13th Month Pay

RANK AND FIILE

UNDER PRESIDENTIAL DECREE NO. 851
Employers from the private sector in the Philippines are required to
pay their rank-and-file employees a Thirteenth 13th Month Pay not
later than December 24 every year. The 13th month pay is equivalent
to one twelfth (1/12) of an employee’s basic annual salary.
It is prescribed by Philippine labor laws as a mandatory benefit
and should not be confused with the “Christmas bonus”
commonly practiced in the local business setting.
The 13th month pay, on the other hand, is required by law and
employers who fail to provide them by the end of the year are
subject to legal scrutiny by the Department of Labor and
Employment (DOLE).
COVERAGE
All employers are required to pay their rank and file employees thirteenth-month pay,
regardless of the nature 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.

Monetary compensations such as the following may not be regarded as part of the
computation for this mandatory benefit:
cost-of-living allowances;
profit-sharing payments;
cash equivalent of unused vacation and sick leave credits;
overtime pay;
premium pay;
night shift differential;
holiday pay; and
other allowances and monetary benefits not considered part of an employee’s basic
salary.
However, if some or all of the items enumerated in the list above are treated as part of the
basic salary, then they shall be included in the final computation.
FORMULA AND COMPUTATION

Total basic salary earned during the year

= 13th Month Pay
12 months

Illustration: Using the basic wage in the National Capital

Region at P570.00 (from January 1, 2023 to July 15, 2023) and
P610.00 (from July 16, 2023 to December 31, 2023) per day
and a six-day workweek or an equivalent Monthly Basic
Salary of P14,820 and P15,860, respectively, to wit:
 FORMULA AND COMPUTATION
JANUARY no absence P14,820
FEBUARY no absence P14,820
MARCH 1 day leave w/pay P14,820
APRIL no absence P14,820
MAY no absence P14,820
JUNE 2 days leave w/o pay P13,600
JULY 1-15 no absence P7,410
JULY 17-31 no absence P7,930
AUGUST 3 days leave w/o pay P15,860
SEPTEMBER 1 day leave w/pay P15,860
OCTOBER no absence P15,860
NOBEMBER no absence P15,860
DECEMBER 5 days leave w/out pay P12,810
TOTAL BASIC SALARY EARNED FOR THE YEAR = ?
 FORMULA AND COMPUTATION
JANUARY no absence P14,820
FEBUARY no absence P14,820
MARCH 1 day leave w/pay P14,820
APRIL no absence P14,820
MAY no absence P14,820
JUNE 2 days leave w/o pay P13,600
JULY 1-15 no absence P7,410
JULY 17-31 no absence P7,930
AUGUST 3 days leave w/o pay P15,860
SEPTEMBER 1 day leave w/pay P15,860
OCTOBER no absence P15,860
NOBEMBER no absence P15,860
DECEMBER 5 days leave w/out pay P12,810
TOTAL BASIC SALARY EARNED FOR THE YEAR = P179,290
FORMULA AND COMPUTATION

TOTAL BASIC SALARY EARNED FOR

THE YEAR = P179,290

P179,290
12 months
= ?
FORMULA AND COMPUTATION

TOTAL BASIC SALARY EARNED FOR

THE YEAR = P179,290

P179,290 P14,940.83 is the

=
12 months 13th Month Pay
FORMULA AND COMPUTATION

Monthly basic salary x Length of employment

= 13th Month Pay
12 months

Illustration: PRORATED (Perfect attendance, hindi

nagtrabaho ng buong taon)
Monthly basic salary = P20,000
Length of employment = 6 M0nths
FORMULA AND COMPUTATION

Monthly basic salary x Length of employment

= 13th Month Pay
12 months

P20,000 x 6 Months
= 12 months

= P10,000 is the
13th Month Pay
COVERAGE
Moreover, an employer is given the prerogative to release the
13th month pay in installments of two (2) to whichever
number that is convenient to satisfy the condition that the
mandatory benefit be given before December 24 every year.
By practice, many companies maintain two installments, first
in May and then in December, where the first fifty percent
(50%) is given as an aid for employees to prepare for the
opening of the regular school year in June.
Thank you!