How to Compute 13th Month Pay in the Philippines
Under Presidential Decree No. 851, all rank-and-file employees in the private sector are entitled to 13th month pay. The formula is straightforward:
13th Month Pay = Total Basic Salary Earned ÷ 12
What counts as "basic salary"?
Only the employee's basic wage is used in the computation. The following are excluded:
- Overtime pay
- Night differential
- Holiday pay
- Allowances (meal, transportation, clothing, etc.)
- Cash equivalents of unused leave credits
- Commissions, profit-sharing, or bonuses
Example Computation
If your monthly basic salary is ₱20,000 and you worked all 12 months: ₱20,000 × 12 = ₱240,000 ÷ 12 = ₱20,000 13th month pay.
If you worked only 6 months with a ₱20,000 salary: ₱20,000 × 6 = ₱120,000 ÷ 12 = ₱10,000 13th month pay.
Tax Exemption Under TRAIN Law
Your 13th month pay, combined with other bonuses, is tax-exempt up to ₱90,000. If the total exceeds ₱90,000, only the excess is subject to withholding tax.
When Must Employers Pay It?
The law requires employers to release 13th month pay on or before December 24 each year. Many companies pay it in two tranches: half in June and the rest in December.
Frequently Asked Questions
Who is entitled to 13th month pay in the Philippines?
All rank-and-file employees in the private sector who have worked for at least one month during the calendar year — regardless of their employment status (regular, contractual, project-based, or seasonal).
Are managers or supervisors entitled to 13th month pay?
Managerial employees (those who have the power to hire, fire, or discipline employees) are not covered by PD 851. However, many companies voluntarily give them 13th month pay or equivalent bonuses.
What if I resigned before December? Do I still get it?
Yes. Employees who resign or are terminated before December are still entitled to 13th month pay proportional to their months worked during the year.
Is 13th month pay the same as a Christmas bonus?
No. The 13th month pay is a mandatory government benefit under PD 851. A Christmas bonus is a discretionary benefit that some employers give voluntarily — it is not required by law.