Dear Attorney,
I was recently employed in a company for only a month, and when I left, they did not include a 13th month pay in my final compensation. I raised this concern with HR, but they mentioned that I needed to have worked for at least two months to be eligible for it. I understand that the 13th month pay is a statutory benefit for all employees, but I am unsure about the exact requirements. Could you clarify whether I am entitled to receive my 13th month pay even if I only worked for one month? I appreciate your insights on this matter.
Sincerely,
A Recently Terminated Employee
Insights
What is the 13th Month Pay?
The 13th month pay is a mandatory benefit granted to all rank-and-file employees under Presidential Decree No. 851, issued by former President Ferdinand Marcos in 1975. It is one of the most critical employee benefits in the Philippines and serves as an additional financial compensation, generally given during the Christmas season to help employees with their holiday expenses.
The key feature of the 13th month pay is that it is based on the employee's total basic salary within the calendar year, and it must be paid on or before December 24 of each year. This benefit is intended to ensure that employees receive a financial boost towards the end of the year.
Who is Entitled to Receive 13th Month Pay?
Under the law, all rank-and-file employees, regardless of their designation or employment status, are entitled to receive 13th month pay, provided they have worked for at least one month within the calendar year. The law is clear that there is no requirement for an employee to complete a specific number of months to become eligible for this benefit. Therefore, even if an employee has only rendered service for one month, they are still entitled to 13th month pay on a pro-rated basis.
The rule applies to all employees who earn a basic salary, whether they are paid on a daily, weekly, or monthly basis. This provision ensures that even short-term and contractual employees receive the same benefit, in proportion to the length of service they rendered.
It is also worth noting that employees who are not considered managerial staff are eligible for this benefit. Managerial employees, who hold supervisory or managerial positions, are excluded from the statutory 13th month pay, as they are typically compensated differently from rank-and-file employees.
Computation of the 13th Month Pay
The computation of the 13th month pay is straightforward. It is calculated by taking one-twelfth (1/12) of the total basic salary earned by the employee during the calendar year. The formula is as follows:
13th Month Pay = Total Basic Salary Earned for the Year ÷ 12
For employees who have worked for less than a year, the 13th month pay is computed on a pro-rated basis. The formula in such cases is:
13th Month Pay = (Total Basic Salary Earned During the Period of Employment ÷ 12) × (Number of Months Worked)
To clarify, even if the employee only worked for one month, the amount they earned during that month is used as the basis for their 13th month pay. Therefore, for a one-month employee, the 13th month pay will be equivalent to 1/12th of their monthly salary.
For example, if an employee worked for one month and earned ₱20,000, their pro-rated 13th month pay would be:
₱20,000 ÷ 12 = ₱1,666.67
This means that the employee is entitled to a 13th month pay of ₱1,666.67, even if they worked for only one month.
Exceptions and Exemptions
Although the 13th month pay is a mandatory benefit, there are certain exceptions under the law. Employers that are exempted from granting 13th month pay include:
Government and Government-Owned Corporations: Employees working for the government or government-owned and controlled corporations (GOCCs) do not receive 13th month pay, as they receive a year-end bonus under separate rules issued by the Civil Service Commission.
Employers Already Paying Equivalent Benefits: Employers who are already providing equivalent or more than the required 13th month pay benefit, such as Christmas bonuses or other incentives, may be exempt from paying the statutory 13th month pay. However, this exemption must be approved by the Department of Labor and Employment (DOLE).
Certain Micro-businesses or Small Businesses: Small enterprises that meet specific criteria under the Barangay Micro Business Enterprises (BMBE) Act may also be exempt from providing 13th month pay. However, this exemption is limited to businesses registered under the BMBE law.
When Should the 13th Month Pay Be Given?
Employers are required by law to pay the 13th month pay on or before December 24 of each year. However, employers may choose to pay this benefit on an installment basis, where the first half is given mid-year, and the other half is given in December. The law gives the employer the discretion to decide whether to distribute the 13th month pay in full or in installments, as long as the total amount is paid by the December 24 deadline.
For employees who have been terminated or have resigned before December, their 13th month pay should be given along with their final pay, which includes their last salary, unused leave credits, and other statutory benefits. In this case, the 13th month pay is still computed on a pro-rated basis and must be included in the employee's final settlement.
Penalties for Non-compliance
Employers who fail to pay the 13th month pay on time, or who refuse to grant the benefit altogether, may face legal consequences under Philippine labor law. Employees who believe that their employer has not complied with the 13th month pay requirement can file a complaint with the Department of Labor and Employment (DOLE).
Non-payment or delayed payment of 13th month pay can result in the imposition of fines or penalties on the employer. In some cases, the employer may also be required to pay the employee additional compensation for damages, as well as legal fees if the matter escalates to litigation.
Final Thoughts
The 13th month pay is a statutory obligation that all employers must comply with, ensuring that all rank-and-file employees receive additional compensation, regardless of how long they have been employed within the calendar year. Even short-term and probationary employees are entitled to receive this benefit, calculated on a pro-rated basis according to the length of service they rendered.
It is important for both employers and employees to understand the rules governing the 13th month pay, to avoid any confusion or disputes regarding this mandatory benefit. Employers must ensure timely payment, while employees should be aware of their rights and entitlements under Philippine labor law.