13th-Month Pay Calculator

The 13th Month Pay is a mandatory benefit provided to employees in the Philippines, as stipulated by Presidential Decree No. 851. It is essentially an additional compensation equivalent to one-twelfth (1/12) of an employee’s total basic salary within a calendar year.

Guidelines on the grant of 13th-month pay

Who is entitled to 13th-month pay? (Coverage)

Rank and File employees in the private sector shall be entitled to the 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.

Also Read: Minimum Wage in the Philippines

How to compute 13th Month Pay in the Philippines?

The minimum 13th-month pay required by law shall not be less than one-twelfth (1/12) of the total basic salary earned by an employee within a calendar year. To illustrate the formula:

Total basic salary earned during the year/ 12 months = proportionate 13th-month pay

Illustration:

Using the basic wage of P537.00 per day and a six-day workweek or an equivalent Monthly Basic Salary of P14,006.75

(P537.00*313/12 months):

January	no absence	P14,006.75
February	no absence	P14,006.75
March	no absence	P14,006.75
April	company shutdown	No salary
May	company shutdown	No salary
June	5 days leave with pay	P14,006.75
July	company shutdown	No salary
August	company shutdown	No salary
September	10 days leave w/o pay	P8,636.75
October	no absence	P14,006.75
November	1 day leave w/o pay	P13,469.75
December	no absence	P14,006.75

Total basic salary earned for the year P106,147.00

P106,147.00/12 months= P8,845.58 is the proportionate 13th-month pay

The minimum amount shall be provided without prejudice to existing company practice and policy, employment contract, or collective bargaining agreement if any.

When is 13th month pay given?

The employer shall pay the 13th-month pay on or before 24 December.

The advisory also reads that no request or application for exemption from payment of 13th-month pay, or for deferment of the payment shall be accepted and allowed.

Is 13th month pay taxable?

The ₱90,000 income-tax exemption generally applies to the combined total of 13th-month pay and other qualifying benefits, not just 13th-month pay alone. Amounts exceeding the applicable exemption may be taxable.

Important Considerations

• Pro-rated 13th Month Pay: If an employee has not worked for the entire year, the 13th Month Pay is computed on a pro-rata basis. For example, if an employee worked for only six months, their 13th Month Pay would be calculated based on the total basic salary earned during those six months divided by 12.
• Deadline for Payment: Employers are required to pay the 13th Month Pay on or before December 24 of each year.
• Exemptions: Certain employers, such as those in the government and those who are already paying their employees a 13th Month Pay or its equivalent, may be exempt from this requirement.

Earnings Excluded from 13th-Month Pay Computation in the Philippines

The 13th-month pay calculation in the Philippines excludes the following types of earnings and allowances:

• Overtime Pay
• Holiday Pay
• Night Shift Differential
• Bonuses and Incentives
• Commissions not forming part of basic salary (classification depends on applicable rules)
• Profit Sharing
• Allowances

These items are generally excluded if they do not form part of basic salary; classification can depend on applicable rules and compensation arrangements.

Conclusion

The 13th Month Pay is a significant benefit for employees in the Philippines, providing them with additional financial support at the end of the year. By understanding how to compute it, both employers and employees can ensure compliance with the law and proper financial planning.

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