13th Month Pay in the Philippines: A Guide for Employers

Depending on the economic and business policies in each country, there may be additional employee entitlements and bonuses that are required which may be unfamiliar to you.

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One of those is what is known as ‘13th month pay’, where employees receive an extra month of salary as though there were 13 months in the calendar year.

This is the case in the Philippines, where 13th month pay is mandated by statute, and widely expected by employees for the holidays.  This guide will explain to you how 13th month pay is offered, calculated and taxed so that you can plan for this additional cost of total compensation.

What is 13th month pay?

13th month pay is an amount equal to 1/12 of the annual salary, paid by December 24 of each year.  Because it is mandatory, employers don’t have any discretion of whether to pay it or not based on employee performance or business revenues.  It is distinct from the Christmas bonus, which is optional but can be awarded to employees out of appreciation.

Who is entitled to receive the 13th month pay in the Philippines?

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Tim Burgess

Director, Shield GEO Services Ltd