13th Month Pay in the Philippines: How to Compute It, Eligibility, and Deadline

As the holiday season approaches, many Filipino employees look forward to receiving their 13th month pay. Whether you’re planning your holiday budget, building your savings, or preparing for upcoming expenses, understanding this benefit can help you manage your money better.

But how much should you receive? Who qualifies for 13th month pay, and when should your employer release it?

Here’s what you need to know about 13th month pay in the Philippines.

What Is 13th Month Pay?

13th month pay is a mandatory benefit under Presidential Decree No. 851. It generally applies to covered rank-and-file employees in the private sector who have worked for at least one month during the calendar year.

It is different from a Christmas bonus. While 13th month pay is required by law for eligible employees, a bonus is generally an additional benefit given by an employer. A bonus may become enforceable when it forms part of an agreement, compensation arrangement, or established company practice.

Who Is Eligible for 13th Month Pay?

Rank-and-file employees who have worked for at least one month during the calendar year are generally entitled to 13th month pay, regardless of their employment status or how their wages are paid.

This may include regular, probationary, and other covered employees. Those who resign or are separated from their jobs before December are also generally entitled to a proportionate payment.

However, certain employers and categories of workers are exempt under the applicable rules. These include some workers paid purely on commission, boundary, or task basis, subject to specific exceptions. Employees should check the rules applicable to their employment arrangement if they’re unsure about their eligibility.

How to Compute 13th Month Pay

The basic formula for computing 13th month pay is:

13th Month Pay = Total Basic Salary Earned During the Calendar Year ÷ 12

Your computation is based on the total basic salary earned during the year, rather than simply multiplying your current monthly salary by a fixed amount. Certain allowances and additional payments are generally excluded unless they are considered part of basic salary under applicable rules or agreements.

Example of 13th Month Pay Computation

Suppose your monthly basic salary is ₱20,000 and you worked for the entire year at that rate.

• Monthly basic salary: ₱20,000
• Total basic salary for the year: ₱240,000
• 13th month pay: ₱240,000 ÷ 12 = ₱20,000

If you started working in July and earned ₱20,000 in basic salary each month through December, your total basic salary for those six months would be ₱120,000.

Your 13th month pay would be:

₱120,000 ÷ 12 = ₱10,000

Your actual amount may differ if your salary changed or certain periods were not counted as basic salary earned.

When Is the 13th Month Pay Deadline?

Employers covered by the law must release 13th month pay on or before December 24 each year.

Some employers may release the benefit earlier or divide it into payments, provided they comply with the applicable requirements and payment deadline.

If you resign or your employment ends before the scheduled release, you are generally still entitled to the proportionate 13th month pay you’ve earned for the year. This is typically settled as part of your final pay.

Are Maternity Leave Benefits Included in the Computation?

Maternity leave benefits are not included in the basic salary used to compute 13th month pay under the DOLE guidance.

For example, if you earn ₱10,000 per month and receive basic salary for only 10 months of the year because you were on maternity leave for two months, your computation would be based on the ₱100,000 in basic salary earned:

₱100,000 ÷ 12 = ₱8,333.33

Individual circumstances may affect the final computation, so employees should confirm their payroll details with their employer.

Is 13th Month Pay Taxable?

Under Philippine tax rules, 13th month pay and other qualifying benefits are generally exempt from income tax up to a combined annual limit of ₱90,000. Any amount exceeding the applicable exemption may be taxable.

If your total bonuses and other qualifying benefits approach or exceed this limit, check your payslip or consult your company’s payroll team to understand how your tax is calculated.

Make the Most of Your 13th Month Pay

Your 13th month pay can help you prepare for holiday expenses, pay down debt, build an emergency fund, or work toward a savings goal. Before spending it, consider listing your upcoming expenses and deciding how much you want to set aside for each priority.

Understanding your employee benefits is an important part of managing your finances and planning your career. Knowing what you’re entitled to helps you make more informed decisions at work.

Looking for your next career opportunity? Explore job openings on Kalibrr and find a role that supports your professional goals.

Reference:

Department of Labor and Employment. (2024). Frequently asked questions on 13th Month Pay. https://bwc.dole.gov.ph/wp-content/uploads/2024/06/FAQS-ON-13TH-MONTH-PAY.pdf