What is 13th month pay?

It is the time of the year when people receive benefits for the Christmas season. 13th month pay is one of them.

In accordance with Presidential Decree Number 851 (The 13th Month Pay Law), employers are required to pay all their employees a 13th month pay equivalent to 1/12 of his basic salary not later than 24 of December every year.

This pay is payable to the employee even if the employee retired from work before the end of the year, by computing its pro-rata equivalent to the months the employee worked in a company.

The Decree shall not be applicable to:
(a) Distressed employers, such as           
     (1) Those which are currently incurring substantial losses or           
     (2) in the case of non-profit institutions and organizations, where their income, whether from donations, contributions, grants and other earnings from any source, has consistently declined by more than forty (40%) percent of their normal income for the last two (2) years, subject to the provision of Section 7 of this issuance; 
  
(b) The Government and any of its political subdivisions, including government-owned and controlled corporations, except those corporations operating essentially as private subsidiaries of the Government; 
  
(c) Employers already paying their employees 13-month pay or more in a calendar year or its equivalent at the time of this issuance; 
  
(d) Employers of household helpers and persons in the personal service of another in relation to such workers; and 
  
(e) Employers of those who are paid on purely commission, boundary, or task basis, and those who are paid a fixed amount for performing a specific work, irrespective of the time consumed in the performance thereof, except where the workers are paid on piece-rate basis in which case the employer shall be covered by this issuance insofar as such workers are concerned.