13th Month Pay in the Philippines: Complete Guide

Every December, Philippine employers are legally required to hand every covered rank-and-file employee a 13th month pay — a full extra month’s worth of basic salary on top of their regular wages. Unlike the many voluntary bonuses employers hand out around the holidays, this one isn’t optional. It’s a statutory right created by a 1975 presidential decree, and understanding exactly how it’s computed, when it’s due, and what to do if it doesn’t arrive is one of the most practical things a Philippine employee can know.

Direct Answer

13th month pay is a mandatory monetary benefit under Presidential Decree No. 851 (1975), requiring covered private-sector employers to pay every rank-and-file employee an amount equivalent to at least 1/12 of the basic salary the employee actually earned within the calendar year.[1] It must be paid not later than December 24 each year. It applies regardless of the employee’s position title, employment status (regular, probationary, project-based, casual), or how they’re paid (monthly, daily, piece-rate, commission-based), as long as they worked at least one month during the year. Managerial employees, government workers, and a few other narrow categories are excluded, and employers already granting an equivalent or superior benefit may be exempt.

Key Takeaways

Governing rule: Presidential Decree No. 851, as modified by Memorandum Order No. 28, s. 1986, and its implementing rules.
Who’s covered: Rank-and-file employees in the private sector who worked at least one month in the calendar year, regardless of employment status or pay scheme.
Who’s excluded: Managerial employees (by actual duties, not job title), government personnel, kasambahay/domestic workers (covered instead under RA 10361), true independent contractors, and employees of employers already paying an equivalent or better benefit.
Formula: Total basic salary actually earned during the calendar year ÷ 12.
Deadline: Not later than December 24 each year; employers may split payment, commonly half by May/June and the balance by December 24.
Tax treatment: Tax-exempt up to a combined ₱90,000 per year together with other bonuses, under the TRAIN Law; any excess is taxed as ordinary compensation.
Employer reporting: Covered employers must file a compliance report with the DOLE Regional Office (now via reports.dole.gov.ph) by January 15 of the following year.
Not the same as 14th month pay: 13th month pay is mandatory; a further 14th month bonus is voluntary unless a specific employer’s policy, contract, or CBA commits to it. See our companion guide, What Is 14th Month Pay in the Philippines?

Legal Basis: Presidential Decree No. 851

13th month pay was created by Presidential Decree No. 851, issued in 1975, which required covered employers to pay their employees a 13th month pay before the end of the year.[1] The original decree applied only to employees earning up to a ₱1,000 monthly basic salary. Memorandum Order No. 28, s. 1986, and its implementing rules removed that salary ceiling, so today the benefit applies to covered rank-and-file employees regardless of how much they earn.

Because it comes directly from a presidential decree rather than a company policy, 13th month pay is not negotiable, cannot be waived by the employee, and cannot be conditioned on company performance — unlike a discretionary bonus.

Who Is Covered

Coverage is broad by design. All rank-and-file employees in the private sector are entitled to 13th month pay if they have worked for at least one month during the calendar year, regardless of:

Employment status — regular, probationary, casual, project-based, seasonal, or fixed-term employees are all covered.
Pay scheme — monthly-paid, daily-paid, and piece-rate workers are covered; workers paid partly or wholly on commission may also be covered where the commission is an integral part of their wage structure.
Job title — coverage depends on actual rank-and-file duties, not what a position is called on paper.

Who is excluded

Managerial employees — those whose primary duty is management of the business and who have the authority to hire, discipline, or set policy. This is determined by actual function, not job title; a “manager” who does not actually perform managerial duties may still be covered.
Government employees — covered instead by separate civil-service compensation and bonus rules, not PD 851.
Kasambahay / domestic workers — covered under the Domestic Workers Act (Republic Act No. 10361), which has its own wage and benefit rules, rather than PD 851.
True independent contractors — individuals genuinely engaged as contractors rather than employees (as distinguished under the four-fold test) fall outside PD 851 entirely.
Employees of employers already paying an equivalent or better benefit — an employer that already grants a Christmas bonus, mid-year bonus, profit share, or similar benefit at least equal to the statutory 13th month pay may be considered compliant, provided the benefit meets the legal requirements for a creditable equivalent.

