Are you one of the millions of Filipinos who are eagerly awaiting their 13th month pay? Then you might want to know how to compute your 13th month pay to ensure that you get the full and exact amount based on your salary and length of service. This article will give you a basic overview of the 13th month pay, whether you are eligible to receive one, and how to compute your 13th month pay using a formula, calculator and spreadsheets.
The holiday season, which includes Christmas and New Year, is a time for celebration together with family and loved ones. It’s also a time when people are expected to spend money on gifts and food, especially during the Christmas Eve feast or Noche Buena. For many Filipino families, however, the Christmas season represents an additional expense and often puts a strain on their limited budgets. Some even resort to borrowing money or pawning jewelry to tide them over during the holidays.
The 13th month pay law aims to address this situation by giving families extra money to spend for Christmas and New Year. So instead of spending a portion of your salary on gifts and other holiday expenses, you can use your 13th month pay (as well as your Christmas bonus) for that purpose. Your regular paycheck should be allocated for basic household necessities such as food, rent, utility bills, transportation, insurance, and tuition fees, among others.
We know that not everyone is very much familiar with the 13th month pay and the correct way to compute it, so we’ve come up with this guide to help you. Don’t worry if you’re not good at math, as we’ve also provided a free 13th month pay calculator and spreadsheet. All you have to do is to enter the required information and the computation will be automatically done for you.
What is the 13th Month Pay?
The 13th month pay is a mandatory benefit or compensation given to rank-and-file employees in the Philippines at the end of the year, as mandated by Presidential Decree No. 851 signed by President Ferdinand Marcos on December 16, 1975.
According to P.D. No. 185, all employers in the Philippines are required to pay their employees, regardless of the nature of their employment, a 13th month pay not later than December 24 of every year. The 13th month pay is the equivalent of one-twelfth (1/12) of an employee’s basic salary within a calendar year.
The 13th month pay is not the same as the Christmas bonus, which is an altogether different form of compensation that a company has the option to reward to their employees for helping to achieve certain goals and contributing to the success of the business. Employers are not required by the government or by law to give a Christmas bonus.
Employees can opt to divide their 13th month pay into two, with half the amount to be received during the first half of the year (January to June) and the remaining half during the latter part of the year.
Under the new TRAIN Law, the 13th month pay is subject to income tax if it exceeds ₱90,000. Only the amount in excess of ₱90,000 will be taxed. For instance, if your 13th month pay is ₱100,000, only ₱10,000 is subject to tax.
Who Are Eligible to Receive a 13th Month Pay?
Only rank-and-file employees or workers who are not in managerial positions are mandated to receive a 13th month pay. However, employers have the discretion to give their managerial employees a 13th month pay. A managerial employee is someone who has the power and responsibility to perform management tasks such as hiring, suspending, transferring, dismissing and disciplining employees.
Employees who resigned or were terminated from their jobs are also eligible to receive a 13th month pay, provided that they worked for the company or employer for at least one month. Resigned employees will receive their 13th month pay as part of their back pay or final pay, which is usually given within one to two months after the date of resignation.
Who Are Not Eligible to Receive a 13th Month Pay?
Not everyone is eligible to receive a 13th month pay. Section 3 of P.D. No. 185 states that the 13th month pay applies to all employers in the Philippines except for the following:
- The Government and any of its political subdivisions, including government-owned and controlled corporations, except those corporations operating essentially as private subsidiaries of the Government;
- Employers already paying their employees 13-month pay or more in a calendar year of its equivalent at the time of this issuance;
- Employers of household helpers and persons in the personal service of another in relation to such workers; and
- Employers of those who are paid on purely commission, boundary, or task basis, and those who are paid a fixed amount for performing a specific work, irrespective of the time consumed in the performance thereof, except where the workers are paid on piece-rate basis in which case the employer shall be covered by this issuance insofar as such workers are concerned.
This means that employees of government institutions, departments, agencies and government-owned and controlled corporation (GOCC) are not eligible to receive a 13th month pay. The same goes for freelancers, household helpers, contractual workers, and employees who are paid on a commission basis (e.g. insurance agents, real estate brokers).
P.D. No. 185 also has a stipulation that exempted distressed employers (currently incurring substantial losses) from giving 13th month pay to their employees with prior authorization from the Secretary of the Department of Labor and Employment (DOLE). However, former DOLE Secretary Franklin Drilon issued new guidelines in 1986 that excluded distressed employers from the list of exemptions.
How Do You Compute Your 13th Month Pay?
By knowing how to compute your 13th month pay, you ensure that you receive the proper compensation that you deserve as mandated by law.
The basic 13th month pay formula is your monthly basic salary multiplied by your length of employment divided by 12:
Monthly Basic Salary x Employment Length ÷ 12 Months = 13th Month Pay
Monthly basic salary refers to all remunerations or earnings paid by an employer or company to an employee for services rendered. The basic salary may not include cost-of-living allowances, profit-sharing payments, and allowances and monetary benefits that are not considered as part of the basic or regular salary, such as the cash equivalent of unused vacation and sick leave credits, overtime pay, holiday pay, premium pay, and night shift differential.
