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13th month pay computation

13th month pay computation
31.08.2022
Romeo Alvarez

The Christmas season is a time of year when Filipinos look forward to exchanging presents, attending parties, and preparing cuisine for Noche Buena. However, Filipinos (particularly workers) are more enthused about their 13th month pay than any other aspect of the holiday season.

According to Malacaang, workers would get their 13th-month salary even if the country is hit by a pandemic. In reality, the DTI has once again offered financial assistance to enterprises that are having difficulty paying 13th-month salaries to their workers.

This year-end bonus is essentially an additional month of monetary compensation, but how to compute 13th month pay?

What Is 13th Month Pay?

Every salaried worker receives a monetary bonus at the end of their thirteenth month of employment. Employees in the private sector are entitled to 13th-month compensation, according to the Department of Labor and Employment, if they have worked at least one month in a year. The 13th-month compensation is equivalent to one-twelfth of an employee’s yearly wage.

What Aspects Are Taken Into Account While Computing It?

Only the employee’s base wage is covered by the 13th-month pay. There are no allowances or other monetary advantages included in the basic pay 13th month pay computation since they are not part of the employee’s regular remuneration.

The parts of the calculation are:

  • Every single one of your paid leaves, including those for maternity, illness, and vacation time off.
  • What you are paid on a day-to-day basis

Pay such as overtime, premium, night difference and holiday pay and cost-of-living allowance are not included in the calculation of this benefit. If these benefits are included in the employee’s contract or agreement, they must be included in the employee’s 13th-month pay calculation.

The things that are not included into the 13th month pay formula:

  • Bonuses;
  • Commissions;
  • Unpaid leaves or absences;
  • The difference between day and night;
  • Credits for unused sick and vacation days;
  • Incentives;
  • Allowances;
  • Pay for overtime;
  • Pay for time off in advance.

No taxes apply to the 13th month’s salary under Republic Act 10653, as long as the total of all employee compensation does not exceed 82,000 for both public and private sector workers. Every employer must submit a report of conformity with the legislation to the closest regional office of the Department of Labor and Employment no later than January 15.

What Is The Formula For Calculating It?

One-twelfth of an employee’s annual basic wage, or your annual basic monthly salary divided by 12, is used to calculate the 13th month’s compensation. The simplest way to do this is to take your basic wage for the year and divide it by 12.

Here is an example:

Paycheck every month. ₱20,000
Amount paid on a daily basis. ₱1,000
Time started. May 2, 2017
Yearlong employment (by December 31). 8 months
Unpaid time off. 3 days
Income during the year (minus unpaid absences). ₱157,000
Pay for the 13th month. 13,083

When Will You Get Your 13th Paycheck?

According to the legislation, workers must get their 13th month’s salary no later than December 24 of each year. Most workers get their 13th month salary in the first week of December, with a few receiving it the day before Christmas or even during the Christmas week itself.

Christmas Bonus vs. 13th-Month Pay

Many workers get a “Christmas bonus” in addition to their regular 13th-month salary. While it’s not required by law, this is a decision made by the employer and isn’t forced by the government.

Because it doesn’t always arrive in the form of cash, this may also vary in form. Christmas bonuses are sometimes given in the form of gift cards, canned foods, or even cash, which is not taxed by the company.

If A Company Fails To Pay Its Employees For The 13th Month Of The Year, They Are Breaking The Law

Unpaid 13th-month benefits might lead to administrative actions against an employer. The closest DOLE office may be used to register a grievance by employees. Former President Ferdinand Marcos issued PD 851 on December 16, 1975, and it was subsequently revised by his successor Corazon Aquino to provide this financial incentive. Filipinos would be able to spend more money on Christmas and New Year’s festivities because of this legislation.

Because of this, the Filipinos are always flush with cash around this time of year. As the Christmas season approaches and preparations are made for the holiday, now is an excellent time to begin saving or computation of 13th month pay.

Last Updated 31.08.2022
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