Here Are 5 Things To Know About Your 13th Month Pay

Ahead of the scheduled 13th month pay release, the Department of Labor and Employment (DOLE) released 2021 guidelines for employers and employees alike. In 2020, Labor Secretary Silvestre Bello III received criticism from labor groups and workers about a decision he made concerning such. 

What did he do? He considered allowing MSMEs and other businesses in turmoil to forego 13th month pay to make up for financial losses. He immediately took this statement back, citing misunderstanding as the reason. 

Have yet to catch up on the new guidelines? We summarize the most important points as you get to know more about this benefit. 

What is the 13th month pay?

According to Presidential Decree 851, the 13th month pay is defined as a "mandatory benefit" that employers must pay out. 

This is not to be confused with your company's voluntary bonus, which is usually based on year-round performance. Labor Secretary Bello emphasizes that the 13th month dole-out should be scheduled on or before December 24.

Depending on the pay you receive, the usual computation is your yearly basic pay divided by 12 months. What does the basic salary comprise? It is the flat rate that employers pay their employees. This amount does not include performance bonuses, premiums, and other pertinent perks. 

But like most payout schemes, there are certain guidelines and exemptions that surround it. Before we explore such, let us take a look at the economic status of the country today. 

(Also read: How To Communicate Your Expected Gross Salary?)

A cautious hope for the Philippines amid the pandemic

BSP's governor Benjamin Diokno relays that the country can look forward to a bright, economic future. He shares with Business World that the Philippines could be back to pre-pandemic times in Q3 of 2022.

Such a prediction stems from several factors. This includes the ongoing vaccine campaign roll-out, and the GDP peaking at 7.1 in Q3 2021. Coupled with the decrease of alert levels in the country, the economy is slated to bounce back soon.

This comes as good news after the pandemic caused several economic downfalls globally and locally. Within the Philippines, the GDP suffered its lowest drop at 16.5, a record high. In July 2020, the number of unemployed Filipinos was at 4.6M as per the Philippine Statistics Authority.

Even in the year 2021, there were unpredictable twists and turns as COVID-19 continued to wreak havoc. Forced lockdowns after surges had to be enforced. As such, the once recovering economy took a downturn as an effect.

Despite this, however, it is still important to remain cautious. The pandemic has shown us how unpredictable it can be. The numbers may have improved, but a wave could come on anytime depending on several factors. 

What you need to know about the 13th month pay

Despite the good news, unemployment rates peaked at the end of Q2 2021. As per the Philippine Statistics Authority, the estimated percentage is at 8.9%. This comes as one of many fluctuating data coming from the crisis we are still recovering from. The decision not to forego the 13th month pay amid economic turmoil is still an important factor for professionals. 

As an employee, you may have questions swirling in your mind about what to expect for your pay. In this article, we tackle the five common inquiries surrounding this concept. Here they are now:

1. Who can receive the bonus?

This monetary benefit is for all rank-and-file employees across all industries. Whether you are in IT or marketing, you have a 13th month payout to look forward to. 

With this in mind, we can define the type of professionals that can receive such. Rank-and-file employees are defined as those not in managerial positions. However, this definition can change depending on the way your company categorizes them. 

On top of that, such employees must have worked at least one (1) month in the fiscal year to be qualified. This also includes part-time workers, terminated, and resigned professionals. Depending on the time they served, they will get a pro-rated bonus. 

However, the pandemic has switched things up and has affected the ins and outs of employees. Hence, the pay should reflect the number of days the employee reported for work. This is dependent on the working arrangements the company implemented. 

2. How do you compute your bonus?

The average bonus computation divides the accumulated total salaries by 12 months. But the months of actual work actually affect the overall total. If you were not present for the full year, your bonus is subject to a pro-rata computation.

What does this mean? If you worked in the company for four months, you will only be receiving an estimated 25% instead of the full amount. The usual computation for pro-rated bonus is as follows:

You multiply the amount of your annual pay by the number of months you worked. Once you get the total, you divide it by 12 months. The amount you get is what you will receive for your bonus compensation. 

Moreover, your pay is not taxable. According to Republic Act No. 10653, you can wholly receive the amount as long as it does not exceed Php 82,000. 

3. Do leaves and premiums affect your pay?

As a working professional in your company, you have a slew of benefits at your disposal. Such examples include your fair share of leaves and premiums.

On the flipside, your leaves can also affect your 13th month pay. If you were on leave for several months, it could lessen your total bonus at the end of the year.

For example, a female employee takes maternity leave. The duration of such is 60 days on average, and 72 for cesarean delivery. When computing for her bonus, she will receive pay minus the months where she did not serve.

In line with this, parents who also take leaves will also affect the total amount they will receive at the end of the year.

4. Who are the exemptions?

According to DOLE, there are four types of employers that do not have to dole out the 13th month benefit. They are the following:

• The government, its subdivisions, and any of the companies they own. Private subsidiaries can receive the perk
• Employees on commission, like freelancers
• Employers who pay their 13th month within the calendar year or its equivalent
• Those who employ household helpers

5. What is a bonus?

DOLE defines this as an added incentive a company provides for its employees. The reasons for such could be due to individual performance, company numbers, and such. This is not a compulsory benefit, but a voluntary one.

As such, employees should know not to expect this along with their 13th month. They can only do so in two situations. First, the employer should disclose if they are giving bonuses outside of the 13th month. Second, your employment (or promotion) agreement has this in writing.

With these in mind, make sure that you double check your payslip and see if your computations align with your company. Scrimping on such would prove difficult especially in these times, where businesses are fluctuating. Every cent counts.

Aside from that, it is important to know your sources of income and how you can save more. Reach out to your Human Resources team if they have loans or other financial benefits you can take part in to help you.

But most of all, enjoy the fruits of your labor. You deserve it. You have reaped the fruits of your labor and now it is time to celebrate. On the flipside, it is also important to save what you have.

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