How to Compute 13th Month Pay

The 13th month pay is an additional salary benefit that employers provide to employees in many countries around the world. It is based on the employee’s annual salary, and is usually paid in December or January of the following year. For employers, calculating the 13th month pay is an important part of their payroll process. This article explains the steps employers can take to accurately compute the 13th month pay for their employees.

What is 13th Month Pay and Who is Eligible for It?

Thirteenth-month pay is a monetary benefit granted to rank-and-file employees in the private sector. In this article, learn more about this benefit, who is eligible for it, how it is computed, and what you need to know.

Thirteenth-month pay is a type of monetary benefit that every rank-and-file employee in the private sector is entitled to receive, as stated by the Department of Labor and Employment (DOLE). To be eligible, the employee must have worked for at least one month during the year.

In general, the computation for the 13th-month pay is 1/12 of the employee’s annual salary. However, for the year 2022, the computation will be based on the employee’s basic salary from January 1 to December 31 of the same year.

It is important to note that even if an employee resigned, was terminated, or separated from their company, they are still entitled to receive their proportionate 13th month pay.

In conclusion, knowing about the 13th-month pay is essential for every rank-and-file employee. Understanding the eligibility requirements, computation, and other important details can help you make the most of this benefit.

Understanding the Difference Between 13th-Month Pay and Christmas Bonus

While the 13th-month pay is a mandatory benefit for employees in the Philippines, the Christmas bonus is not. Learn more about the difference between these two benefits and how employers commonly provide Christmas bonuses.

Aside from the 13th-month pay, some employees receive an additional benefit called the “Christmas bonus.” However, unlike the 13th-month pay, the Christmas bonus is not mandated by law and is solely dependent on the employer’s discretion.

The Christmas bonus can come in various forms, such as gift certificates, grocery items, or even cash. It is important to note that the form of the Christmas bonus may affect its taxability. If given in cash, it is typically subject to income tax and other deductions, while non-cash items may be considered non-taxable.

What Happens When Employers Fail to Provide 13th-Month Pay in the Philippines

Employers who fail to provide the mandatory 13th-month pay in the Philippines can face administrative cases. Learn more about the legal basis for this benefit and why it’s important for Filipino employees during the holiday season.

Under the law, employers in the Philippines are required to provide their rank-and-file employees with a 13th-month pay as mandated by Presidential Decree (PD) 851, which was signed by former President Ferdinand Marcos on December 16, 1975, and later amended by President Corazon Aquino. The purpose of this mandate is to give Filipino employees additional discretionary money for Christmas and New Year celebrations.

If an employer fails to provide the 13th-month pay, employees have the right to file charges at the nearest Department of Labor and Employment (DOLE) office. Employers who violate this mandate can face administrative cases and other penalties.

The 13th-month pay is an essential benefit for Filipino employees, as it provides them with extra funds during the holiday season for their expenses and celebrations. It’s also a good time for employees to start their savings or investment plans with the additional money they receive.

New memorandum on 13th month pay

A new memorandum has been proposed by Senator Raffy Tulfo, urging the Department of Labor and Employment (DOLE) to collaborate with local government units to ensure that local businesses give their employees their 13th month pay on or before December 24, 2022. Failure to comply may result in consequences for the employers, including denial of renewal of business permits. Senator Tulfo raised this issue during a joint hearing by the Senate Committee on Labor and Employment and Human Resources Development, citing cases of companies that failed to provide their employees with the mandated benefit.

14th-month pay remains to be optional for employers

Senator Vicente Tito Sotto recently filed a bill that would require both government and private sector employers to provide a 14th-month pay to their employees, regardless of their employment status.

The payment would be made on or before May 31st of each year in anticipation of the school enrollment of employees’ dependents.

While the bill is pending approval in the Senate and the House of Representatives, it is already facing opposition from private business owners in the Philippines.

The House Bill aims to release the 13th-month pay before May 31st and the 14th-month pay on or before November 30th, in preparation for the upcoming holidays. The 14th-month pay will also be prorated based on the number of months employed if the employee has not worked for the company for more than a year.

Despite its unopposed support among the working population, the Department of Labor Secretary, Silvestre Bello III, says that DOLE is consulting with both labor and management to determine the feasibility of the 14th-month pay to workers. The department plans to study the bill further and consult with stakeholders before indicating its position.


Calculating 13th month pay is an important obligation for employers in the Philippines. It is important to remember that 13th month pay is calculated based on the employee’s total basic salary for the year, excluding allowances, overtime pay and bonuses. It should also be noted that if an employee was not employed for the entire year, the 13th month pay should be calculated based on the number of months the employee was employed.

Finally, employers should be aware that the 13th month pay must be paid before the end of the year. By following these steps, employers in the Philippines can ensure that they meet their legal obligation to provide 13th month pay.

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