13th Month Pay in the Philippines — Complete Guide
Everything about 13th month pay: computation, deadline, who's covered, tax rules, and pro-rating.
What Is 13th Month Pay?
The 13th month pay is a mandatory monetary benefit equivalent to one-twelfth (1/12) of the total basic salary earned by an employee within a calendar year. It was established by Presidential Decree No. 851 in 1975 and applies to all rank-and-file employees in the private sector.
13th Month Pay = Total Basic Salary Earned During the Year ÷ 12
Legal basis: Presidential Decree No. 851 (December 16, 1975), as amended by Memorandum Order No. 28
Who Is Covered?
All rank-and-file employees in the private sector are entitled to 13th month pay, regardless of:
- The nature of their employment (regular, probationary, contractual, casual, project-based, or seasonal)
- Their method of payment (monthly, semi-monthly, weekly, daily, or per piece)
- The amount of their basic salary
Exemptions
The following are exempt from the mandatory 13th month pay:
- Government employees (covered by separate laws)
- Managerial employees (those with the power to hire, fire, and make management decisions)
- Employers already paying the equivalent of 13th month pay or more (e.g., mid-year and year-end bonuses totaling at least 1/12 of annual salary)
- Domestic workers (kasambahay) — they receive a separate 13th month pay under RA 10361
What Is Included in "Basic Salary"?
Only the basic salary is included in computing 13th month pay. The following are excluded:
- Overtime pay
- Holiday pay premiums
- Night shift differential
- Cost of living allowances (COLA)
- Cash equivalent of unused leave credits
- All allowances and monetary benefits not integrated into the basic salary
Deadline and Payment
Employers must pay the 13th month pay on or before December 24 of each year. However, employers may give it in two installments:
- First half: on or before May 30 (optional mid-year release)
- Second half: on or before December 24
Pro-rating for Partial Year
Employees who worked for less than 12 months (due to resignation, termination, or new hire mid-year) are entitled to a pro-rated 13th month pay based on the total basic salary actually earned during the months worked.
Tax Treatment
Under the TRAIN Law (RA 10963), the first PHP 90,000 of the combined 13th month pay, Christmas bonus, and other benefits is tax-exempt. Any amount exceeding PHP 90,000 is subject to income tax.
Compute Your 13th Month Pay
Use our free calculator to instantly compute your 13th month pay, including pro-rated amounts.
Open 13th Month Pay Calculator →Frequently Asked Questions
When is the deadline for 13th month pay?
Under Presidential Decree No. 851, employers must pay the 13th month pay on or before December 24 of each year. Some employers give half on or before May 30 (mid-year) and the other half before December 24.
Is 13th month pay the same as a Christmas bonus?
Not exactly. The 13th month pay is a mandatory statutory benefit required by law (PD 851). A Christmas bonus is a voluntary benefit given at the employer's discretion. However, many Filipino workers commonly refer to their 13th month pay as their Christmas bonus.
Are resigned or terminated employees entitled to 13th month pay?
Yes. Employees who have resigned or were terminated at any time before December 24 are entitled to a pro-rated 13th month pay based on the number of months they actually worked during the calendar year.
Is 13th month pay taxable?
The first PHP 90,000 of the combined 13th month pay, Christmas bonus, and other benefits is tax-exempt under the TRAIN Law (RA 10963). Any amount exceeding PHP 90,000 is subject to income tax.
Does 13th month pay include overtime and allowances?
No. The computation of 13th month pay is based on basic salary only. Overtime pay, holiday pay, night shift differential, allowances, and monetary value of unused leave credits are excluded from the computation.