As an employee before, we tend to be more motivated and driven to excel when our works are recognized and especially when we receive benefits of any form. Moreover, its more exciting to work when our 13th month pay is about to be released.
A 13th month pay is one of the monetary benefits of an employee in the Philippines. Under the Presidential Decree No. 851, a rank-and-file employee should receive a 13th month pay on or before December 24. The main purpose of this law is to let the employees enjoy the extra cash for coming holidays especially the Christmas and New Year Celebrations.
By the way, the rank-and-file employees are those general employees in the company which positions are non-executive and non-managerial.
Some companies, including the one I previously worked, half of the 13th month pay is released before the opening of the school year (around June) and the remaining half is before December 24.
How to Compute 13th Month Pay in the Philippines
If you are a new employee or this is the first time that you are about to receive a 13th month pay, the amount of your 13th month pay is equivalent to 1/12 of your “total basic salary received” in the whole calendar year.
The general formula is:
13th Month Pay = Total Basic Salary of the Year ÷ 12
So how do you exactly compute the 13th month pay you should receive? Follow this guide:
Step 1: Determine Your Basic Salary
Of course, you know very well how much is your basic salary but this is just to clear things up. For the computation of 13th month pay, you should just consider your regular or basic salary you are receiving per month. Don’t include your allowances, cash equivalent for unused sick or vacation leaves, night shit pay, holiday pay and other remuneration.
So let’s say you are receiving a basic salary worth ₱15,000 per month.
Step 2: Get the Total Basic Salary
Perhaps, there were times that you have absences, late days and other circumstances that affects your monthly compensation. So take this table for example:
| Month | Basic Salary |
|---|---|
| January | ₱15,000 |
| February | ₱14,000 |
| March | ₱15,000 |
| April | ₱15,000 |
| May | ₱13,500 |
| June | ₱15,000 |
| July | ₱15,000 |
| August | ₱15,000 |
| September | ₱14,500 |
| October | ₱15,000 |
| November | ₱15,000 |
| December | ₱15,000 |
In this case, the sum of your salary the whole year is ₱177,000.
Step 3: Calculate Your 13th Month Pay
Given the formula for the computation, ₱177,000 ÷ 12 = ₱14,750.
The amount ₱14,750 is your expected 13th month pay.
Under the TRAIN Law, the 13th month pay worth 90,000 and below are exempted from income tax. Any amount over that set limit is taxable.
The basic calculation is just to get the total salary received for the whole year. Regardless if you are on a Maternity Leave for 2 months or Leave Without Pay for 5 days, etc. Just compute the amount you have received in each month. Then, divide the total by 12 and the result is your 13th month pay.
For HR and employers who are calculating paper timesheets manually for payroll or billing, you may want to use this Timesheet Calculator for faster computations.
Resigned Employees
Even when you have resigned, as long as you have rendered for at least one (1) month working in the company, you are entitled to receive a 13th month pay.
Example you have worked on January to June, that is 6 months, with a basic salary of ₱25,000.
| Month | Basic Salary |
|---|---|
| January | ₱25,000 |
| February | ₱25,000 |
| March | ₱25,000 |
| April | ₱25,000 |
| May | ₱25,000 |
| June | ₱25,000 |
Your total salary received was ₱150,000. Divide it by 12, your 13th month pay should be ₱12,500 (calculated as ₱150,000 ÷ 12). This is normally released on the date given by the HR or a person-in-charge in the company since it may take some time for approval and other followed rules. In the same way, you should also settle anything before your resignation (loans, property accountability, etc).
Increased Salary
So what if your salary increased from ₱20,000 on the month of January until May then to ₱25,000 on June to December? As general formula is concerned, get the total salary received when you are still earning ₱20,000 per month to the months when you are already receiving ₱25,000. Then, divide the total amount by 12.
So that was the general guide on how to compute your 13th month pay. Remember, if you have confusion about these things, you may read on the Presidential Decree No. 851 to learn more. If you have legal complaints against your employer who didn’t release your 13th month pay, you may contact DOLE. Let us know your thoughts in the comment section.
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