How to compute 13th Month Pay: DOLE Philippines
October 4, 2009 by Admin
Filed under Employer - employees
We are already on the month of October and after a few months, Christmas season is here again. For employees, that season sounds delightful. Aside from the enjoyable Christmas party and the series of vacations, the long awaiting 13th Month pay will finally land in our hands. For employers, this extra month pay is an additional mandated expense given to employees once or twice (installment) a year. However, some good business owners and employers see the giving of this added remuneration to employees as an appreciation and gratitude for their valuable contribution to their companies.
An employer must know how to compute the lawful amount of 13th month pays to be distributed to his employees. On the other hand, it is clever for an employee to know the computation of his thirteenth month paycheck to ensure that he is receiving it in the right amount of money. So to know what must be known, the following guidelines are presented below.
How to compute?
Section 2(a) of PD No. 851, which was issued by former president Ferdinand E. Marcos on December 16, 1975, stated that:
“thirteenth-month pay” shall mean one twelfth (1/12) of the basic salary of an employee within a calendar year.
According to the Revised Guidelines on the Implementation of the 13th Month Law issued on November 16, 1987 by then Labor Secretary Franklin Drilon:
the “basic salary” of an employee for the purpose of computing the 13th month pay shall include all remunerations or earning paid by this employer for services rendered but does not include allowances and monetary benefits which are not considered or integrated as part of the regular or basic salary, such as the cash equivalent of unused vacation and sick leave credits, overtime, premium, nigh differential and holiday pay, and cost-of-living allowances. However these salary-related benefits should be included as part of the basic salary in the computation of the 13th month pay if by individual r collective agreement, company practice or policy, the same are treated as part of the basic salary of the employees.
Based on the foregoing information, we can arrive with the following formula in computing 13th month pay:
13monthpay = total basic salary within the calendar year / 12
Is it taxable?
Thirteenth month pay and other benefits amounting to P 30,000 and below are not subject to income tax. This means, if you receive P 40,000, the P10,000 excess is already taxable.
Who are entitled?
Memorandum Order No. 28, issued by former President Corazon C. Aquino on August 13, 1986, modified Section of PD No. 851 and provided that all employers are hereby required to pay all their rank-and-file employees a 13th month pay not later than December 24 of every year.
Before its modification by the aforecited Memorandum Order, P.D. No. 851 excludes from entitlement to the 13th month pay those employees who were receiving a basic salary of more than P1,000.00 a month. With the removal of the salary ceiling of P1,000.00, all rank and file employees are now entitled to a 13th month pay regardless of the amount of basic salary that they receive in a month if their employers are not otherwise exempted from the application of P.D. No. 851. Such employees are entitled to the benefit regardless of their designation or employment status, and irrespective of the method by which their wages are paid, provided that they have worked for at least one (1) month during a calendar year.
Who are considered rank-and-file employees?
According to the Labor code, all employees not falling within the definition of a managerial employee are considered rank-and-file employees. A managerial employee is one who is vested with powers of prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay-off, recall discharge, assign or discipline employees, or to effectively recommend such managerial actions.
How about resigned and separated employees?
An employee who has resigned or whose services were terminated at any time before the time for payment of the 13th month pay is entitled to this monetary benefit in proportion to the length of time he worked during the year, reckoned from the time he started working during the calendar year up to the time of his resignation or termination from the service. Thus, if he worked only from January up to September his proportionate 13th month pay should be equivalent of 1/12 his total basic salary he earned during that period.
The payment of the 13th month pay may be demanded by the employee upon the cessation of employer-employee relationship. This is consistent with the principle of equity that as the employer can require the employee to clear himself of all liabilities and property accountability, so can the employee demand the payment of all benefits due him upon the termination of the relationship.
When to pay?
The required 13th month pay shall be paid not later than December 24 of each year. An employer, however, may give to his employees one half (½) of the required 13th month pay before the opening of the regular school year and the other half on before the 24th of December of every year. The frequency of payment of this monetary benefit may be the subject of agreement between the employer and the recognized/collective bargaining agent of the employees.
Who are considered exempted employers?
