All You Need To Know About Your 13th Month Pay

Are you one of the many government and private sector employees who’s looking forward to the release of the 13th month pay? I know I am, haha! It’s been a long and difficult 2021 for most of us and we can all use a windfall especially now that we are slowly easing our way back to normalcy.

To those who may still not know much about the 13th month pay — how is it computed, who are entitled to receive it, is it the same as a Christmas bonus — I did a quick research on the DOLE website and here are the facts you need to know about it.

Hope you find these informative. Read on.

What is the 13th month pay?

A mandatory benefit provided to employees pursuant to Presidential Decree No. 851 which requires employers to grant 13th month pay to all its rank and file employees.

Who are entitled to the 13th month pay?

All rank-and-file employees who have worked for at least one month during the calendar year, are entitled to receive the 13th month pay regardless of the nature of their employment and irrespective of the methods by which their wages are paid.

Who are rank-and-file employees?

All employees not considered managerial employees are considered rank-and-file employees. A managerial employee is one who is vested with powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign, or discipline employees, or to effectively recommend such managerial actions.

How is the 13th month pay computed?

The 13th month pay shall not be less than 1/12 of the total basic salary earned by an employee within a calendar year. To illustrate:

Total basic salary earned for the year / 12 months = proportionate 13th month pay.

When should the 13th month pay be paid?

It should be paid not later than December 24 of each year. An employer, however, may give to his employees one half of the 13th month pay before the opening of the regular school year and the other half on or before the 24th day of December of every year.

Is the 13th month pay the same as a “bonus”

No. A bonus is an amount granted to an employee in excess of what the law requires as a reward or incentive for achieving a goal and/or contributing to the success of the employer’s business. Unlike the 13th month pay, a bonus is given out of the employer’s generosity and is not a demandable and enforceable obligation.

I think more than the definition and schedule of payment of the 13th month pay, what’s more important for us to know is how to appropriate or use this windfall wisely so that it is not wasted. Most finance experts would suggest that the 13th month pay be set aside as forced savings or invest it on a small side business or insurance. It is, after all, an amount that is not included in our monthly budget (unless you have already counted it as your spending money for the holidays) and therefore, forms part of your “excess”. Others opt to use it for family trips, tuition fee payment, and the like.

However you spend your hard-earned cash, always remember to save some for a rainy day. With all the experiences we had during the onslaught of COVID-19, we know better now than to put all our eggs in one basket. Keep some of your 13th month pay so you don’t depend solely on ayuda later on.

Stay safe and happy!



Published by MasterCitizen

I collect citizen facts and the usual stuff that might be important for a Pinoy's everyday life....Subscribe to get updates, opinions, and news.

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