Lifestyle News

How to Compute 13th Month Pay in the Philippines

We all know that the Yuletide season is a time of joy and celebration. For most people, it’s also a time to receive their 13th month pay. In the Philippines, employees are entitled to 13th month pay, which is mandated by law. This additional compensation is given to employees by companies as part of their benefits package. It’s usually paid every December and can be anywhere from 10% to 100% of one’s regular monthly salary.

You might be wondering how to compute the 13th month pay. It’s not as simple as it may seem, and there are many factors that go into computing it. Nowadays, with the world wide web as a haven of information, you can easily generate data regarding this topic. And doing this will be much easier if you are equipped with fiber internet by a reliable internet provider in the Philippines.

If you want to know more about the 13th month pay, read through this article that will explain how this monetary benefit is offered, computed, and taxed so that you can plan for it as part of your overall compensation.

1. What is 13th month pay?

The 13th month pay is a mandatory benefit given to the employees in the country as provided by law. All rank and file employees in the private sector have the right to receive 13th month pay, provided they worked for at least one month in a year. The 13th month salary is 1/12 of the employee’s yearly income.

Since it is mandated, employers do not have the option of paying it depending on employee performance or business earnings. It differs from the optional Christmas bonus, which can be given to staff as a token of appreciation.

2. What is the basis for the 13 month pay?

Presidential Decree No. 851, S. 1975, entitled “Requiring All Employers to Pay their Employees a 13th-Month Pay” was a significant milestone for the labor laws and sector of the Philippines. This provided the basis for employees to receive an additional monetary benefit each year.

3. Who is eligible for or covered by the 13th month pay?

Regardless of the type of their job or the means by which their salaries are paid, all rank-and-file employees who worked for at least one (1) month throughout the calendar year are entitled to 13th month compensation.

The exact terms regarding the 13th month pay will be determined by the employment contract or through industry or collective agreements.

4. What do you mean by rank and file employee?

To begin, it should be noted that this category of an employee varies from that of a manager. A managerial employee is someone who works in a position that allows them to apply management rules and undertake tasks in their own capacity (e.g. lay-off, hire, transfer, suspend, assign or discipline).

Employees who do not meet the criteria of a managerial employee in the Philippines will normally be classified as a rank-and-file employee for the purposes of the 13th Month pay benefit.

5. How is the 13th month pay computed?

According to the Department of Labor and Employment (DOLE), the 13th month pay shall not be less than 1/12 of the total basic salary earned by an employee within a calendar year. The following is the basic formula for the computation:

Total basic salary earned for the year/12 months  =  proportionate 13th month pay

“Basic salary” means all remunerations paid by an employer to an employee for services rendered.

To illustrate, here is an example:  Ms. Sharon, an employee of AZ Agency, receives a monthly basic salary of P15,000.00. Her earnings for the current year are as follows:

January                 no absence                          P15,000.00

February              no absence                          P15,000.00

March                   on leave w/o pay             P0.00

April                      no absence                          P15,000.00

May                       no absence                          P15,000.00

June                      no absence                         P15,000.00

July                        no absence                         P15,000.00

August                 3 days leave w/ pay        P15,000.00

September         no absence                          P15,000.00

October               no absence                         P15,000.00

November          2 days leave w/pay         P15,000.00

December           no absence                         P15,000.00

Total Basic Salary Earned During the Year    – P165,000.00

Ms. Sharon’s 13th month pay will be computed as P165,000/12 months  = P13,750.00

6. What is included in the computation of the 13th month pay?

The 13th month pay covers only the basic salary of the employee. Allowances and monetary benefits not regarded or integrated as part of the employee’s regular remuneration are not included in the calculation of the annual basic salary.

Included in the computation are your basic pay and all of your paid leaves including maternity leave, sick leave, and vacation leaves. The cash equivalent of unused vacation and sick leave credits, overtime, premium pay, night difference, and holiday pay, as well as the cost-of-living allowance, are all excluded from the computation. If, however, these benefits are recognized as part of the employee’s basic annual salary under the employee’s contract or agreement, they will be factored into the employee’s 13th-month pay calculation.

7. When should the 13th month pay be paid?

Employees should get their 13th month salary on or before December 24 each year, according to the law. Employees often receive their 13th-month salary in the first week of December, with some receiving it during Christmas week or the day before Christmas.

Employers may decide to give their employees the 13th Month pay benefit in equal installments.