The following employers are still not covered by P.D. No. 851:
a. The Government and any of its political subdivisions, including government-owned and controlled corporations, excepts those corporations operating essentially as private subsidiaries of the Government;
b. Employers already paying their employees a 13th month pay or more in a calendar year or its equivalent at the time of this issuance;
c. Employers of household helpers and persons in the personal service of another in relation to such workers; and
d. Employers of those who are paid on purely commission, boundary, or task basis, and those who are paid a fixed amount for performing specific work, irrespective of the time consumed in the performance thereof, except where the workers are paid on piece-rate basis in which case the employer shall grant the required 13th month pay to such workers.
As used herein, workers paid on piece-rate basis shall refer to those who are paid a standard amount for every piece or unit of work produced that is more or less regularly replicated, without regard to the time spent in producing the same.
The term “its equivalent” as used on paragraph (b) hereof shall include Christmas bonus, mid-year bonus, cash bonuses and other payments amounting to not less than 1/12 of the basic salary but shall not include cash and stock dividends, cost of living allowances and all other allowances regularly enjoyed by the employee, as well as non-monetary benefits. Where an employer pays less than required 1/12th of the employees basic salary, the employer shall pay the difference.
References:
DOLE: Frequently Asked Questions
ChanRobles: Revised Guidelines on the implementation of the 13th month pay law
No related posts.
HI NICE POST.VERY INSPIRING VOICE.THANKS FOR SHARE
Its good and very informative article. Its very useful for all of us. thanks for sharing it.
Computation of wages is governed by the following rules:
Computing Overtime:
On Ordinary Days
Number of hours in excess of 8 hours (125% x hourly rate)
On a rest day, special day or regular holiday
Number of hours in excess of 8 hours (130% x hourly rate)
Computing pay for work done on:
A special day (130% x basic pay)
A special day, which is also a scheduled rest day (150% x basic pay)
A regular holiday (200% x basic pay)
A regular holiday, which is also a scheduled rest day (260% x basic pay)
Computing Night Shift Premium Where Night Shift is a Regular Work:
On Ordinary day (110% x basic hourly rate)
On a rest day, special day, regular holiday (110% of regular hourly rate for a rest day, special day, regular holiday)
Computing Overtime on Night Shift:
On ordinary day (110%) x overtime hourly rate)
On rest day, special day or regular holiday (110% x overtime hourly rate for rest days, special days, regular holidays)
Computing 13th Month Pay:
Total basic salary earned for the year exclusive of overtime, holiday, and night shift differential pay divided by 12 = 13th month pay.
**It was not indicated that the number of absence days will be deducted from the 13th month pay. It is clearly stated that only overtime, holiday and ND pay will be deducted from the total basic salary. MATERNITY should not be deducted cause it is not indicated as per labor code. Also for the first pay since it is taxable it should also be included in the computation of 13th month pay.**
Hello there Skycaptain,
Thanks for for your participation and contribution. I was just about to write an article about the computation of overtime pay. With regard to the absence days to be deducted from the 13th month pay, I believe the law is clear to state the 13th month pay is equal to total “basic salary earned” for the period multiplied by 1/12. Meaning, the total basic salary must be “EARNED” to be incuded in the computation.
my brother work as a manager in a company in pasig. he's been receiving his 13th month pay every year. last Sept 30 he filed his resignation effective the 30th of Oct. he was informed by the company that we wont be receiving any 13th month pay because he's not included in rank and file. isn't it that the 13th pay is mandatory to all employees as per PD#851? what should my brother do in this case?
thank you
Hi Aba,
Welcome!
The 13th month pay is required to be paid by all employers to their rank-and-file employees (PD851). Hence, a managerial employee is not mandated to be paid. For the purpose of determining whether your brother is considered a management employee, the labor code provided that “a managerial employee is one who is vested with powers of prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay-off, recall discharge, assign or discipline employees, or to effectively recommend such managerial actions.”
In your case, you may try to read the “contract of employment” or CBA if your brother is included (usually management employee are not covered by CBA). In his contract of employment, his duties and authorities are stipulated – you can determine if these warrant the definition of a management employee. You may also try to find out if there is an stipulation of 13th month pay benefit to be paid to your brother (where the employer must respect the contract).
To Aba:
How long has your brother been employed in this company? Was the grant of 13th month pay applied to all employees in his category or rank? If the company has been granting this for a long period of time, it may have ripened already into a company practice and employees like your brother, even if managerial and not mandatorily and legally entitled to it, may have acquired a vested right and the company cannot just take it away (this is the so-called Non-diminution of benefits).
he's been in the company for about 8 years now. he started there as a rank and file employee then was promoted to a manager. he was receiving his 13th month pay ever since he was hired. their accounting told him that he won't be receiving his 13th month pay even a portion of it on his last pay.
