received a salary differential; and
• employees with more than one employer, who get it from each.

Kasambahay (domestic workers) also get 13th month pay under the Kasambahay Law, Republic Act No. 10361 (RA 10361).

Managerial employees are not covered by PD 851, though many companies give them a 13th month pay by policy or contract. Government employees get a year-end bonus under separate rules.

How to Work Out the Amount

The smallest 13th month pay allowed is:

Total basic salary earned from January to December ÷ 12

Basic salary means what you were paid for work done. It does not include, unless your contract, company policy or practice treats them as part of basic salary:

• overtime pay, premium pay (extra pay for rest days and special days) and night shift differential (extra pay for night work);
• holiday pay;
• the cash equivalent of unused vacation and sick leave; and
• cost-of-living allowances and other allowances not part of basic pay.

Days you were absent without pay are not counted, since you did not earn pay for them. Paid leave you actually used is part of the salary you earned.

Example. You earned a basic salary of ₱18,000 a month from January to December: ₱18,000 × 12 = ₱216,000. Divided by 12, your 13th month pay is at least ₱18,000.

Piece-rate workers: total production earnings for the year ÷ 12. Fixed wage plus commission: total of the fixed wage and commissions ÷ 12.

Try the 13th month pay calculator.

When It Must Be Paid

• On or before 24 December of each year.
• The employer may pay half before the school year opens and the other half on or before 24 December, or in other installments, as long as the full amount is paid by 24 December.
• DOLE's yearly notices say it does not accept requests to skip the payment or pay it late.
• Employers file a report with DOLE showing they paid, through its online reporting system early the following year.

If You Resigned or Were Dismissed

You get a pro-rated 13th month pay, meaning a share for the time you worked in the year: your total basic salary from January to your last day, divided by 12. It is usually paid with your final pay. DOLE asks employers to release final pay within 30 days from your last day, unless a better company policy or agreement applies. See final pay.

Example. You resigned at the end of May, with a basic salary of ₱20,000 a month: ₱20,000 × 5 = ₱100,000. Divided by 12, your pro-rated 13th month pay is ₱8,333.33.

Exempt Employers

Under PD 851's revised guidelines, the law does not apply to:

• the government and its local governments, including government-owned and controlled corporations, except those that run basically as private businesses;
• employers already paying a 13th month pay or more in a calendar year, or its equivalent (a year-end bonus of at least one month's basic salary counts); and
• employers of people paid purely by commission, "boundary" (like jeepney drivers who keep what they earn above a fixed daily amount) or by task, and those paid a fixed amount for a specific task however long it takes. Piece-rate workers are still covered.

A Christmas bonus that is less than one month's basic salary does not replace the 13th month pay. The employer must make up the difference.

Tax and What to Do If You Are Not Paid

Under the Tax Code as amended by the TRAIN law, Republic Act No. 10963 (RA 10963), the 13th month pay and other benefits (such as a Christmas bonus and productivity incentives) are free of income tax up to ₱90,000 in total per year. Only the amount above that is taxed.

If your employer does not pay, raise it with HR first, in writing. If that fails, file a request for assistance with DOLE under the Single Entry Approach (SEnA), where DOLE helps you and your employer settle it. Claims for unpaid money must be filed within three years from when the money was due. See labor complaints.