Can Construction Workers Demand a 13th Month Pay if Hired by a Contractor on a Project-Based Contract?

Question: Do construction workers in the Philippines have the right to demand a 13th month pay if they are hired by a contractor on a project-based contract?

The 13th month pay is a mandatory benefit in the Philippines under Presidential Decree No. 851. It requires employers to provide their rank-and-file employees with a bonus equivalent to at least one-twelfth (1/12) of the basic salary earned within a calendar year. This benefit is generally applicable to all rank-and-file employees regardless of their designation or employment status, as long as they have worked for at least one month during the calendar year.

In the context of the construction industry, workers are often hired under project-based contracts by contractors. These contracts are typically for a specific duration, ending once the project is completed. The question arises as to whether these workers are entitled to the 13th month pay, especially when they are hired by contractors and not directly by the principal company.

According to the law, the primary obligation to pay the 13th month pay rests with the direct employer of the worker. In this case, the contractor is considered the employer and is responsible for ensuring that the workers receive their statutory benefits, including the 13th month pay. This means that even if a construction worker is hired on a project-based contract, as long as they have rendered at least one month of service within the calendar year, they are entitled to receive the 13th month pay from their contractor.

It is important to note that the 13th month pay is calculated based on the worker's basic salary, which excludes overtime pay, allowances, and other monetary benefits that are not considered as part of the basic pay.

Moreover, the principal company that engaged the services of the contractor has a secondary liability. If the contractor fails to pay the 13th month pay, the workers can seek redress from the principal company. This ensures that workers' rights are protected, even if their direct employer (the contractor) defaults on its obligations.

In conclusion, construction workers hired by contractors on a project-based contract in the Philippines do have the right to demand the 13th month pay, provided they have worked for at least one month during the calendar year. The responsibility to pay this benefit lies with the contractor, with the principal company serving as a secondary guarantor in case of non-compliance.