13th Month Pay

All employers are required to pay their rank and file employees 13^th month pay, regardless of the tenure 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. It should be given to the employees not later than December 24 of every year. The minimum amount shall not be less than one-twelfth (1/12) of the total basic salary earned by an employee in a calendar year. It doesn’t include

Allowances and monetary benefits which are not considered or integrated as part of the regular or basic salary, such as unused leave credits, overtime, premium, NSD and holiday pay.

Employees paid on a purely commission basis are not entitled to 13^th month pay but if there is a fixed wage aside from the commission, they are also entitled to 13^th month pay based on this fixed wage.  

Sample Computation of 13th month pay

Month	Attendance	Basic Salary
Jan	no absence	P11,372.33
Feb	no absence	P11,372.33
Mar	1 day leave with pay	P11,372.33
Apr	no absence	P11,372.33
May	no absence	P11,372.33
Jun	2 days leave with pay	P11,372.33
Jul	no absence	P11,372.33
Aug	2 days leave with pay	P11,372.33
Sep	on maternity leave	no salary
Oct	on maternity leave	no salary
Nov	no absence	P11,372.33
Dec	5 days leave without pay	P9,192.33
Total Salary for the Year		P111,543.33
13th Month Pay	P111,543.33 / 12	P9,295.28

Notes: The computation is pro-rata basis according to the number of months within a year that employee has rendered service. It should be included as a part of the Final Pay for those who resigned or terminated.

Notes: To avoid the burden of one-time big expenses in December, you may release it twice a year like in May and December under the consent of the employees.

Notes: 13^th month pay (Mandatory) is different with Christmas Bonus (Voluntary). 13th month pay and other benefits, such as productivity incentives and Christmas bonus, not exceeding Eighty-Two Thousand Pesos (P90,000) are exempt from taxation.

Notes: Managerial employees including Managerial Staff are not entitled to this pay but I recommend you to include all employees. Or you may set different rules for Managerial employees since their basic salary would be quite big.