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How to Compute Your 13th Month Pay

Cue the Aegis classic.
by Arianne Merez
Nov 25, 2021
Photo/s: shutterstock

Philippine law mandates that all workers get 13th month pay every year. Simply put, it's the pay equivalent of an entire month of work for those who worked the full 12 months in the calendar year.

While 13th month pay is given in November to December, it is different from a bonus that is given on top of the 13th month pay. That usually depends on your employment contract or the collective bargaining agreement of your union if there's one.

Bonuses can also be given based on company earnings and employee performance. That's all up to your employer. What your boss is obliged to give you though is 13th month pay.

1. How do I compute my 13th month pay?

If you worked for a full year without any unpaid absences, your 13th-month pay should be equivalent to a month's salary. Otherwise, it will be pro-rated, meaning it will be based on the number of months you worked for the year, this applies to new hires.

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As required by law, the minimum 13th-month should not be less than a twelfth (1/12) of the total basic salary earned for the year.

To compute for your 13th-month pay, you divide your total basic salary earned for the year by 12. Take note that your basic salary excludes other earnings such as allowances, and overtime pay.

Let's say a starting call center worker earns P21,000 per month and works the entire year, their 13th month pay is P21,000. Here's the computation from a Senate briefier on taxes.

13th Month Pay Calculator
Philippine Senate website
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Your 13th month pay is taxable up to P90,000. Anything in excess will be subject to income tax. Say, your 13th month pay is P120,000, the P90,000 is tax-free while the excess P30,000 is taxable. If you are in the 20% income tax bracket, that's less P6,000 from the P30,000 excess. This will leave you with P114,000 total 13th month pay.

2. Who is entitled to 13th month pay?

According to the Department of Labor and Employment, rank-and-file employees in the private sector shall be entitled to 13th month pay regardless of their position, designation, or employment status as long as they have rendered at least a month of service in the company.

3. When should I get my 13th month pay?

Employers should pay the 13th month pay on or before Dec. 24 according to the labor department.

4. I resigned this year, will I get 13th month pay?

Yes, resigned or terminated employees are entitled to their 13th month pay. This will be computed using their total earnings for the time they worked in the company for the said calendar year.

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The labor department has barred employers from seeking a deferment or exemption from paying the 13-month pay of their workers so this means that you should receive yours before Christmas.

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