What you should know about 13th month pay
The 13th Month Pay is likewise paid to a rank-and-file employee who resigned or had his services terminated before the 13th Month Pay was due
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The 13th Month Pay is likewise paid to a rank-and-file employee who resigned or had his services terminated before the 13th Month Pay was due
Christmas is quickly approaching, as is the end of the year. Employees look forward to not only the gifts they will receive, the vacations they will take, the Christmas dances they will perform at office Christmas parties (sarcasm applied), but also the additional income that will be coming their way — the 13th-month pay.
Coverage of 13th Month Pay Law
Presidential Decree 851, also known as the "13th Month Pay Law," governs the 13th Month Pay. The said law originally mandated employers to pay 13th Month pay to all employees with a basic salary of not more than P1,000 per month no later than 24 December of each year. However, under President Corazon Aquino's Memorandum Order 28 dated 13 August 1986, all employees must now pay their rank-and-file employees their 13th Month Pay by 24 December of each year.
At present, rank-and-file employees in the private sector shall be entitled to 13th-month pay regardless of their position, designation, or employment status, and irrespective of the method by which their wages are paid, provided that they have worked for at least one month during the calendar year. It shall also be given to rank-and-file employees who are paid on a piece-rate basis, fixed or guaranteed wage plus commission, with multiple employers, resigned or were terminated, and were on maternity leave and receive salary differential are also entitled to 13th-month pay.
It should be noted, among others, that the 13th Month Pay is likewise paid to a rank-and-file employee who resigned or had his services terminated before the 13th Month Pay was due. This is consistent with the principle of equity that as the employer can require the employee to clear himself of all liabilities and property accountability, the employee can also demand the payment of all benefits due him upon the termination of the relationship.
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The amount to be paid to this employee must be proportionate to the length of time he worked during the year, reckoned from the time he began working during the calendar year until the time he resigned or was terminated from service. Thus, if he only worked from January to September, his 13th-month pay should be equivalent to one-twelfth of his total basic salary earned during that period, and he may demand the same upon the termination of the employer-employee relationship.
The minimum amount of 13th Month Pay
The minimum 13th-month pay required by law cannot be less than 1/12 of an employee's total basic salary earned in a calendar year. The "basic salary" of an employee, under the Revised Guidelines Implementing the 13th Month Pay Law, includes all remunerations or earnings paid by the employer for services rendered but excludes allowances and monetary benefits that are not considered or integrated as part of the regular or basic salary, such as the cash equivalent of unused vacation and sick leave credits, overtime, premium, night differential, and holiday pay, and cost-of-living allowances.
These benefits, however, should be included as part of the basic salary if by agreement, company practice, or policy, the same is treated as part of the basic salary of the employees.
When to pay
The required 13th-month pay must be paid by 24th December of each year. An employer, however, may give his employees 1/2 of the required 13th-month pay before the opening of the regular school year and the other half before 24th December of each year. The frequency with which this monetary benefit is paid may be agreed upon by the employer and the employees' recognized/collective bargaining agent.
As the due date for the payment of the 13th Month Pay approaches, hopefully, every employee entitled to this benefit has received it already so that they can enjoy a more fulfilling Christmas and New Year.