If you’re unsure which category applies to you, the safest approach is to ask HR directly which exclusion, if any, your employer is relying on — “managerial” status in particular is frequently misapplied to employees who don’t actually exercise managerial authority.

How to Calculate 13th Month Pay

Formula:
13th Month Pay = Total Basic Salary Earned During the Calendar Year ÷ 12

Prefer not to do the math by hand? Our pro-rated 13th month pay calculator handles partial-year employment and mid-year salary changes automatically.

What counts as “basic salary”

Included: regular basic pay for time actually worked, including piece-rate earnings and commissions that are an integral, regular part of the wage structure.

Excluded: overtime pay, night shift differential, holiday premium pay, cost-of-living allowances and other allowances, cash conversions of unused leave, and other bonuses not considered part of basic salary — unless a company policy or CBA expressly includes them in the computation base.

Worked example 1: Full-year employee

An employee earning a fixed ₱25,000 basic monthly salary, employed the entire calendar year:

Total Basic Salary for the Year = ₱25,000 × 12 = ₱300,000
13th Month Pay = ₱300,000 ÷ 12 = ₱25,000

Worked example 2: Employee with a mid-year salary increase

An employee earning ₱22,000/month for the first 5 months of the year and ₱25,000/month for the remaining 7 months:

Total Basic Salary = (₱22,000 × 5) + (₱25,000 × 7) = ₱110,000 + ₱175,000 = ₱285,000
13th Month Pay = ₱285,000 ÷ 12 = ₱23,750

Note that this is lower than simply using the current ₱25,000 salary — 13th month pay reflects what was actually earned across the year, not a projection of the current rate.

Worked example 3: Employee hired mid-year

An employee earning ₱30,000/month who started work in April (9 months of service that calendar year):

Total Basic Salary Earned = ₱30,000 × 9 = ₱270,000
13th Month Pay = ₱270,000 ÷ 12 = ₱22,500

Unlike 14th month pay, this proration is not optional — it applies automatically by law to anyone who worked at least one month, even if they’re no longer employed by December 24.

Worked example 4: Employee who resigns before year-end

An employee earning ₱28,000/month who resigns effective end of August (8 months worked that year) is still entitled to a prorated 13th month pay, typically released with final pay:

Total Basic Salary Earned = ₱28,000 × 8 = ₱224,000
13th Month Pay = ₱224,000 ÷ 12 = ₱18,667 (rounded)

Resignation scenarios can get more complex than this — different exit months, salary changes before leaving, or disputes over the final computation. For a deeper walkthrough with more worked examples, see Are Resigned Employees Entitled to 13th-Month Pay in the Philippines?

How to verify your computation is correct

Confirm your total basic salary actually earned for the year from your payslips, not just your current monthly rate.
Check what your employer included or excluded from the base — overtime, allowances, and holiday premium should generally be excluded unless your specific company policy says otherwise.
If you started, left, or took extended unpaid leave mid-year, confirm the amount was prorated to reflect only the months actually worked.
For a full-year employee with an unchanged salary, the result should simply equal one month’s basic salary — if it doesn’t and nothing changed during the year, ask HR for an itemized computation.

Common computation errors

Using your current salary instead of the actual basic salary earned across the year when there was a mid-year raise, demotion, or unpaid leave.
Including overtime, allowances, or holiday premium pay in the base when they should be excluded.
Failing to prorate — or incorrectly prorating — for employees who worked less than the full calendar year.
Applying the original ₱1,000 monthly-salary ceiling, which was removed by Memorandum Order No. 28 back in 1986 — some outdated references still cite it incorrectly.

