Dear Attorney,

I am a concerned worker seeking clarification about the real reason behind the 13th month pay in the Philippines. While it is often perceived as a way to spread holiday cheer, I’ve heard conflicting information that it might also be due to a lack of payment for one month's worth of wages throughout the year. Could you please clarify whether the 13th month pay is intended to compensate for an unpaid month or if it solely serves as a year-end bonus?

Sincerely,
A Diligent Employee

Insights:

The 13th month pay is a mandatory benefit provided to workers in the Philippines, as established by Presidential Decree No. 851 (PD 851), which was enacted on December 16, 1975. This law requires employers to grant their employees a 13th month pay, which is equivalent to one-twelfth (1/12) of an employee's basic annual salary. The purpose of this decree was to alleviate the economic difficulties faced by Filipino workers during that period, ensuring they have extra financial support during the holiday season.

However, it is essential to clarify that the 13th month pay is not a remedy for any supposed unpaid month of wages during the year. The confusion may stem from the fact that the 13th month pay is calculated based on the total basic salary earned by an employee within a calendar year, but it is not intended to cover a shortfall in monthly wages. Every month, employees are expected to receive their full salary as agreed upon in their employment contracts. The 13th month pay is an additional benefit, not a replacement for any portion of an employee's regular pay.

The primary intent behind PD 851 was to provide financial relief and enhance the purchasing power of workers during the holiday season, contributing to the welfare of employees by ensuring they have extra funds at the end of the year. It is, therefore, a separate entitlement from the regular monthly wage and should not be misconstrued as compensation for any unpaid period during the year.

In conclusion, the 13th month pay is a statutory benefit designed to support employees financially during the Christmas season and is not intended to address any issue of unpaid wages. Employees should receive their full agreed-upon monthly salary throughout the year, in addition to the 13th month pay.