It’s 55 days before Christmas! For sure a lot of you are excited as we count down the days before Christmas. If you are an employee like us, this is the time of the year to get excited about something else – the 13th-month pay. This means extra cash for foods, gifts, or for the vacation that you’ve been planning with your friends since last year. For employers, it is also a way to appreciate your hard-working employees and let them know that what they have done in the company truly counts. There can be quite a confusion about this government-mandated bonus, so read on and we’ll clarify it up for you.
To give you an idea on how much you can get, here are the things you need to know about your 13th-month pay:
Who is entitled to receive it?
All rank and file employees are entitled to receive this monetary benefits as long as you’ve worked for at least one month in a year within the company. Even if you’re already resigned from the company you are still entitled to this benefit as long as you worked for at least a month. The computation is the same.
What are the inclusions?
Allowances, night-differential, holiday pay, unused vacation, and sick leave are not included in the computation of the 13th-month pay. But if these are included in your basic salary as stated in your contract, then it will be included in the computation.
Is it taxable?
According to the new TRAIN law, benefits or bonuses of up to Php90,000 will no longer be subjected to tax.
When do you get this?
It should be given on or before December 24 of each year. Most of the company give the half of it on November and the remaining half before December 24.
How to compute 13th-month pay?
It’s the equivalent of a monthly basic salary and is computed pro-rata according to the number of months that the employee has worked in a calendar year.
Monthly Basic Salary x Employment length ➗ 12 months
Multiply your monthly basic salary with the months that you’ve been working with the company the divide it by 12. For example, your basic salary is Php20,000 in a month and you’ve been in the company for 4 months, you will receive Php 6,666.67 as your 13thmonth pay.
20,000 x 4 = 80,000 ➗12 = 6,666.67
13th Month pay vs Christmas Bonus
Aside from 13th pay, another benefit to enjoy during December is the “Christmas bonus”. However, this is not mandatory. It is the employer’s prerogative if they will give Christmas bonus or not.
“Ber” months is a season to be jolly indeed, especially after receiving some bonus. We hope that this clarifies your question about this topic. If you need more assistance or clarifications about employee relations here in the Philippines, do not hesitate to get in touch with our Consulting Team, and we will be more than happy to help!