‘Tis the season when Filipino employees highly anticipate the holidays not just for the celebration itself, but also for the monetary incentives that come along with it. But many Pinoys are quite confused whether 13th month pay and Christmas bonus are just the same—and if not, what are their key differences?
In this article, we’ll discuss thirteenth month pay, Christmas bonus, together with their similarities and whether they are different from each other in the first place.
13th Month Pay and Christmas Bonus: Is There A Difference?
13th-month pay and Christmas bonus are sometimes used interchangeably, wherein employees see 13th month pay as a Christmas bonus itself, since it is given to qualified employees every late November or early December before Christmastime.
However, 13th month pay and Christmas bonus in the Philippines are not the same. Thirteenth month pay is a government-mandated employee benefit, whereas Christmas bonuses are not compulsory, meaning employers have the discretion whether to give or not to give their employees a holiday bonus.
13th Month Pay: What You Need to Know
In order to fully understand what makes your 13th month salary different from your Christmas bonus, let’s dive deeper into the law’s history, from passage to the latest updates and guidelines set the Department of Labor and Employment (DOLE).
What is 13th Month Pay?
Thirteenth-month pay is a legal obligation of employers to their hardworking employees every end of the year. The law was officially implemented on December 16, 1975 after then-President Ferdinand Marcos signed Presidential Decree No. 851, which mandates employers in the private sector to give additional compensation to their rank-and-file employees on or before December 24.
The amount of compensation is equivalent to one-twelfth of an employee’s total basic salary annually. For example, if a person’s total yearly earning is ₱235,020, divide that by 12. The amount of 13th-month pay the employee shall then receive is ₱19,585.
If you’ve worked the entire year with no unpaid absences, you shall receive a month’s worth of your annual salary without deductions. If you’ve had deductions due to absences, however, the computation becomes pro-rated. This means your 13th month pay will be calculated based on the number of months you worked for during the year.
Are you still eligible for a 13th-month pay benefit even if you’ve been in the company only recently? Yes, you are qualified and entitled to receive your 13th month salary as long as you’ve worked in the company for at least a month. So if you’re salary for the entire calendar year is ₱18,000, assuming it’s your monthly salary, divide that by 12 and you shall receive ₱1,500 for your 13th month pay.
Who are not eligible to receive 13th month pay?
Every rank-and-file employee in the private sector, regardless of position and employment status, is eligible of a 13th-month pay benefit. Meanwhile, those excluded from the law are as follows: government workers, household helpers, and employees who are rendering work on a commission basis, such as freelancers and real estate brokers.
It is also important to mention other types of employers who are exempted from giving their employees legally mandatory monetary benefits like the 13th month pay, namely:
- The government sector, including government-controlled corporations, except corporations operating essentially as the government’s private subsidiaries;
- Distressed employers, or those who are not financially capable of paying their employees any additional holiday pay due to substantial losses in their income;
- Non-profit organizations whose regular income for the last two years has consistently decreased by no less than 40 percent, which is subject to review by the Secretary of Labor.
In the case of government employees, while they are not entitled to receive the mandatory benefit, they will still get other monetary benefits like 14th-month pay, mid-year, and year-end bonuses. According to the latest guidelines set by DOLE, 14th month pay is not compulsory, while the mid-year and year-end bonuses will be based upon individual performance and tenure.
Is my 13th month pay taxable?
According to Republic Act 10653, the mandatory 13th month pay for rank-and-file employees is not taxable, as long as it does not exceed ₱90,000. The current tax-exempt rate is higher compared to the last, which was ₱82,000.
Who are rank-and-file employees?
Rank-and-file employees are considered regular employees in a private company who do not hold supervisory and/or managerial positions. Having said that, supervisors and managers may or may not receive 13th month pay or its equivalent. It is best to ask your HR Department to clarify this matter.
Am I still eligible to receive 13th month pay if I separated from my employer?
If you resigned or was terminated by your company before the actual issuance of 13th month pay, you will still receive the payment due to you for the work you rendered for the entire calendar year prior to your resignation/termination. The same rule applies: you must have worked for at least a month. The payment you will receive is considered part of your back or final pay.
When will you receive your 13th month pay as part of your final compensation? It is typically given to employees after a month or two after their last working date. You must check this with your HR to verify the actual date.
What should I do if I didn’t receive my 13th month pay?
You should receive your thirteenth month pay on or before December 24. If Christmastime went by and you didn’t see any payment made to your bank account, you may want to call DOLE’s 24/7 hotline at 1349 to formally file a complaint about your employer’s nonpayment. However, you must first ensure that you are indeed entitled to a 13th month pay. Reviewing your employment contract is therefore advisable. If you’re not sure, you can coordinate with your HR or report the matter to your immediate supervisor.
Have You Received Your 13th Month Pay Yet?
How do you plan to spend your 13th month pay and any other monetary incentives you’ll receive this holiday season?
It’s important to ask yourself this question as this will help you make the right financial decision. That is, you might want to use it to pay off existing debts first or increase your personal savings. Still, it’s not wrong to use your bonuses to treat yourself, buy your loved ones gifts, or even use it to fund a future purchase of a condo for sale in Philippines, which you may be thinking of for quite some time to a start a new life!
Whatever your immediate plans are, a condo investment through Asterra is a choice you won’t regret. We provide the best value for money through our quality amenities, including a gym, swimming pool, clubhouse, and a play area. Whether it’s in Cavite, Pampanga, or Laguna, our condo for sale allows you to strike a balance between rural and urban living, where you get convenient access to essential establishments without the overwhelming hustle and bustle that Metro Manila is known for.
Got any questions for our affordable condominium communities? Feel free to send us your message. Rest assured that we will help you get your future condo in Philippines at a price that wouldn’t bust all your money in the bank. Inquire today!