It is better to identify what policy the Company is implementing for giving 13th Month pay. Usually, it is stipulated in the employment contract what kind of benefits an employee (rank and file or management employee) is entitled. If the Company is already giving your brother a 13th month pay “since and even he become a manager” because of the organization's policy or because it was stipulated in the contract, then the Company must respect that policy or that contract.
Hi ask ko lang kasama ba sa computation sa 13th mo pay ung naka maternity leave ako?buo pa din ba ung makukuha ko or ibabawas ung months na di ako pumasok
Hi jrod23,
Did your employer paid you during your maternity leave? The salary you have received during your maternity leave should be included in the computation of your 13th month pay. In this case, you will receive a 13th month pay as if you have not been deducted by the days you have'nt reported.
With regard to your right on maternity leave, please be guided by this article in the labor code:
Art. 133. Maternity leave benefits.
Every employer shall grant to any pregnant woman employee who has rendered an aggregate service of at least six (6) months for the last twelve (12) months, maternity leave of at least two (2) weeks prior to the expected date of delivery and another four (4) weeks after normal delivery or abortion with full pay based on her regular or average weekly wages. The employer may require from any woman employee applying for maternity leave the production of a medical certificate stating that delivery will probably take place within two weeks.
The maternity leave shall be extended without pay on account of illness medically certified to arise out of the pregnancy, delivery, abortion or miscarriage, which renders the woman unfit for work, unless she has earned unused leave credits from which such extended leave may be charged.
The maternity leave provided in this Article shall be paid by the employer only for the first four (4) deliveries by a woman employee after the effectivity of this Code.
Hi, just want to ask some legal question about 13th month pay.. i am employed march 3 until June 2009 as Operations Officer (P9,950/month plus P1,500 transpo allowance) and on July until today, i am hired as Sales Manager (P9,950/month plus P3,800 transpo allowance). And i plan to resign this end of the month or until 1st week of December. The Managing Director told me that she will pay only July up to now. I know that this is illegal because they should count the first 4 months of staying in the company. I do my own research and it said that when i am employed between Jan and June, i will get a one month salary, is it true? if not, how much do you think i will get? thanks a lot, i will appreciate your help..God Bless!
Hi Nemargalvez,
Please be guided by the following in computing your 13th Month Pay:
“13monthpay = total basic salary within the calendar year / 12″
“monetary benefits which are not considered or integrated as part of the regular or basic salary” are not included in the computation of 13th month pay.”
Assuming you are entitled to 13th Month Pay by your Company, your 13th Month pay shall be computed as follows:
Total basic salary earned during the calendar year / 12 = 13 month pay
or total basic salary you earned during your employment for the calendar year / 12 = 13th month pay
“An employee who has resigned or whose services were terminated at any time before the time for payment of the 13th month pay is entitled to this monetary benefit in proportion to the length of time he worked during the year, reckoned from the time he started working during the calendar year up to the time of his resignation or termination from the service. Thus, if he worked only from January up to September his proportionate 13th month pay should be equivalent of 1/12 his total basic salary he earned during that period.”
If you are saying that you started working on March and it will end on Decemeber, I don't think your 13month pay will equal to a one month salary since your total basic salary earned (which run only from March to December) during the calendar year will be divided by 12.
I hope this guides you to answer your question.
Thank you.
Thank you very much..
even SSS Maternity benefit were advanced by employer. Is she entitled to have a (2) weeks maternity leave and 4 weeks after normal delivery? THank you!!!
Hi! Good day! Does one-month suspension can be deducted in computation of 13th month? Please enlightened me. Thank you so much.
Rachelle,
You may want to read our article on “Philippine Laws for Women at Work.”
http://businessaccent.com/2009/11/16/philippine…
The “basic salary” of an employee for the purpose of computing the 13th month pay shall include all remunerations or earning paid by this employer for services RENDERED. The basic rule in determining compensation is: NO WORK, NO PAY. During suspension, you are not rendering any services and is not paid for any work done. Therefore, that one month period is excluded.
Maternity leave is a BENEFIT. In legal parlance, benefit is something given “in addition to” the basic pay that an employee usually gets. Hence, it is NOT part of the basic salary.
what about the employee who started on july 15, 2009?
can i receive my 13th bonus? my company (government) not giving me becouse i started only last july 15, 2009 but in a permanent position
Its good and very informative article. Its very useful for all of us. thanks for sharing it.
