Some say the number thirteen (13) is unlucky. Well, not during the Holiday. The holiday season or the Christmas season is indeed a time for merrymaking, not just for kids but also for many adults because during this time comes the 13th-month pay!
Employees who receive their 13th-month pay understand that it means taking home more than their basic monthly salary. But what is the concept behind the 13th-month pay? Should you receive it or not? How much should you have?
Read on as we explore the facts and bust the myths about the mysterious 13th-month pay.
Myth: 13th-month pay is a Christmas bonus.
No, it is not. A bonus is a reward or an incentive given to an employee or a worker as a positive response to a job well done by the employee or as a thank you for a company’s success or as a celebration for an occasion. One example is the Christmas bonus. A company voluntarily distributes Christmas bonuses to its employees in the form of cash, gifts, vacations, promotions, among others, though, not all companies do.
The 13-month pay, on the other hand, is a mandatory benefit in accordance with the Presidential Decree 851 which requires all employers to pay their employees a 13th-month pay regardless of the nature of their employment, not later than December 24 every year.
In short, all employees shall receive a 13th-month pay, but not all are awarded a Christmas bonus.
Fact: Employees receive different amounts for their 13th-month pay.
Unlike bonuses wherein employees receive the same amounts, the amount received by employees for their 13th-month pay differs. It depends on the employee’s basic salary and the number of months he/she worked for the company. The basic computation for this is:
However, it is very seldom that employees receive the exact 1/12 of their annual salary as a 13th-month pay because of several salary deductions received, plus it does not include other benefits such as holiday double pay and overtime.
Therefore, expect that you and your colleagues may receive different amounts.
Myth: You shall only receive your 13th-month pay in December from your current employer.
While it is true that the decree states that 13th-month pay shall be distributed to employees before the 24th of December every year, employers and companies may distribute it in a two-time installment- the first half shall be given before the start of the Academic Year (AY) and the other half before Christmas. The schedules are very strategic as it provides financial help for employees who have students as dependents and for employees to celebrate the Holidays. The 13th-month pay received during the start of AY does not equate to a midyear bonus.
Another option for the two-time installment is for the first half to be given before December payouts and the other half before the 24th of December.
Moreover, it is not true that only the current employer shall give the employee a 13th-month pay. Resigned, terminated, and fully-detached employees shall also receive the payment from its previous company or employer, given that they worked for at least a month.
Based on the basic computation, if an employee worked for six months in his/her previous employer, the proportionate 13th-month pay he/she shall receive equals:
The computation also applies to employees who availed of the maternity or paternity leaves wherein the months on-leave shall not be included in the months rendered.
Fact: 13th-month pay has exceptions.
Though deemed as mandatory to all employees with fixed basic monthly salary, the decree had enumerated several exceptions to the 13th-month pay:
- Household employees and professionals in personal services;
- Employees in a managerial position or those who have the authority to enforce policies, hire, suspend, or discipline other employees;
- Employees working for the government or those covered under the civil service law;
- Commissioned employees who are paid in a fixed rate, task basis or on a boundary system except those who are paid a piece-rate basis;
- Employees receiving the amount equivalent to or more than one-month salary under the form of bonuses; and
- Employees working under distressed employers or those who are incurring potential losses or have filed a petition for exemption approved by the Secretary of Labor.
However, employers of the mentioned exempted employees may still opt to give away 13th-month pay voluntarily.
Fact: 13th-month pay is non-taxable.
This one is partly true and partly not. Yes, it is not taxable provided that the sum received is less than Php 82,000.00. Otherwise, it is taxed.
Moreover, employees who received the 13th-month pay shall expect some tax deficit problems when the 13th-month pay mess with the tax tallies. In this case, the employee is obligated to pay the deficits for the 1st and 2nd monthly salary after the receipt.
There you have it—some of the facts and myths about the 13th-month pay. In conclusion, we may say that thirteen is not at all unlucky. After all, there is no such thing as luck. There is only hard work and determination that will reward you with a positive outcome, just like the formula for the 13th-month pay: the harder you work for the whole year, the more dividend you receive.
Source: Presidential Decree Number 851