It’s December and people are looking forward to two (2) things: The Holidays and their bonuses and 13th month pays. A lot of people have inquiries as to what the 13th month pay is and whether or not they can get it. In this article, we will be detailing what the 13th month pay is and to answer your question, we’ll tell you who are entitled to receive a 13th month pay.
Before we start, let us first know what a 13th month pay is. Many people think that this is a pay given to workers as a bonus. The value of the 13th month pay will depend on the number of months an employee has been working for the company in a calendar year.
What is the 13th month pay?
To end the inquiries and confusion, the 13th month pay is a mandatory benefit given to employees as part of the Presidential Decree No. 851. The 13th month pay is not actually a “bonus” because a bonus is an incentive or a reward given to employees in excess of a business or an establishment success. It’s not a bonus because the 13th month pay is a benefit that should be given to all rank and file employees even if the business doesn’t have excess funds.
A bonus is given to an employee depending on the company’s generosity; it’s not really a requirement. The factors in computing for the 13th month pay would include the basic pay of a worker in a month and the number of months the employee has worked for the company in a calendar year.
What is a basic salary?
For most of you who are not aware, the basic salary is the sole ingredient in this computation. The basic salary is the pay that an employer gives its employees. However, the basic pay shall not include monetary benefits, incentives, and allowances of a certain employee. So, the basic salary is simply the renumeration of paid by the employer without allowances and benefits.
More so, salary-related benefits should be part of the computation of the 13th month pay depending on company policy or collective agreement. But usually, the 13th month pay only includes the basic salary.
Who can receive a 13th month pay?
All rank-and-file employees can receive a 13th month pay. However, it’s computed monthly so that employee must have had worked for a month in a calendar year for the company. They should receive a 13th month pay regardless of the nature of the company they work for; irrespective of the ways they are paid.
What are file-and-rank employees?
Employees who do not have managerial roles in a company are considered as file and rank employees. Managerial roles are people who make decisions terminate and execute management policies. Furthermore, they’re the people who have the power to decide over hiring, suspending, recalling, discharging, and laying employees off.
Are there exceptions to the 13th month mandatory pay?
Yes, there are certain exceptions. The following employers who have this exemption under Presidential Decree 851 are:
- The government and any of its political subdivisions. This includes government-owned and controlled corporations, except those corporations operating essentially as private subsidiaries of the Government;
- Employers who are already paying their employees 13th month pay or more in a calendar year or its equivalent at the time of the issuance of the Presidential Decree 851;
- Employers of persons in the personal service of another in relation to such workers; and
- The employers of those who are paid on purely commission, boundary, or task basis. Those who are paid a fixed amount for performing specific work, irrespective of the time consumed in the performance thereof, except those workers who are paid on piece-rate basis, in which case the employer shall grant such workers the required 13th month pay.
What is the computation of the 13th month pay?
Since you are to receive your 13th month pay, you should know the computation for you to know whether or not it’s legitimate. The 13th month pay should not be less than 1/12 of the basic salary of the worker. To give you an illustration of how the formula looks like:
TOTAL BASIC SALARY IN A MONTH, EARNED IN THE YEAR / 12 MONTHS = PROPORTIONATE 13TH MONTH PAY
So, the number of calendar years a specific employee has worked for the company is a major factor in the computation.
What if a person had a maternity or a paternity leave?
Unfortunately, while a person is either on a maternity or a paternity leave, it’s not part of the computation. So, even if a person is having a maternity leave, they’ll still get what they should. For instance, let’s take a scenario and look at it in a practical manner:
A woman will be on Maternity Leave for two months. She’ll be out on September 1st to October 31st. Her basic salary is P15, 000.00 in a month.
- January – P15, 000.00
- February – P15, 000.00
- March – P15, 000.00
- April – P15, 000.00
- May – P15, 000.00
- June – P15, 000.00
- July – P15, 000.00
- August – P15, 000.00
- September – On Maternity Leave
- October – On Maternity Leave
- November – P15, 000.00
- December – P15, 000.00
- 15, 000 x 10 (number of months the woman has worked) = 150, 000.00
- 150, 000 / 12 (full calendar year) = P12, 500; the 13th month pay that the worker will get.
P.S.: There are companies who have different rules as regards maternity and paternity leaves. So, it’s better to clarify it with your compensation and benefits department.
What if the employee resigned? Would they still receive a 13th month pay?
Yes, even if a person has resigned or if they completely detached themselves from the company, they should still get a 13th month pay depending on the number of months they’ve worked for the company. So, if a person has worked for a company from January to October, it should be computed as:
- Basic Salary x 10 (number of months an employee worked for the company) = XXXXXX
- XXXXXX / 12 = 13th month pay of the resigned employee
When should employees receive the 13th month pay?
As per the Presidential Decree, employers should hand the 13th month pay not later than the 24th of December, each calendar year. However, an employer can pay their employees staggered, giving half of it before the opening of the regular school year (S.Y.) and the half on or before the 24th of December of each calendar year.
Moreover, employers can also give half of it before December payouts and on or before the 24th of December. This way, the employees have ample budget and time to plan for the holidays.
Are you going to receive a 13th month pay? Will you be able to confirm whether or not the 13th month pay given to you is correct? Now that you know what THE 13th month pay is, why not assess and validate whether or not you’ll be receiving it? Who knows? Maybe your employer has something brewing special for you.