Millions of Filipinos are eagerly expecting their 13th month’s pay. Then, you might be interested in learning how to calculate your 13th month pay in the Philippines to make sure you receive the full and accurate amount depending on your salary and duration of service.
By providing families with extra money to spend on Christmas and New Year’s, the 13th month pay law seeks to alleviate this issue. You can therefore use your 13th month’s pay for that purpose instead of devoting a portion of your paycheck to gifts and other holiday expenses. You should set aside money from your normal income for needs like food, bills, transportation, academic expenses, and among others. This article will provide you with a fundamental overview of the 13th month pay in the Philippines, tell you if you qualify for one, and show you how to calculate it using a pen, a paper, and a calculator.
How to Compute Your 13th Month Pay in the Philippines?
By understanding how to calculate your 13th month salary, you may make sure that you get the just compensation that the law requires. Your monthly basic income multiplied by the number of months you’ve worked there, divided by 12, is the basic calculation for 13th month pay:
All payments made by an employer or business to an employee in exchange for services done are referred to as a monthly basic salary. For example, the cash equivalent of unused vacation and sick leave credits, overtime pay, holiday pay, premium pay, and night shift differential are not considered to be part of the basic or regular salary. Neither are cost-of-living allowances, profit-sharing payments, allowances, or other financial benefits.
The aforementioned salary-related benefits, however, may be taken into account when calculating the 13th month’s pay if they are regarded as a component of the employees’ basic pay under an individual or collective agreement, corporate practice, or policy.
To assist you, the 13th month salary formula for the Philippines is as follows:
Monthly Salary x Length of Employment (example 11 months) divide it to twelve = Pay for the 13th Month
(Example: ₱10,000×11÷12= ₱9,166.66)
In a different illustration, if a worker makes PHP 150,000 a year and doesn’t take any unpaid time off, their compensation for the thirteenth month would be PHP 12,500 (150,000÷12 = 12,500).
If an employee joins or leaves the company halfway through the year, the calculation for the 13th month salary in the Philippines is a little different. In this scenario, rather than using the annual salary as the starting point, you would divide the accrued payment by 12 to get the 13th month’s pay.
Assuming the employee in the previous example, who makes PHP 180,000 year, has only been employed by the company for exactly four months(15,000 per month) as of December 31, let’s take that as our example. In order to get at their basic monthly income, first multiply it by the quantity of months they worked (PHP 15,000 x 4 = PHP 60,000), then divide it by 12 (PHP 60,000 12 = PHP 5,000). That is the 13th month’s pro rata compensation for them.
What is the 13th Month Pay?
According to Presidential Decree No. 851 which was approved by President Ferdinand Marcos on December 16, 1975, rank-and-file workers in the Philippines must get the 13th month pay as a reward or compensation at the end of the year.
That’s what P.D. No. 185 mandates that all Filipino employers must pay their staff a 13th month’s salary by December 24 of each year, regardless of the nature of the work they are doing. In a calendar year, the 13th month’s pay is equal to one-twelfth (1/12) of the employee’s base pay.
Who Qualifies, and Who Does Not Qualify to Receive a 13th Month Pay in the Philippines?
There are restrictions on who is qualified for a 13th month salary. Part 3 of P.D. According to No. 185, all employers in the Philippines are subject to the 13th month wage rule with the following exceptions:
- The Government and any of its political subdivisions, including corporations that are owned and controlled by the Government, with the exception of those that basically serve as its private subsidiary;
- Companies paying employees at the time of this release 13 months’ pay or more in a calendar year’s equivalent;
- Employers of domestic assistants and individuals working in another person’s personal service in connection to such workers;
- Employers of workers who are paid solely on a commission, boundary, or task basis as well as those who receive a set payment for completing a particular task, regardless of the amount of time required to complete it, with the exception of those who are paid on a piece-rate basis, in which case the employer is covered by this issuance insofar as such workers are concerned.
Therefore, workers for governmental organizations, including departments, agencies, and government-owned and controlled corporations (GOCC), are not entitled to 13th month salary. The same holds true for contract employees, domestic helpers, freelancers, commission-based workers, and other types of employees (e.g. insurance agents, real estate brokers).
P.D. With prior approval from the Secretary of the Department of Labor and Employment, No. 185 also contains a provision that exempts distressed firms from paying their employees 13th month wage if they are currently suffering severe losses (DOLE). Franklin Drilon, the previous DOLE Secretary, however, published new rules in 1986 that removed struggling firms from the list of exemptions.
Are 13th month pay benefits still available to terminated or resigned employees?
As long as they have been employed by the business or employer for at least one month, workers who quit their positions or were fired are likewise qualified for a 13th month’s compensation. Employees who resign will be paid for their 13th month as part of their last or back pay, which is typically delivered one to two months after the date of resignation.
Should I pay taxes on my 13th month’s pay?
If the 13th month’s wage is greater than PHP 90,000, the new TRAIN Law requires it to be taxable. There will only be taxation on the amount over 90,000. For instance, only ten percent of your thirteenth month’s salary is taxed.
When will I get my thirteenth month’s pay?
Your 13th month shall be sent no later than December 24 of each year, as mandated by the Department of Labor and Employment (DOLE).
If I don’t get my 13th month’s pay, what should I do?
The 13th month benefit must be provided to eligible employees by all private businesses, otherwise, they risk administrative penalties. Calling the DOLE’s 24-hour hotline 1349 or using an online form are two ways you can report bad employers.
Even though working hard can be difficult, the small period of vacation we get at the end of the year can make it all worthwhile. We also receive a bonus for the 13th month at the end of the year as a thank you from our employers, and the government for the hours we put in to help them grow their company and the economy. And as long as you know how to compute your 13th month pay, you can use it as a down payment on affordable houses and lots or condominiums from BRIA Homes This will ensure that you get the fair compensation to which you are entitled as required by law.
BRIA Homes, one of the Philippines’ leading housing developers, aims to bring affordable house and lot packages and condominium units closer to ordinary Filipino families. BRIA Homes takes pride in its quick construction time. It uses new home building technologies in every project to reduce construction time without sacrificing quality.