Payment Deadline

13th month pay must be paid not later than December 24 of each year. Employers are permitted to split the payment into two installments — commonly half around May or June and the remaining half by December 24 — but the full amount must be settled by the December 24 cutoff regardless of how it’s split. There is no legal exemption from this deadline for business losses or cash-flow difficulties; DOLE guidance has consistently reiterated that the December 24 deadline applies without exception.

Tax Treatment of 13th Month Pay

Under Section 32(B)(7)(e) of the National Internal Revenue Code, as amended by the TRAIN Law (Republic Act No. 10963), 13th month pay and other benefits — including Christmas bonuses, productivity incentives, and any voluntary 14th month pay — are tax-exempt up to a combined ₱90,000 per calendar year.[2] This threshold has applied since 2018.

If your combined 13th month pay and other included bonuses total ₱90,000 or less in a calendar year, none of it is subject to withholding tax.
Any amount above ₱90,000 combined is added to your taxable compensation income and withheld at your marginal income tax rate.
The cap is shared across all benefits in that category, not a separate allowance per benefit type.

Worked example: An employee earning ₱25,000/month receives ₱25,000 in 13th month pay for the year. If the same employer also gives a ₱20,000 Christmas bonus that falls in the same “other benefits” bucket, the combined total is ₱45,000 — still under the ₱90,000 ceiling, so none of it is taxed. If that employee also received a voluntary ₱50,000 mid-year bonus, the combined total (₱95,000) would exceed the cap by ₱5,000, and only that ₱5,000 excess would be taxed as ordinary compensation — the 13th month pay itself is never singled out first.

Employers must reflect any taxed excess correctly in the employee’s BIR Form 2316 at year-end. For most rank-and-file employees whose 13th month pay alone falls well under ₱90,000, the entire amount is simply tax-free.

Employer Reporting Requirement

Separate from paying the benefit itself, covered private employers must submit a 13th month pay compliance report to the DOLE Regional Office with jurisdiction over their workplace, now filed through reports.dole.gov.ph, not later than January 15 of the following year.[3] The report typically covers the establishment’s name and address, principal business, total employment, number of workers who received the benefit, and total amount granted. This reporting obligation exists independently of whether every employee actually received full payment — it is a compliance and monitoring mechanism, not a substitute for actual payment.

What to Do If Your 13th Month Pay Isn’t Paid

Because 13th month pay is a statutory right rather than a discretionary benefit, non-payment is a straightforward labor standards violation — you don’t need to first prove a contract or company policy created the obligation, unlike with 14th month pay.

Raise it with HR or payroll in writing first, noting the December 24 deadline and requesting a computation and payment date.
File a request for assistance through DOLE’s Single Entry Approach (SEnA), a mandatory 30-day conciliation-mediation process designed to resolve labor issues quickly without a formal case.
Request a labor standards inspection from the DOLE Regional Office, which has visitorial and enforcement power under Article 128 of the Labor Code to investigate and order compliance for violations like unpaid statutory benefits.
File a money claim with the National Labor Relations Commission (NLRC) if the issue isn’t resolved through SEnA or DOLE inspection. Money claims arising from employer-employee relations generally must be filed within three years from the time the cause of action accrued.

Exact administrative penalties DOLE may impose on a noncompliant employer depend on the specific violation and inspection findings; for the current schedule of fines and enforcement actions in a specific case, confirm directly with the DOLE Regional Office or a Philippine labor lawyer rather than relying on unofficial figures circulating online.

