When to Release 13th Month Pay After Resignation in the Philippines: A Comprehensive Legal Guide

In the Philippines, the 13th month pay is an essential statutory benefit mandated by law to protect employees’ welfare. Many questions arise regarding how and when this benefit should be released—especially when an employee resigns before the usual payout season. This article provides a comprehensive overview of the legal framework, entitlements, computation, and timelines surrounding the release of 13th month pay to resigned employees in the Philippines.

1. Legal Basis

Presidential Decree No. 851 (PD 851)
This decree, signed in 1975, serves as the primary legal authority requiring employers to pay their rank-and-file employees a 13th month pay. It was issued to help workers cope with the rising cost of living.
Labor Advisories and Implementing Rules
- The Department of Labor and Employment (DOLE) regularly issues labor advisories and clarifications regarding 13th month pay. While these do not replace PD 851, they provide specific guidelines and clarifications for employers and employees (e.g., the computation, deadlines, coverage, and penalties for non-compliance).
- Employers are strongly advised to keep updated with new or supplemental advisories published on the DOLE website.

2. Who is Entitled to 13th Month Pay?

Rank-and-File Employees
Under the law, all rank-and-file employees (i.e., those who are not considered managerial employees) are entitled to 13th month pay, regardless of their employment status (regular, contractual, project-based, or casual), provided they have worked for at least one month in a calendar year.
Managerial Employees
While PD 851 covers rank-and-file employees, managerial employees are generally not legally entitled to the 13th month pay under the decree. In practice, however, many companies voluntarily grant it to managerial staff as part of their benefits package or company policy.
Exempt Establishments
PD 851 originally excluded certain employers with fewer employees or those already paying equivalent bonuses, but most of these exemptions were removed or revised over time. Generally, very few exemptions remain, such as those explicitly exempted by the DOLE. Employers must check the latest DOLE guidelines to verify if they qualify for an exemption.

3. Entitlement After Resignation

Pro-Rated Amount
Even if an employee resigns before the usual 13th month pay release (commonly on or before December 24), they are entitled to a pro-rated 13th month pay based on the number of months (or fractions thereof) they have actually worked within that calendar year.
Inclusion in Final Pay
In most cases, the 13th month pay due to a resigned employee is integrated into their final pay. The final pay would typically include:
- Unpaid salaries or wages
- Pro-rated 13th month pay
- Cash conversions of unused leaves, if company policy or law requires
- Any other amounts due (e.g., refunds for withheld deductions, separation pay if applicable)

4. Computing the 13th Month Pay for Resigned Employees

Basic Formula
For resigned employees, the simplest computation is based on the total basic salary earned for the calendar year divided by 12. However, the law also allows for a monthly accrual approach, counting the number of months actually worked.

[ \text{13th Month Pay} = \frac{\text{Total Basic Salary Earned During the Year}}{12} ]
What Counts as “Basic Salary”?
- Includes: Only the employee’s fixed or guaranteed wages.
- Excludes: Allowances, overtime pay, holiday pay, night-shift differential, and other monetary benefits that are not considered part of the basic salary (unless company policy states otherwise).
Pro-Rating
If an employee worked, for example, eight months of the year before resigning, their pro-rated 13th month pay is based on the basic salary they earned during those eight months.

5. When Must the 13th Month Pay Be Released After Resignation?

Deadline Under the Law
- For active employees, PD 851 and DOLE guidelines require that the 13th month pay be released on or before December 24 of each year.
- However, for resigned or separated employees, the law and DOLE guidelines do not explicitly set a separate fixed date. Instead, these entitlements should generally be included in the employee’s final pay.
Release of Final Pay
- DOLE’s latest labor advisories suggest releasing the final pay within 30 days from the date of separation or resignation, unless a more favorable company policy or collective bargaining agreement provides an earlier release.
- The 13th month pay portion of the final pay is typically released at the same time as the rest of the due compensation.
Practical Considerations
- Documentation & Clearance: Employers often withhold final pay until the resigned employee completes the necessary clearance process (e.g., returning company property).
- Company Policy: Some companies have internal policies that might require additional steps or impose different timelines. Nevertheless, these policies should not unreasonably delay the release of statutory benefits like the 13th month pay.
- Earlier Payment: In many situations, employers may opt to release the pro-rated 13th month pay earlier (for instance, at the time of resignation approval) to simplify computations.

