With the economy slowly recovering as quarantine measures are easing, many are looking forward to brighter holidays ahead. Jojo was beginning to get excited until his employer announced that the release of their 13th month pay will be delayed.

In their company, it has been a tradition to get their 13th month pay by November 30, giving employees that extra cash for holiday shopping and spending. The news hit Jojo hard, as he has been struggling to make ends meet during the year, what with reduced pay from reduced working hours.

The question on Jojo’s mind and on the other employees too was whether their company can actually delay the release? Is it even legal? To answer this and other questions you may have on the 13th month pay, here are the top 10 things you need to know.

#1 Your 13th month pay is not a bonus

By virtue of Presidential Decree No. 851, all private sector employers are legally required to give a 13th month pay to its rank-and-file employees. This makes it different from a bonus which is given out of the employer’s generosity, usually when a company did well during the year. Your employer can choose to give a bonus or not, but the 13th month pay must be paid, regardless of a good or not-so-good year for the company.

#2 Benefit covers rank-and-file employees

According to the website of the Department of Labor and Employment (DOLE), “all rank-and-file employees who have worked for at least one month during the calendar year, are entitled to receive 13th month pay regardless of the nature of their employment and irrespective of the methods by which their wages are paid.” You don’t need to be a permanent employee, or to have worked the full year to be qualified to receive the 13th month pay.

#3 Yes, there are exceptions to the rule

Government employees are not covered (but they are given year-end bonus and cash gifts and may come out better off but that’s another story). If your employer is paying more than 13 months in a year, your company can also skip paying the 13th month pay. This applies to firms that pay guaranteed bonuses every quarter or semester, where the sum comes to better than 13 months’ worth of pay. Also, if you are paid per project, or on commission basis, sorry to say no 13th month pay for you too.

#4 Must pay up on or before December 24

While Jojo will have to wait for his 13th month pay this year, his employer is not really at fault as the law says it can be paid as late as December 24 of each year. Now some employers choose to give one-half of the 13th month pay around June and the other half in December and that’s okay too, so long as the full credit is completed before December 25.

#5 Can employers ask for amnesty due to hard times?

Businesses have been closing left and right, or cutting back jobs so it’s natural for you to worry that some employers may seek amnesty or relief from paying the 13th month pay. You can go ahead and breathe a sigh of relief as DOLE Secretary Silvestre Bello III recently said: “No request or application for exemption from payment of 13-month pay, or for deferment of the payment thereof shall be accepted and allowed.” Instead, Bello urged struggling business owners to tap loans from the government-run Small Business Corporation to be able to comply.

#6 Who’s tracking this to make sure employers comply

Now that you are assured the law is clear, you may be wondering if anyone is checking that this gets done. After all, if some employers choose not to pay up, and the employees are worried about losing their jobs, this may be swept under the rug. Well, it’s not that easy. Employers are now required to make a report of their compliance online through the DOLE Establishment Report System at reports.dole.gov.ph. They have to file the declaration on or before January 15 of the following year.

#7 Resigned, terminated and retired employees are also covered

You’ll be happy to know that even if you were let go (something that happened to many employees during the pandemic), or retired or chose to resign, you are still entitled to the 13th month benefit. It will be a pro-rated pay and you can ask your employer for the computation so you can verify too.

#8 Let’s do the 13th month pay math

The DOLE website provides a simple computation: Take your total basic salary earned for the year, divide it by 12 months and you will get your equivalent 13th month pay. But because 2021 is another extraordinary year due to lockdowns, DOLE recently gave a sample computation that may help you better compute for your 13th month pay.

Let’s use the basic wage in the National Capital Region at P537 per day and a six-day workweek. This will give us the equivalent Monthly Basic Salary of P14,006.75 (P537.00 x 313 days /12 months):

• January (assuming no absence) = P14,006.75
• February (assuming no absence) = P14,006.75
• March (assuming no absence) = P14.006.75
• April (company shutdown) = no salary
• May (company shutdown) = no salary
• June (5 days leave with pay) = P14,006.75
• July (company shutdown) = no salary
• August (company shutdown) = no salary
• September (10 days leave with no pay) = P8,836.75
• October (assuming no absence) P14,006.75
• November (1 day leave w/o pay) = P13,469.75
• December (assuming no absence) = P14,006.75

If we add up all your pay for the 12 months, that would come to P106,147.00. To compute for your 13th month pay, we take your full year pay and divide it by 12 and that gives you P8,845.58.

#9 Can you count in maternity leave benefits?

The short answer here is no. If you went on maternity leave for 60 days during the year, those two months are counted as no pay for you and will reflect as zero in adding up your full year pay. This means you can only add the other 10 months you were paid and divide that number by 12. The answer is your 13th month pay. The same goes for employees who went on paternity leave or sabbatical. Any period where you were not paid will not count towards your 13th month pay.

#10 With tax or without tax?

And finally, the question that will decide just how much we pocket. The 13th month pay is generally exempt from taxes, but only up to a certain limit. That limit used to be P82,000 but thanks to Republic Act No, 10963, the cap was adjusted to P90,000. This means that based on the earlier computation, you can receive the P8,845.58 in full. But if your 13th month pay is P100,000, the P10,000 in excess of P90,000 will be subject to income tax.

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