The end of the year is a time for celebration and giving thanks. It is also a time for employees to receive their 13th-month pay.
What is the 13th Month’s Pay?
13th-month pay is a mandatory benefit in the Philippines that all companies are required to pay their employees. It is equivalent to one month’s basic salary and is usually paid on or before December 24th. The law that mandates 13th-month pay is Republic Act No. 8425, also known as the “13th Month Pay Law.” This law was enacted in 1975 and was amended in 1989.
The computation formula for the 13th-month pay is as follows:
13th-month pay = total basic salary / 12
For example, if an employee’s basic salary is Php20,000 per month, and they’ve worked for a year with the company, their 13th-month pay would be Php20,000.
Deadline for Payment
The deadline for the payment of 13th-month pay is December 24th. However, companies may choose to pay their employees earlier.
All employees who have worked for at least one month during the calendar year are entitled to 13th-month pay. This includes regular employees, probationary employees, and casual employees. However, contractors are not entitled to 13th-month pay unless it is stated in their contract.
Pro-rated 13th Month Pay
Employees who have not worked for the entire calendar year are entitled to a pro-rated 13th-month pay. The computation for pro-rated 13th-month pay is as follows:
pro-rated 13th month pay = total basic salary * number of months worked / 12
For example, if an employee has worked for 9 months during the calendar year and their basic salary is Php20,000 per month, their pro-rated 13th-month pay would be Php15,000.
Difference between Christmas Bonus and 13th Month Pay
Christmas bonus and 13th-month pay are often confused with each other. However, there is a difference between the two. Christmas bonus is a discretionary benefit that is given by employers to their employees. It is not mandatory and is not regulated by the government. 13th-month pay, on the other hand, is a mandatory benefit that is given to all employees who have worked for at least one month during the calendar year. It is regulated by the government and must be paid on or before December 24th.
Penalties for Non-Payment
Companies that do not meet the 13th-month pay deadline or do not pay it at all may be penalized by the government. The penalties may include fines, imprisonment, or both.
13th-month pay is a welcome bonus for many employees. It can help them to pay for Christmas expenses or to save for the future. It is important to know your rights as an employee and to make sure that you are getting your 13th-month pay on time.
Do You Need Help for 13th-month Pay With Your Company?
The December deadline for the 13th-month pay is fast approaching. If you are a company that needs assistance in meeting this deadline, contact Triple i Consulting. We are a team of finance, accounting, and payroll professionals who can help you with the computation and filing of 13th-month pay for your employees.
We are the first ISO 9001:2008 firm to offer company and business registration services in the Philippines. We have a team of experts with decades of combined experience in Philippine business incorporation, accounting, taxation, FDA licensing, product registration, and more. We can provide the skilled assistance you need to settle your 13th-month pay and more.
Contact us for help here, or fill out the form below, call us at +63 (02) 8540-9623, or email us at email@example.com to schedule an initial consultation with one of our payroll service professionals.