6. Common Issues and Clarifications

Short-term or Probationary Employees
If an employee resigns while still on probation but has worked at least one month within the current calendar year, they are still entitled to a pro-rated 13th month pay.
Re-hired Employees Within the Same Year
- If an employee resigns and later rejoins the same company within the same calendar year, their 13th month pay calculation must consider the periods of service for that year, potentially adding up separate stints of employment.
- Often, separate computations are made, and any advanced payments made earlier are deducted from the final settlement.
Unpaid Leaves or Suspensions
Periods where the employee was on unpaid leave or suspension typically result in lower basic salary earned, thereby reducing the amount of 13th month pay proportionally.
No Company Policy Can Reduce the Statutory Entitlement
While companies may have their own rules, no policy can override the statutory right of employees to receive at least the minimum legally required 13th month pay.
Penalties for Non-Compliance
- Employers who fail to pay the 13th month pay or final pay can face administrative sanctions, penalties, and legal claims before the DOLE or the National Labor Relations Commission (NLRC).
- Employees who believe their 13th month pay was wrongfully withheld or delayed may file a complaint with the DOLE.

7. Best Practices for Employers and Employees

Clear Policies and Procedures
Employers should maintain clear written policies about:
- How and when the 13th month pay is computed and disbursed
- Timelines and processes for releasing final pay upon resignation
Final Pay Computation Sheet
Providing a detailed breakdown of the final pay, including the pro-rated 13th month pay, helps avoid disputes. This ensures transparency in how amounts were arrived at.
Prompt Clearance Process
Both parties—employer and employee—benefit from a timely clearance process. The faster an employee returns company property and completes exit requirements, the sooner the final pay (including 13th month pay) can be released.
Seek Legal or Professional Advice
- Employers: Consult with an HR professional or legal counsel to ensure compliance with current DOLE regulations.
- Employees: If there is an issue with the final pay release, seek clarifications from HR first. Should the issue remain unresolved, an inquiry or complaint can be filed at the nearest DOLE office.

8. Frequently Asked Questions (FAQs)

Is it mandatory to release the 13th month pay before an employee’s last day if they resign in mid-year?
- Not necessarily. The standard practice is to include the pro-rated 13th month pay in the final pay, which is due within 30 days of separation (unless company policy or a CBA prescribes an earlier release).
Can an employee waive their right to the 13th month pay?
- No. Statutory benefits cannot be waived. Any agreement or contract clause that purports to deny the employee’s mandatory 13th month pay is generally considered void.
What if the employee resigns in January or February—do they still get a 13th month pay?
- Yes, as long as they have worked at least one month in that calendar year, they are entitled to a pro-rated amount for the days or months actually worked.
If the employer fails to pay the 13th month pay, what can the employee do?
- The employee may file a complaint with the DOLE. The employer may face penalties, and the employee may be entitled to recover the unpaid amount plus potential legal fees if the case escalates.
Does 13th month pay apply to managerial-level employees if they resign?
- PD 851 excludes managerial employees, but many companies voluntarily extend 13th month pay to all staff as part of their benefits policy. If company policy explicitly includes managerial staff, then they are entitled to it upon resignation (subject to the policy’s terms).

9. Conclusion

The 13th month pay is a legally mandated benefit in the Philippines designed to provide additional financial support to rank-and-file employees. For those who resign or are otherwise separated from employment, the 13th month pay should be computed proportionally based on the actual time worked during the calendar year and is typically released with the final pay.

Employers must be mindful of both the legal requirements and practical considerations, ensuring that they process employees’ final pay (including 13th month pay) within a reasonable period—generally no later than 30 days from the date of separation. Employees, on the other hand, should understand their rights and follow due process if they encounter any delays or underpayment.

When in doubt, always refer to the most recent DOLE advisories or seek professional legal advice to ensure compliance with labor laws and regulations in the Philippines.

Disclaimer: This article is for general informational purposes only and does not constitute legal advice. For specific concerns regarding 13th month pay or labor law matters, consult a qualified labor lawyer or contact the Department of Labor and Employment (DOLE).