What Is 13th Month Pay?
The 13th month pay is a mandatory cash benefit granted to rank-and-file employees in the Philippines, regardless of the nature of their employment. It is governed by Presidential Decree No. 851, signed in 1975 and amended over the years. It is not a bonus — it is a legal right.
Who Is Entitled to 13th Month Pay?
All rank-and-file employees in the private sector who have worked for at least one month during the calendar year are entitled to 13th month pay. This includes:
- Regular, probationary, and contractual employees
- Part-time employees (prorated)
- Employees who resigned or were terminated mid-year (prorated)
- Employees on maternity leave (for the period covered by the benefit)
Not covered: Managerial employees, household workers (kasambahay), and workers paid purely on commission are generally excluded.
How Is 13th Month Pay Computed?
The formula is straightforward:
13th Month Pay = Total Basic Salary Earned in the Year ÷ 12
"Basic salary" includes your regular pay but excludes overtime pay, allowances, cash gifts, and other monetary benefits not considered part of basic pay.
Example Computation
| Scenario | Computation | 13th Month Pay |
|---|---|---|
| Full year, ₱20,000/month | ₱20,000 × 12 ÷ 12 | ₱20,000 |
| Worked 8 months, ₱25,000/month | ₱25,000 × 8 ÷ 12 | ₱16,667 |
| Worked 3 months, ₱30,000/month | ₱30,000 × 3 ÷ 12 | ₱7,500 |
When Must It Be Paid?
Employers must pay the 13th month pay on or before December 24 of each year. Many companies split the payment — releasing half in June (mid-year bonus) and the remainder in December — though this is optional.
Employees who resign or are terminated before December are entitled to their prorated 13th month pay as part of their final pay, which must be released within 30 days of separation under DOLE Labor Advisory No. 06-20.
Is 13th Month Pay Taxable?
Under the TRAIN Law (RA 10963), 13th month pay and other bonuses are tax-exempt up to ₱90,000 in total. Any amount exceeding ₱90,000 (combined with other bonuses) is subject to withholding tax.
Calculate Your 13th Month Pay
Use the FinalPay.ph 13th Month Pay Calculator to compute your exact entitlement — especially useful if you are resigning mid-year and need to know your prorated amount. If you are also computing your full final pay, the Final Pay Calculator includes the 13th month pay component automatically.
What If Your Employer Doesn't Pay?
Failure to pay 13th month pay is a labor violation. You can file a complaint with DOLE through the Single Entry Approach (SEnA). Employers found in violation face fines and may be required to pay the amount owed plus interest. Keep payslips and employment records as evidence.