Baguio City – Private sector employers have until Christmas Eve (December 24) to release the 13th-month pay of their workers, DOLE-CAR Regional Director Exequiel Ronie A. Guzman said Thursday.

“The 13th month pay is considered a bonus mandated by law or a mandatory benefit of 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.” Guzman added.

The Labor Code distinguishes, rank-and-file employee  from a managerial employee. are all employees not considered managerial employees.  A managerial employee is one who is vested with powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees, or to effectively recommend such managerial actions.

The minimum amount of the 13th month pay shall not be less than one-twelfth (1/12) of the total basic salary earned by an employee in the calendar year and the basic salary of an employee for the purpose of computing the 13th month pay shall include all renumerations of earnings paid by his or her employer for services rendered.

“The 13th month pay does not include allowances and monetary benefits which are not considered or integrated as part of the basic salary, such as the cash equivalent of unused vacation leave and sick leave credits, overtime, premium, night shift differential and holiday pay, and the cost of living allowance (COLA). However, these salary related benefits should be included as part of the basic salary in the computation of the 13th month pay if these are treated as part of the basic salary of the employees, through individual or collective agreement, Company practice or policy.” Guzman also added.

An employer may give to his or her employees half of the 13th-month pay before the opening of the regular school year and the remaining half on or before December 24 every year.

The employers who are exempted from paying 13th month under PD 851as are : a) The government and any of its political subdivisions, including government-owned and controlled corporations, except those corporations operating essentially as private subsidiaries of the Government;  b)   Employers who are already paying their employees 13th month pay or more in a calendar year or its equivalent at the time of the issuance of PD 851; c) Employers of persons in the personal service of another in relation to such workers; and d) Employers of those who are paid on purely commission, boundary, or task basis, and those who are paid a fixed amount for performing specific work, irrespective of the time consumed in the performance thereof, except those workers who are paid on piece-rate basis, in which case the employer shall grant such workers the required 13th month pay.

13th month pay should not be confused with Christmas bonus. The former being mandated by law while the latter which is merely a privilege that can be withdrawn anytime unless it is part of the collective-bargaining agreement (CBA) of the company.

 END/Patrick Rillorta