13th month pay is not a Christmas bonus. It’s a mandatory, government-mandated benefit for all eligible employees in the Philippines. Think of it as an extra month's salary, which is legally required under Presidential Decree No. 851.
The core idea is simple: it's equivalent to one-twelfth (1/12) of the basic salary you earned within a calendar year. It's your hard-earned money, and the law requires your employer to pay it.
The Big Question: Are You Eligible for It?
Most rank-and-file employees are. But to be sure, check these lists.
Who is covered:
- You're a rank-and-file employee in the private sector.
- Your employment status doesn't matter (regular, probationary, contractual, project-based, it's all good).
- You’ve worked for your employer for at least one (1) month within the calendar year.
- You're a resigned or terminated employee. Yes, you still get it, but it's prorated.
Who is NOT covered:
- Government employees (you guys have your own year-end bonuses).
- Managerial employees. A "managerial employee" is someone with the power to hire, fire, assign tasks, or recommend these actions.
- People paid on a pure commission, boundary, or task basis.
- Freelancers and independent contractors. You bill for your services, so this law doesn't apply.
How to Compute Your 13th Month Pay: The Simple Formula
This is the part everyone wants to know. The official formula is super straightforward:
Total Basic Salary Earned for the Year ÷ 12 = Your 13th Month Pay
But wait, there's a key detail you can't miss.
What Does "Basic Salary" Actually Mean?
Your "basic salary" is your fixed monthly pay. It's the amount you get before any other additions or deductions.
The law is very specific about what's excluded from the computation:
- Overtime pay
- Holiday pay
- Night shift differential
- Allowances (like for travel or meals)
- Commissions (unless they are guaranteed as part of your salary)
- Other monetary benefits
As human rights lawyer Atty. Chel Diokno advises, "My advice to employees is to keep your payslips and know exactly what constitutes your basic salary to ensure you get the correct amount."
Full-Year Calculation Example
Let's say your basic monthly salary is ₱30,000. You started in January and had no unpaid absences all year.
- ₱30,000 (Basic Salary) x 12 (Months) = ₱360,000 (Total Basic Salary)
- ₱360,000÷12 = ₱30,000 (Your 13th Month Pay)
Easy, right? You get a full extra month's pay.
Try our free 13th Month Pay and Holiday Pay Calculator
The Prorated Calculation: For Mid-Year Hires & Absences
What if you didn't work the full 12 months? That's where prorated computation comes in. You still use the same formula, but you only count the total basic salary you actually earned.
Scenario 1: The New Hire
You started your job in July 2025 with a basic salary of ₱25,000. You worked for 6 months (July to December).
- ₱25,000 x 6 months = ₱150,000 (Total Basic Salary Earned)
- ₱150,000÷12 = ₱12,500 (Your Prorated 13th Month Pay)
Scenario 2: The Employee with Unpaid Leave
Your basic salary is ₱30,000, but you took one month of unpaid leave in August. So you only earned a basic salary for 11 months.
- ₱30,000 x 11 months = ₱330,000 (Total Basic Salary Earned)
- ₱330,000÷12 = ₱27,500 (Your Prorated 13th Month Pay)
Scenario 3: The Resigned Employee
You worked at a company from January until you resigned on September 30. Your basic salary was ₱28,000. You worked for 9 months.
- ₱28,000 x 9 months = ₱252,000 (Total Basic Salary Earned)
- ₱252,000÷12 = ₱21,000 (Your Prorated 13th Month Pay)Your former employer must include this in your final pay.
Key Deadlines & Details You Need to Know
When to Expect It?
By law, your employer must pay your 13th month pay on or before December 24. Some companies are cool and give half in June and the other half in December, which is also allowed.
Is It Taxable?
Good news. Your 13th month pay and other benefits (like performance bonuses) are tax-exempt up to ₱90,000. If your total 13th month pay and other bonuses exceed that amount, only the excess will be taxed.
13th Month Pay vs. Christmas Bonus
They are NOT the same.
What to Do If Your Employer Doesn't Pay
The 13th month pay isn't just a suggestion. According to the Department of Labor and Employment (DOLE), it's a "legally mandated wage."
If December 24 passes and you still haven't received it, here's what to do:
- Talk to HR or your boss. It could be a simple payroll error. Give them a chance to fix it.
- If that doesn't work, you can file a complaint at the nearest DOLE regional office.
For businesses, ensuring timely payroll is non-negotiable. Using reliable digital payroll systems like NextPay can help streamline these mandatory payments and avoid any legal trouble.
Try our free 13th Month Pay and Holiday Pay Calculator
13th Month Pay FAQs
Is 13th month pay the same as a Christmas bonus?
No. 13th month pay is required by law. A Christmas bonus is an extra, voluntary gift from your employer.
Are probationary employees entitled to 13th month pay?
Yes. As long as you've worked for at least one month, you are entitled to a prorated 13th month pay.
What if I resigned? Do I still get it?
Absolutely. You are entitled to a prorated amount based on how many months you worked. Your employer should include it in your final pay.
How is 13th-month pay computed if I had unpaid absences?
Unpaid absences are not included in your "total basic salary earned." So, if you were unpaid for a month, you'd calculate your total salary based on 11 months instead of 12, just like in the example above.