@noradeguzman:
Employees of the government or any of its political subdivisions, including government-owned and –controlled corporations are NOT covered by the 13th month pay law (PD 851, as amended). Only those corporations operating essentially as private subsidiaries of the Government are covered (See Revised Guidelines on the Implementation of the 13th Month Pay Law).
For government employees, if you started as early as May 1 and worked until Oct 31, you could be entitled.
hello, I'm currently working as a Research Assistant in one of the government agency here in Laguna, but my status is Job Order only. I just want to ask if I am entitle for 13th month pay. I started working here last May, 2009 and my contract was renewed last October, 2009. I'm not receiving any benefits but they less 4% of my monthly salary for the tax. please give me some info. about this. thank you…
Hi Kathzy,
Please read the article on the part “Who are considered exempted employers?” and the reply of author Vanessa (assenav) to noradeguzman.
Thank you so much.
@kuya
ikaw man an author hini..hehe. im just a collaborator.
@Kathzy,
If you will look at the “exempted employers” the government is not covered by the 13th month pay law. However, as a common practice, government employees also receive 13th month pay (loosely called also as Bonus), aside from the so-called cash gift. But the grant of this amounts depend on the national budget which should be approved by Congress working together with the Executive Department.
Government employees are given 13th month pay if they have worked from May 1 until October 31 of the same year. Those who are hired on “job order” basis are not entitled to 13th mo pay, like in your case, because it is usually a 5-month term only.
Oppsss. I forgot that I was the one who wrote this article. Hahahaha.
Thanks for the additional Info…
HI! I was appointed to compute 13th month pay this year, but the problem is am not accurate about the basic rate because we differ from each. May i know also the basic rate last 2007 and 2008? thank you sir!
what should we do if we didn't receive our 13th pay and tax refund for this year?
Because in our situation, we are not an active employee. I mean we resigned from our previous company last september. But until now, our 13th pay and tax refund has not yet given to us.. What should we do?
When can we recieve our 13th month pay if we worked only from January up to September?
Can we get this by December 24? Is there any violoations to be filed to the employeer if they doesn't give the 13th month pay?
Hi!
I have been working for the past 6 years. This year I got employed by a retail group. My employment started on Aug 15. I have been informed that my 13th month pay will include only the basic salary I earned from Aug 15-Oct 31.
Please define CALENDAR year for me…does it pertain to the same calendar we are using or it may also mean the Fiscal year on certain companies?
Thanks much!
Hi! Good day!
Does one-month leave because of an injury can be deducted in computation of 13th month? In my case, I am a contractual employee for 3 years and a half. Please enlighten me. Thank you so much.
All employees regardless of salary rate are entitled to 13th month pay. Now the amounts of your 13th month pay will depend on your basic salary.
We cannot determine your basic rate for 2007 and 2008 because we do not know how much exactly each of you are receiving. For computation, just follow the following:
13th MONTH PAY = your total basic salary within the calendar year divided by 12
and your BASIC SALARY includes all the payments for your services rendered but does NOT include allowances and monetary benefits which are not considered or integrated as part of the regular or basic salary (example: overtime pay)
NOTE: BASIC RATE is not the same as MINIMUM WAGE. Minimum wage means the lowest pay fixed by law (usually through a wage order) that an employer could give. Your basic rate may be equal to the minimum wage if that is what you actually receive. But basic rate is not always equal to minimum wage, it depends usually on the rank or position of the employee in the company.
If you read the article, it says:
“An employee who has RESIGNED…is ENTITLED to this monetary benefit IN PROPORTION to the length of time he worked during the year reckoned FROM the time he STARTED working during the calendar year UP TO the time of his RESIGNATION or termination from the service.”
Take note of the word ENTITLED. You can claim it from your employer.
You may demand payment of the 13th month pay from the time the employment ends.
Yes, the employer violates the 13th month pay law (PD851) if he will not give the 13th month pay because it is required by law.
CALENDAR means January to December. That is why the law says it shall be paid “on or before December 24.” If we refer to the law (PD 851) we can see that it was concerned with the working masses (rank and file employees). It intended to give an additional amount so that they can properly celebrate Christmas and New Year. If we will use FISCAL year, it will defeat the real purpose of the law.
were you paid for this one month leave?
