About 13th Month Pay

About 13th Month Pay

What is 13th Month Pay?

13th Month Pay is a mandatory benefit provided to employees pursuant to Presidential Decree No. 851 which requires employers to grant 13th-month pay to all its rank and file employees.

13th-month pay shall be paid by the employer on or before December 24. There are instances that a half portion of the 13th month is released in the middle of the year and the other half in the latter part. Most of the companies release 100% of the 13th Month Pay starting from November to December.

Who is entitled to receive 13th Month Pay?

All rank-and-file employees who have worked for at least one (1) month during the calendar year, are entitled to receive 13th Month Pay pay regardless of the nature of their employment and irrespective of the methods by which their wages are paid.

How is the 13th Month Pay computed?

According to DOLE, the minimum amount that the employee should receive as 13th Month Pay shall not be less than 1/12 of the total basic salary earned by an employee within a calendar year.
How the 13th Month Pay is computed or the amount basis depends on the existing company policy. The employer has different salary-based options in computing an employee’s 13th Month Pay. These options include attendance elements such as tardiness, absences, OT, and holiday premium.  The employer can consider these attendance elements as long as they adhere to DOLE’s minimum requirements on 13th Month Pay.

In Salarium, there four (4) different salary-based amount basis options to choose from that cover a company’s particular 13th Month Pay scenario:

Current Salary
The latest salary of the employee within the coverage period.

The Basic Pay currently entered in the employee’s 201 file under the Employee page
Average Salary
The average salary of the employee within the coverage period.

Average Salary = (Previous Salary + Current Salary)/12

*This applies if you have done Basic Pay Adjustments
Gross Salary
The gross salary comprises the basic salary and other income of the employee within the coverage period (other incomes such as allowances, commission, overtime etc.)

Gross Salary =((Gross Income - Attendance Deductions) + OT Pay, Holiday Pay, RD Pay)/12
Basic Pay
The basic pay comprises the actual basic salary of the employee within the coverage period (basic salary less attendance based deductions such as tardiness, undertime, absences, LWOP, over break etc.)

Basic Pay =(Basic Pay - Attendance Deduction)/12

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