How your 13th month pay is computed

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MANILA, Philippines—Do you know how your 13th month pay is computed? Or who are entitled to receive it?

Following is a Question-and-Answer on 13th month pay published by the Department of Labor and Employment’s Bureau of Working Conditions:

Q:  What is 13th  month pay?

A:  13th  month pay is a form of monetary benefit equivalent to the monthly basic compensation received by an employee, computed pro-rata according to the number of months within a year that the employee has rendered service to the employer.

Q: Who are required to pay the 13th  month pay?

A:  All establishments regardless of the number of employees are required to pay their rank-and-file employees the 13th  month pay.

Q: Who are entitled to receive the 13th  month pay?

A: All rank-and-file employees regardless of the nature of their employment, and irrespective of the methods by which they are paid, provided they worked for at least one month during a calendar year.

Q:  How is 13th  month pay computed?

A:  The 13th  month pay is computed based on 1/12 of the total basic salary of an employee within a calendar year, or basic monthly salary for the whole year divided by 12 months.

Q:  What are the components of “basic salary”?

A:  “Basic salary” shall include all remunerations or earnings paid by an employer to an employee for services rendered, but does not include allowances and monetary benefits which are not considered, or integrated, as part of the regular, or basic, salary, such as the cash equivalent of unused vacation and sick leave credits, overtime, premium, night differential and holiday pay. Basic salary includes cost-of-living allowances.

However, these salary-related benefits should be included as part of the basic salary in the computation of the 13th  month pay if, by individual or collective agreement or company practice or policy, the same are treated as part of the basic salary of the employees.

Q: Are maternity leave benefits included in the computation of 13th  month pay?

A:  No. Maternity leave benefits are not included in the computation of 13th  month pay.

Q:  When shall 13th  month pay be paid?

A:   13th  month pay should be paid not later than  December 24  of each year.

Q:  Is there an option when a covered employer should pay the 13th  month?

A:  Yes.  A covered employer may pay one-half of the 13th  month pay before opening of the regular school year and the other half on or before the 24th  day of December of every year.

SOURCE: Official Gazette