I have been employed in this BPO since May 2009 and signed a contract that upon signing the said contract I will be automatically addressed as a Regular Employee. In Oct 2009 I was on leave for more than 30 days. As a regular employee, are they really suppose to deduct my absences/leaves on the 13th month pay? My figures are at P22,+++., and got my 13th month pay check for P4720.54. HR people said that it's pro-rated and deducted all leaves and absences. I really need a light on this. Thanks!
I am paid with my SSS maam. Not with my company because I am a contractual employee. No work no pay.
We have a communication with my employeer, But sad to say, she say's that there's no sched for the released of my 13th month pay.. She said that maybe it will be release next year.. Is this a violation ma'am?
For resigned employees, this is what is stated in the REVISED GUIDELINES
ON THE IMPLEMENTATION OF THE 13TH MONTH PAY LAW:
“The payment of the 13th month pay may be demanded by the employee UPON THE CESSATION of employer-employee relationship. This is consistent with the principle of equity that as the employer can require the employee to clear himself of all liabilities and property accountability, so can the employee demand the payment of all benefits due him UPON THE TERMINATION of the relationship.”
Since your employment ended in September, from that time on, you could have already demanded for your 13th month pay for that year.
The sick leave benefit paid by SSS to you is NOT to be INCLUDED in computing for 13th month pay. All remuneration (or earnings) and other monetary benefits which are not part of the basic salary are EXCLUDED. Sick leave with pay is an additional benefit, it is not part of basic salary. Kindly take note of the word BASIC. All other additional payments are excluded except when there is an agreement between the employee and employer.
As much as we can, we would like to help all our visitors in answering their questions regarding on the article above. However, we may request all our commentators and askers to PLEASE make first your BEST EFFORT TO READ AND UNDERSTAND the article above. The content of the article, along with all our previous answers on the previous comments and questions, may become sufficient enough to enlighten your self with regard to the matter above.
I have OBSERVED that most of the commentators are asking questions that are already have been answered by the article itself and by our previous answers to the previous commentators' questions.
So again, READ FIRST the article above and all the previous comments, questions and answers below before making questions. The answer to your question may have already been answered by us.
We are already filtering comments on this article to use time practically.
Thank you
HI Gary,
Let these provisions guide you:
“thirteenth-month pay” shall mean one twelfth (1/12) of the basic salary of an employee within a calendar year.”
13Month pay = Total basic salary earning paid during the calendar year / 12
“the “basic salary” of an employee for the purpose of computing the 13th month pay shall include all remunerations or earning paid by this employer for services rendered but does not include allowances and monetary benefits which are not considered or integrated as part of the regular or basic salary, such as the cash equivalent of unused vacation and sick leave credits, overtime, premium, nigh differential and holiday pay, and cost-of-living allowances. However these salary-related benefits should be included as part of the basic salary in the computation of the 13th month pay if by individual r collective agreement, company practice or policy, the same are treated as part of the basic salary of the employees.”
I second the motion.
i was on leave for a month using the maternity leave benefit does it mean that i will not be paid for a month on my 13th month? it was supposed to be 2 month maternity leave but ii got back to work using only a month… will they still deduct 2 months from my 13th month?..
Hi, Calendar means January to December? Because my company calendar is December to November? Is this legal?Thank You.
I have a question concerning the 13th month pay.
I started working with this private company last April 6, 2009, and the boss of the company will be giving the said 13th month pay on the 23rd of December of the same year.
In line with this, the boss said that he wouldn't be including the month of December in the computation of the 13th month pay. Is he right with this computation?
Hoping for an immediate response… thank you…^^
Hi Alucard1016,
Please read reply on Jrod23's comment.
If you received salary instead of maternity benefits (like SSS) on the other month, then that salary on that month shall be included in the computation of your 13th Month Pay.
Please be assure that you're maternity benefits is tally on the number of days of your maternity leave. If it is an SSS benefit, the number of days you were on leave should tally with the one you have reported to the SSS to avoid SSS reports not in good faith.
Yes. Calendar year means January to December.
December to November cycle is called fiscal year.
Tha law stated that the computation should be for the calendar year..
We follow the law, not the law shall follow us.
Please review the reply of assenav.
Thanks
Hi Mark0917
If you're employment is only up to November, then he can be right not to include December in the computation.
If that is not the case, then your 13th Month pay shoud equal to “total basic salary within the calendar year / 12″.