13th Month Pay

LAW EACH WEEK

Who are entitled to 13th month pay?

All rank and file employees are entitled to receive 13th month pay regardless of the nature of their employment and irrespective of the methods by which their wages are paid, provided they worked for at least one (1) month during a calendar year.

Who are rank and file employees?

They those not considered to hold managerial tasks. They do not have the capacity to lay down and execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign and other similar prerogatives.

When should the 13th month pay be given?

It should be given to the employees not later than December 24 of every year.

Is the 13th Month Pay similar to Christmas bonus?

No, the 13th month pay and the Christmas bonus are two different things. The 13th month pay is specifically mandated by law while the Christmas bonus is a voluntary act by the employer anchored mainly on the productivity and practice of the company. The 13th month pay as provided for in Republic Act 10653 is generally taxable except when the gross benefits received by officials and employees of public and private entities does not exceed P82,000.00. On the other hand, a Christmas bonus which normally comes on the form of gift certificate, money or canned goods are non-taxable.

How much is the required 13th month pay?

The amount of 13th month pay shall at least be 1/12 of the total basic salary earned for the year. The “basic salary” of an employee for the purposes of computing his 13th month pay includes all remunerations or earnings paid by the employer for services given but it does not include allowances and other monetary benefits given to the employee which are not considered as part of regular salary such as cash equivalents of unused vacation leave, night differential, cost-of-living allowance and other similar benefits. However, such exemptions above may be included in the computation if the same is explicitly provided for in the collective bargaining agreement (CBA).