How to Compute 13th-Month Pay: A Must-Read for Every Filipino Employee

How to Compute 13th Month Pay

Introduction

December, with its festive spirit and holiday cheers, also brings the much-anticipated 13th-month pay for employees in the Philippines. As the month edges closer, it’s beneficial for both employers and employees to understand how to compute this mandatory bonus. Here’s a straightforward guide on how to compute 13th-month pay with ease.

What is the 13th Month Pay?

The 13th-month pay is a form of monetary benefit that’s mandated by Presidential Decree No. 851. It is equivalent to one-twelfth of the basic salary of an employee earned within a calendar year.

Who are eligible?

All rank-and-file employees, regardless of their employment status (whether contractual, regular, casual, or others), are entitled to receive a 13th-month pay, provided they have worked for at least one month during a calendar year. Employees who have resigned or were terminated before the payout period are still entitled to this benefit, pro-rated based on the months they have rendered service within the year. However, managerial employees, field personnel, and those who are paid on commission, boundary basis, or task basis, and those who are paid a fixed amount for performing specific work are excluded from this mandate.

How to Compute 13th Month Pay

The computation of the 13th-month pay is quite straightforward. Here’s a simple guide:

Formula: (Total Basic Salary Earned for the Year) ÷ 12 = 13th Month Pay

For example:

1. If Juan has a monthly basic salary of PHP 20,000 and he worked the entire year, the computation would be:

PHP 20,000 x 12 months = PHP 240,000 (Total Basic Salary for the Year)
PHP 240,000 ÷ 12 = PHP 20,000 (13th Month Pay)

2. If an employee didn’t work the entire year, then you compute based on the months they have rendered service. For instance, if Juan worked for just 6 months:

PHP 20,000 x 6 months = PHP 120,000
PHP 120,000 ÷ 12 = PHP 10,000 (13th Month Pay)

Note: Deductions such as absences, late, or undertimes are not taken into account when computing the 13th-month pay.

When should the 13th Month be received?

By mandate, the 13th-month pay should be given to employees no later than December 24th every year. However, employers have the discretion to split the 13th-month pay into two parts:

  • The first half can be given to the employees between May 1 and November 30.
  • The second half is to be paid before December 24.

However, these are just the basic guidelines. Companies may have different policies, but they are obliged to follow the legal requirement of paying no later than December 24th.

The 13th-month pay is not just a tradition but a right of every eligible employee in the Philippines. It serves as a reward for the hard work throughout the year and provides an additional boost during the festive season. Now that you understand how it’s computed and when it’s due, you can better anticipate and plan for this annual financial bonus.

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About the Author

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Mark Nobleza

Head Rocketeer

Mark Nobleza is a seasoned real estate professional with a wealth of industry experience. As a real estate support specialist, he has worked with a diverse range of clients and has a deep understanding of the intricacies of the real estate market. Mark is known for his attention to detail, strong work ethic, and commitment to providing exceptional customer service. With his extensive knowledge of the industry, he has helped countless individuals and businesses navigate the complex world of real estate.

Mark Nobleza

Head Rocketeer

Mark Nobleza is a seasoned real estate professional with a wealth of industry experience. As a real estate support specialist, he has worked with a diverse range of clients and has a deep understanding of the intricacies of the real estate market. Mark is known for his attention to detail, strong work ethic, and commitment to providing exceptional customer service. With his extensive knowledge of the industry, he has helped countless individuals and businesses navigate the complex world of real estate.

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