13th month pay in the Philippines: who gets it and how it's computed

Who gets 13th month pay

Presidential Decree No. 851, signed in 1975, requires private employers to pay a 13th month pay. The Revised Guidelines on its implementation, issued in 1987, extended it to all rank-and-file employees regardless of how much they earn. Each year DOLE repeats the rules in a labor advisory; for 2025 it was Labor Advisory No. 16.

You are entitled if all of these are true:

• You work for a private-sector employer.
• You are a rank-and-file employee, not a managerial employee.
• You worked for at least one month during the calendar year.

Your position title, employment status and the way you are paid don't matter. Probationary, contractual, project and seasonal employees qualify, and so do piece-rate workers and employees on a fixed wage plus commission. Someone who works for two employers gets 13th month pay from each, based on what each one paid.

Who isn't covered by PD 851

• Government employees. They get a year-end bonus under separate laws, not PD 851.
• Managerial employees. The decree covers rank-and-file staff only. Many companies pay managers a 13th month anyway as policy.
• People paid purely by commission, boundary or task, such as some drivers on a boundary system, or workers paid a fixed amount per job regardless of time spent. Piece-rate workers are the exception: they are covered.
• Employees of employers who already pay the equivalent, such as a Christmas bonus of at least one-twelfth of basic salary that the employer treats as the 13th month pay.

Domestic workers are covered by a different law. Section 25 of the Kasambahay Law (RA 10361) gives any kasambahay who has served at least one month a 13th month pay of at least one-twelfth of total basic salary for the year.

What counts as basic salary

The computation uses basic salary only. The guidelines define it as all pay for services rendered, but they leave out allowances and benefits that are not part of basic pay. Unless your company treats them as basic salary by contract, policy or long practice, these are excluded:

Unpaid absences reduce the total, because the salary for those days was never earned. A suspension or unpaid leave of a week means a week less basic salary in the year.

How 13th month pay is computed

13th month pay = total basic salary earned from January to December ÷ 12

Always divide by 12, whatever the number of months you worked. Here are the usual cases, worked through:

• Same salary all year. ₱20,000 a month × 12 = ₱240,000. ₱240,000 ÷ 12 = ₱20,000. A full year at a fixed salary gives exactly one month's basic pay.
• Unpaid leave. ₱18,000 a month × 12 = ₱216,000, less ₱3,000 deducted for unpaid absences = ₱213,000. ₱213,000 ÷ 12 = ₱17,750.
• A raise during the year. ₱20,000 from January to June and ₱22,000 from July: 6 × ₱20,000 + 6 × ₱22,000 = ₱252,000. ₱252,000 ÷ 12 = ₱21,000.
• Daily-paid. ₱645 a day for 312 paid days = ₱201,240. ₱201,240 ÷ 12 = ₱16,770.

The calculator has a month-by-month mode for raises and unpaid months, and a daily-rate mode.

Resigned, newly hired or on leave

The Revised Guidelines say an employee who resigned or was terminated before the payout is entitled to 13th month pay in proportion to the time worked during the year, from the start of the year (or the start date) up to the last day. No special formula is needed: the basic salary actually earned in those months, divided by 12, is the prorated amount.

If you resigned at the end of June after earning ₱20,000 a month, you earned ₱120,000, and your 13th month pay is ₱120,000 ÷ 12 = ₱10,000. It is normally paid with your final pay. A new hire who starts on 1 September at ₱25,000 earns ₱100,000 by December and gets ₱8,333.33.

A common mistake is dividing by the months worked instead of by 12. ₱120,000 ÷ 6 = ₱20,000 would be a full month's pay for half a year's work, twice what the law requires.

When 13th month pay is paid

It must be paid on or before 24 December. The guidelines allow employers to pay half before the opening of the school year and the rest by 24 December, and a union can agree a different schedule. DOLE has said that requests to be exempted from paying, or to defer payment, are not accepted. Employers then file a compliance report through the DOLE online portal; for 2025 the deadline was 15 January 2026.

Is 13th month pay taxed?

Only above ₱90,000. Section 32(B)(7)(e) of the Tax Code, as amended by the TRAIN law (RA 10963), excludes 13th month pay and other benefits from gross income up to ₱90,000 a year. The ceiling is shared: a Christmas bonus, productivity incentive and similar benefits all use the same ₱90,000.

The taxable part is added to your regular compensation and taxed at your income tax rate. Bills to raise the ceiling have been filed in Congress, but as of October 2026 the ₱90,000 in the Tax Code applies.

If you aren't paid

Ask HR or your employer in writing first, with your own computation. If that doesn't work, you can file a request for assistance with DOLE through the Single Entry Approach (SEnA), which tries to settle labour claims within 30 days. Money claims arising from employment must be filed within three years under Article 306 of the Labor Code (formerly Article 291).

Sources

• Presidential Decree No. 851 and its implementing rules (Lawphil)
• Revised Guidelines on the Implementation of the 13th Month Pay Law (Chan Robles)
• Republic Act No. 10963 (TRAIN), section 32(B)(7)(e) (Lawphil)
• Republic Act No. 10361 (Kasambahay Law), section 25 (Lawphil)
• Department of Labor and Employment. Labor Advisory No. 16, Series of 2025, on the payment of 13th month pay