13th Month Pay

It is interesting to note that some readers posted 13th Month Pay related questions. The questions are quite timely, considering that we are nearing the end of the year 2013. 

To begin with, the Revised Guidelines on the Implementation of the 13th Month Pay Law states that "All employers are required to pay all their rank and file employees a 13th month pay not later than December 24"

Q: Are managerial employees entitled to 13th month pay?A: No. A reading of the law states that the 13th Month Pay is mandatory ONLY to rank and file employees. 

In the case of PMTI-ULGF vs Ferrer-Calleja, et. al., GR No. 85915, January 17, 1990, managerial employee is defined as:

The Labor Code recognizes two (2) principal groups of employees, namely, the managerial and the rank and file groups. Thus, Art. 212 (k) of the Code provides:

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(k) "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 action. All employees not falling within this definition are considered rank and file employees for purposes of this Book.

However, the management has the prerogative to give managerial employees with 13th Month Pay, which I think is currently practiced by most of the employers in the Philippines.

Q. I joined the company in March 2013 and I intended to resign this November 2013, am I still entitled to 13th Month Pay even if I was employed less than one (1) year?

A. Yes. The law does not require that an employee has rendered at least one (1) year of service to be entitled for the 13th Month Pay.

However, in the computation of the amount due to the employee, take note the definition of 13th month pay: it shall mean 1/12 of the basic salary of an employee in a calendar year. Moreover, pursuant to the revised guidelines:

6.  13th Month Pay of Resigned or Separated Employee.

An employee who has resigned or whose services were terminated at any time before the time for payment of the 13th month pay is entitled to this monetary benefit in proportion to the length of time he worked during the year, reckoned from the time he started working during the calendar year up to the time of his resignation or termination from the service. Thus, if he worked only from January up to September his proportionate 13th month pay should be equivalent of 1/12 his total basic salary he earned during that period.

So in this case, an employee should compute his total basic salary he/she earned  from March 2013 to November 2013, find 1/12 of the said amount, and that should be the 13th month pay that he/she should receive from his/her employer.

Q: Is 13th Month Pay taxable?
A: Yes if together with other benefits from the company, it exceeds Thirty Thousand Pesos (Php 30,000.00).