However, the aforementioned salary-related benefits may be included in the computation of the 13th month pay if these benefits are considered as part of the employees’ basic salary by individual or collective agreement, company practice, or policy.
If there are any absences, unpaid leaves, lates or undertimes during the month, the salary equivalent for those missed days or hours will be deducted from the basic salary before calculating the 13th month pay.
Employment length is the number of months worked in a calendar year. For example, if an employee worked from February until November, then the employment length is 10 months.
Maternity leaves are excluded from the 13th month pay computation. For example, if an employee took a maternity leave for two months, only the months in which she was present at work will be included in the computation. This applies even if the employee was paid during the maternity leave.
Let’s say that your monthly basic salary is ₱15,000 and you were employed with the company for the whole year. Based on the computation, your 13th month pay is ₱15,000.
₱15,000 x 12 months ÷ 12 months = ₱15,000
Now what if you’ve worked for less than a year? In that case, you will receive a prorated 13th month pay based on the number of months that you’ve worked for the company. If your basic salary is ₱15,000 and you’ve only worked for 9 months, then your 13th month pay is ₱11,250.
₱15,000 x 9 months ÷ 12 months = ₱11,250
Due to absences, unpaid leaves, undertimes and other deductions, your monthly basic salary may not be the same all throughout the calendar year. If you have these salary deductions, you can compute your 13th month pay by subtracting the deductions from the monthly basic salary, and then adding up all your monthly salaries to come up with your total salary for the year. Finally, divide your total salary by 12 to get your 13th month pay.
To help you with the computation, we’ve provided a 13th month pay calculator and an Excel spreadsheet that you are free to use and share with anyone.
Use Our Online 13th Month Pay Calculator
With our free 13th month pay calculator, you don’t have to make your computations manually. All you have to do is to enter your basic salary for each month that you are employed, along with any deductions (unpaid leaves, absences, undertimes, etc.), during the calendar year, and then hit the Calculate button to determine your 13th month pay.
13th Month Pay Calculator
Enter your basic salary and deductions for each month to compute your 13th month pay.
January
February
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December
Disclaimer: Our online calculator is provided for illustrative purposes only, and the information obtained by using the online calculator is not, and should not be taken as, legal or financial advice. We accept no liability whatsoever for any losses or liabilities allegedly arising from the use of our online calculator.
Download Our 13th Month Pay Excel Spreadsheets
If you don’t want to use our calculator, we also have a free spreadsheet that will automatically compute your 13th month pay based on your monthly basic salary and deductions, if any. Click any of the links below to download the Microsoft Excel file or to open in Google Sheets.
After downloading and opening the spreadsheet in Excel, click “Enable Editing” so that you can edit it and add your information. Simply enter your basic salary, absences and late/undertime pay (if any) in their corresponding fields. The spreadsheet will automatically calculate the totals and your 13th month pay.
In Google Sheets, you can make your own copy of the spreadsheet by clicking File > Make a Copy. After creating a copy, you can start entering your data to compute your 13th month pay.
If there are any discrepancies or differences between your own computation and your actual 13th month pay, you may approach your HR department to know how they came up with their computation. It’s possible that you have deductions that you are unaware of or have tallied incorrectly.
Frequently Asked Questions
Who can receive their 13th month pay?
Rank-and-file employees who are not in managerial positions, and have worked for at least one month, are eligible to receive their 13th month pay.
Who cannot receive their 13th month pay?
Aside from employees in managerial positions, those who are ineligible to receive their 13th month pay are government employees, household helpers, and workers who are paid on a commission or per-task basis, such as freelancers.
I’m a manager. Can I still receive my 13th month pay?
Yes, managers and employees with managerial responsibilities can receive their 13th month pay if their company or employer decides to give it to them.
Can terminated or resigned employees still receive their 13th month pay?
Employees who have resigned or were terminated from their jobs are still eligible to receive their 13th month salary. The amount is computed starting from the time the employee started working during the calendar year until the time of their resignation or termination.
Do I have to pay taxes on my 13th month pay?
Under the TRAIN Law, your 13th month pay will only be taxed if it exceeds ₱90,000. This is higher than the previous tax-exempt rate of ₱82,000.
What should I do if I did not receive my 13th month pay?
All private employers are required to give 13th month benefits to their eligible employees or else face administrative charges. You can report erring employers by calling the DOLE 24/7 hotline 1349 or by filling out an online form.
Final Thoughts
The 13th month is indeed a big help to many Filipinos who are struggling to make ends meet during these difficult times. It gives families extra money for Christmas and New Year to avoid using their household budget or savings on gifts, parties and other holiday expenses.
Make sure that you get the exact 13th month benefits that you deserve by using the formula for computation as well as our free 13th month pay calculator and spreadsheet. Please feel free to share this article with your friends who might also be interested to know their 13th month pay. Do let us know if you have any questions and suggestions by leaving a comment below.
