A mandatory annual bonus in the Philippines equal to 1/12 of your total basic salary for the year. Required by law for all rank-and-file employees regardless of how they are paid.
13th Month Pay is a mandatory employment benefit in the Philippines governed by Presidential Decree No. 851. It must be paid to all rank-and-file employees — meaning any employee not in a managerial role — regardless of whether they are paid on a daily, weekly, or monthly basis. **Key rules:** - Amount: At least 1/12 of the employee's total basic salary earned within the calendar year. - Deadline: Must be paid on or before 24 December of each year. Employers may choose to pay half in June and half in December. - Minimum service: An employee who has worked for at least one month during the calendar year is entitled to 13th month pay, prorated based on months worked. - What counts as "basic salary": Regular pay only — overtime, allowances, cost-of-living allowances, and other monetary benefits are excluded from the computation. - Tax treatment: The first ₱90,000 of the 13th month pay is tax-exempt under the TRAIN Law. **Enforcement**: File a complaint with DOLE if your employer does not pay on time. Non-payment is a violation of PD 851 and the Labor Code.
An employee earns a basic salary of ₱20,000/month and started work in April of the current year. Their 13th month pay = (₱20,000 × 9 months) ÷ 12 = ₱15,000. This must be paid on or before 24 December. If the employer pays half in June, the remaining ₱7,500 must be paid by 24 December.
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