13th Month Pay vs. 14th Month Pay

	13th Month Pay	14th Month Pay
Legal basis	Presidential Decree No. 851 (mandatory)	No national law; company policy, contract, or CBA (voluntary)
Who must pay it	All covered private employers	Only employers who have committed to it
Coverage	Rank-and-file employees who worked at least 1 month in the calendar year	Whoever the employer’s policy or contract names — often narrower than 13th month coverage
Standard amount	1/12 of basic salary earned that year	Usually ~1 month’s basic salary, but employer-defined
Legal deadline	Not later than December 24	No fixed legal deadline; employer-set
Can be withdrawn	No — it’s a statutory right	Sometimes, unless it has become a company practice or contractual obligation
Tax treatment	Shares the ₱90,000 combined exemption ceiling	Shares the same ₱90,000 combined exemption ceiling

The two are often confused but work very differently. 13th month pay is mandatory for every covered employer under PD 851, with a fixed December 24 deadline and an automatic proration rule. 14th month pay is voluntary nationwide — it exists only where a specific employer’s policy, contract, or CBA creates the obligation, with no fixed legal deadline and no automatic proration unless the employer’s own policy provides for one. For a full breakdown, including how 14th month pay is computed, taxed, and what to do if a specific employer promised but didn’t pay it, see What Is 14th Month Pay in the Philippines? Complete Guide.

Frequently Asked Questions

Is 13th month pay mandatory in the Philippines?

Yes. It’s required under Presidential Decree No. 851 for all covered private-sector rank-and-file employees who worked at least one month during the calendar year. Unlike 14th month pay, it cannot be withheld at the employer’s discretion.

Who is exempt from paying 13th month pay?

The government, employers of kasambahay/domestic workers (covered under RA 10361 instead), and employers already granting an equivalent or better benefit may fall outside PD 851’s coverage. Managerial employees, as opposed to their employers, are the main category of individual workers excluded from receiving it.

How is 13th month pay computed?

Total basic salary actually earned during the calendar year, divided by 12. It excludes overtime, allowances, and most premium pay, and is automatically prorated for anyone who worked less than a full year.

What is the deadline for 13th month pay?

Not later than December 24 each year. Employers may split it into two payments during the year, but the full amount must be paid by that date.

Is 13th month pay taxable?

Only above a combined ₱90,000 annual threshold shared with other bonuses like 14th month pay and Christmas bonuses, under the TRAIN Law. Most employees’ 13th month pay alone falls well under this cap and is entirely tax-free.

Do I still get 13th month pay if I resign before December?

Yes. You’re entitled to a prorated amount based on the basic salary you actually earned that calendar year, typically released together with your final pay. See 13th-Month Pay After Resignation for scenario-specific examples and edge cases.

Is 13th month pay the same as a Christmas bonus?

No. A Christmas bonus is typically a separate, voluntary benefit an employer may choose to give on top of the mandatory 13th month pay, unless the employer has designated it as a creditable equivalent that meets PD 851’s requirements.

Sources and Legal Citations

Presidential Decree No. 851, s. 1975 (Requiring All Employers to Pay Their Employees a 13th Month Pay), as modified by Memorandum Order No. 28, s. 1986, Official Gazette of the Republic of the Philippines. Supports: legal basis, coverage, computation formula, and December 24 deadline.
National Internal Revenue Code, Section 32(B)(7)(e), as amended by the TRAIN Law, Republic Act No. 10963. Supports: ₱90,000 combined annual tax-exemption ceiling for 13th month pay and other benefits, effective 2018.
DOLE 13th Month Pay Compliance Report requirement, filed via reports.dole.gov.ph. Supports: January 15 annual reporting deadline for covered employers.
Labor Code of the Philippines, Presidential Decree No. 442, as renumbered, Article 128 (visitorial and enforcement power) and money-claims prescription provisions. Supports: DOLE inspection authority and NLRC money-claim remedy for unpaid statutory benefits.

Sources rechecked as of: August 10, 2026. Labor law and DOLE issuances can change — verify current requirements directly with DOLE, and confirm your own computation against your payslips and specific employment records.

Disclaimer: This article is for general educational and informational purposes only and does not constitute legal, tax, or HR advice. Your specific entitlement, computation, and remedies depend on your individual employment facts. For advice on a specific situation, consult the Department of Labor and Employment, the Bureau of Internal Revenue, or a Philippine labor lawyer.

13th Month Pay in the Philippines: Complete Guide

Direct Answer

Key Takeaways

Legal Basis: Presidential Decree No. 851