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13th Month Pay: How is it Computed?

Time flies so fast and before you know it, the year-end is just around the corner. There's the thought of Christmas and, yes, 13th-month pay, which the law requires to be paid not later than December 24 of each year.



The law - Presidential Decree No. 851 - requires all employers to pay their rank-and-file employees, regardless of the nature of their employment and irrespective of the method by which their wages are paid, an equivalent to at least one (1) month of their wages as 13th month pay. To be entitled to 13th-month pay, these employees must have worked for at least one month during the calendar year.

The 13th-month pay of an employee is based on the "basic salary," which includes all remunerations or earnings paid by an employer to an employee for services rendered. However, 13th-month pay does not include cost-of-living allowances (COLA) granted pursuant to P.D. No. 525 or Letter of Instruction No. 174, profit-sharing payments, and all allowances and monetary benefits which are not considered or integrated as part of the regular or basic salary of the employee. Maternity benefits, like other benefits granted by the SSS, are are not included in computing the employee's 13th-month pay. Overtime pay, earnings and other remunerations are also excluded from "basic salary" in the computation of the 13th-month pay.

The phrase "earnings and other remunerations," which are deemed NOT part of the basic salary, includes payments for:

1. Sick leave
2. Vacation leave
3. Maternity leave
4. Premium for works performed on rest days and special holidays, pay for regular holidays and night differentials.

There's a catch, though. If these items, which are legally excluded from the computation of 13th month pay, are included by the employer in its previous computations and such act ripens into a "company practice," then these items can't be excluded without violating the prohibition against diminution or elimination of  benefits.

What about Christmas bonus and 14th month pay? Both the Christmas bonus and 14th month pay, which are generally categorized as bonus, are different from 13th-month pay. There's a previous post on Bonus vs. 13th Month Pay.

[See also Basic Discussion on 13th-month Pay 1; Basic Discussion 2; Basic Discussion 3; Who are the Employees Entitled to 13th month Pay?; Thirteenth-month Pay Distinguished from Bonus; Thirteenth Month Pay and Salary Increases; PD 851 (full text of 13th Month Law)Labor Advisory 2 in 13th month pay; and previous Guidelines; Revised Guidelines on the Implementation of the 13th Month Law; and Additional 14th Month Pay] Source: Producers Bank of the Philippines vs. NLRC.


Comments  

 
+1 #21 13th month payjumong 2012-10-31 10:00
binawasan ang aming 13th month pay dipende kung ilan ang absence namin at kung mag kano ang aming sweldo kada araw ganun ang binawas sa amin kayo halos wala ng natira sa i3th month pay namin. isang kasamahan ko nga nag kautang pa sa employer namin kasi mahigit pa ang naging absent nya kaysa makukuha nyang 13th month. tama po ba yun?
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#22 13TH MONTH PAYSEL 2012-12-14 10:35
gusto ko lang po itanong kung ang pagbibigay ng 13th month pay eh depende sa company? dbah by law po iyon? kasi mag 3 months na ako sa company ko at hindi kami kasali sa 13th month pay .may habol ba ako?kasi ang alam ko atleast 1 month dbah ung pagtatrabaho.
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#23 ctpa included in 13thmonth?dan 2012-12-19 11:16
tanong ko lang po kung included ba sa computation ang ctpa? thank you po
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#24 In response to Jumong QJo 2012-12-20 09:59
Quoting jumong:
binawasan ang aming 13th month pay dipende kung ilan ang absence namin at kung mag kano ang aming sweldo kada araw ganun ang binawas sa amin kayo halos wala ng natira sa i3th month pay namin. isang kasamahan ko nga nag kautang pa sa employer namin kasi mahigit pa ang naging absent nya kaysa makukuha nyang 13th month. tama po ba yun?


Hi Jumong, hindi po sa 13th month pay kinakaltas ang absences ng isang empleyado kundi sa SL/VL o mas kilala bilang Sick Leave and Vacation leave. Ang prebadong kompanya ay required na magbigay ng sampung araw sa SL at VL. Depende sa kompanya kung ang SL/VL na hindi nagagamit ng isang empleyado ay binabayaran nila base sa daily wage rate. Ang 13th month pay ay mandatory na ibigay ng kompanya sa kanyang mga empleyado. Gross Compensation Income/12 months= 13th month pay
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#25 In response to Jumong QJo 2012-12-20 10:05
Quoting SEL:
gusto ko lang po itanong kung ang pagbibigay ng 13th month pay eh depende sa company? dbah by law po iyon? kasi mag 3 months na ako sa company ko at hindi kami kasali sa 13th month pay .may habol ba ako?kasi ang alam ko atleast 1 month dbah ung pagtatrabaho.


Hi Sel, 13th month pay ay mandatory pong ibinibigay ng kompanya sa kanyang mga empleyado. kahit 3-months kalang nag tatrabaho sa kompanya may makukuha ka. ganito ang komputatio ng 13th month pay: Let say, yong basic salary mo ay 10,000.
Gross Compensation Income/12 months
P10,000x 3 mos= P30,000/12=P2,5 00. yan yong 13th month pay na makukuha mo sa loob ng tatlong buwan sa kompanya na pinagtatrabahoa n mo.
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#26 Clarificationnoman 2013-04-11 13:07
Hi Sel, 13th month pay ay mandatory pong ibinibigay ng kompanya sa kanyang mga empleyado. kahit 3-months kalang nag tatrabaho sa kompanya may makukuha ka. ganito ang komputatio ng 13th month pay: Let say, yong basic salary mo ay 10,000.
Gross Compensation Income/12 months
P10,000x 3 mos= P30,000/12=P2,5 00. yan yong 13th month pay na makukuha mo sa loob ng tatlong buwan sa kompanya na pinagtatrabahoa n mo.

Clarify ko lang po kc yung binigay mo na example ay fix monthly paid. E paano kng daily at 5 days a week lang o di ba kaya 6 days. Sabi nyo po ang absences i deduct sa VL @ SL... Paano kng ubos na ang SL@VL nya. At paano kng nag VL sya pero hindi authorized.
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#27 13 month paymegs 2013-05-14 23:27
Hello po,gusto ko lang po sa malaman kung magkano po kaya makukuha kong 13month? bale 2years and 5months po akong nagwowork. Ang rate ko po ay P350. nagdole po kasi ako,bale ibibigay na po sa friday. ang sabi po kasi sa akin kailangan ko daw ipripared kung magkano.
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