13th Month Pay is a mandatory benefit provided to employees pursuant to Presidential Decree No. 851 which requires employers to grant 13th month pay to all its rank and file employees who have worked for at least one (1) month during the calendar year, regardless of the nature of their employment and irrespective of the methods by which their wages are paid. 13th Month Pay shall not be less than 1/12 of the total basic salary earned by an employee within a calendar year.
Below is the commonly used formula in computing the 13th Month Pay:
| Basic Salary x No. of months worked | = 13th Month Pay |
| 12 |
*Basic Salary does not include overtime pay, premium pay, night shift differential, holiday pay and other allowances and monetary benefits not considered part of an employee’s basic salary. However, if these are treated as part of the basic salary, then they shall be included in the final computation.
*Maternity Leave benefits are not included in the computation of 13th Month Pay.
Payment of 13th Month Pay should be paid not later than December 24 of each year. An employer, however, may give one-half of the 13th Month Pay before the opening of the regular school year and the other half on or before December 24 of every year.