While payments can be made in installments, the full amount of the 13th Month Pay benefit must be paid before December 24 to assure 100 percent compliance.

8. Is the 13th month pay taxable?

Employers in the Philippines can take into account some non-taxable compensation when computing payroll. The income tax exemption threshold is one of them. Employees in the Philippines are eligible for an income tax exemption on benefits and allowances paid up to a total value of P90,000.00 each year.

What does this actually imply in terms of 13th Month Pay? If the value of the 13th Month Pay benefit, when combined with any other allowances or benefits received from the employer during a calendar year, does not exceed P90,000, the whole value of such benefits/allowances is tax-free.

If the value of any such benefits or allowances, including the 13th Month pay benefit, exceeds P90,000, the employee will still be eligible for the exemption for the first P90,000, but the remaining amount will be subject to income tax. The employer will be responsible for ensuring that the taxable value is deducted at source from their workers’ pay.

9. Are there employers who are exempted from paying 13th month?

 Yes.  The following employers are exempted from paying 13th month pay under PD 851:

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.

10. What is a bonus?

A bonus is an amount given to an employee in excess of what the law mandates as a reward or incentive for completing a goal and/or contributing to the employer’s commercial performance. A bonus, unlike 13th month pay, is given out of the generosity of the employer and is not a demandable and enforceable duty unless it is formed part of the salary or the subject of an express agreement.

11. Is the 13th month pay the same as the bonus/Christmas bonus?

It’s important to realize that the 13th Month Pay benefit is distinct from any bonus or other type of remuneration that a Philippine company may provide or pay to its workers. Discretionary business incentive schemes or allowances – whether it’s a Christmas bonus, a performance bonus due around Christmas (or at any other time of the year), or any other category bonus – are normally exempt from labor regulations. As a result, employers should not mistake the 13th Month pay benefit with any other type of incentive or compensation payment (which is a statutory requirement).

A Christmas Bonus, for example, is not required; it is a voluntary reward that businesses may choose to make to their employees.

12. Are resigned or separated/terminated employees entitled to 13th month pay?

Yes. According to DOLE, an employee who has resigned or whose services were terminated at any time before the time for payment of 13th month is still entitled to the benefit.

13. How much is the 13th month pay of a resigned or separated/ terminated employee?

The 13th month pay of a resigned or separated/terminated employee is in proportion to the length of time he or she has worked during the year, reckoned from the time he has started working during the calendar year or the time the last 13th month pay was given, up to the time of his/her resignation or separation/termination from the service.

Therefore, if he/she worked only from January to September, his/her 13th month pay shall be equal to 1/12 of his total basic salary earned during that period.

When calculating payroll and the last pay for a departing employee, it is critical for companies and their HR teams in the Philippines to consider this cost in mind.

14. When can resigned or separated employees receive their 13th month pay?

The 13th month of compensation for a resigned or terminated employee is usually included in their back pay or final pay. Depending on the employee’s resignation date, this might take a month or two. You may need to verify the release date with your HR department.

15. Are maternity leave benefits included in the computation of 13th month pay?

Maternity leave is not included in the 13th month pay calculation. For example, if you were absent for two months of the calendar year due to maternity leave, you should only include the months during which you were present.

Using the same example as before, your calculation should be as follows:

(P15,000 x 10 months) /12 months = P 12,500.00

16. Are employers required to submit a report regarding the payment of the 13th month pay?

Employers must submit a report each year to their nearest Department of Labor and Employment, or DOLE, Regional Office confirming that they have complied with the 13th Month Pay requirement. This is to ensure that they are indeed complying with their statutory obligations to pay their employees their 13th Month Pay.

Employers must submit the Compliance Report to DOLE by January 15 of the following year.

17. Are government employees entitled to 13th month pay?

As discussed in the exceptions, government workers are not eligible, along with freelancers, contractual workers, household helpers, and employees who are paid solely on commission (real estate brokers) under PD No. 851 Section 3.

This does not, however, imply that government employees are not compensated throughout the Christmas season. Every year, they earn two sorts of bonuses: a mid-year bonus paid around June to July and a year-end bonus (also known as 14th month pay or Christmas bonus) paid around November to December.

Each of these bonuses is worth one month’s basic wage. Employees of the government are also eligible to a P5,000 cash bonus, which is provided in conjunction with their year-end bonus.

These incentives are awarded to regular, contractual, casual, full-time, and part-time government employees, from the President to the lowest-paid janitor or clerk, under the Salary Standardization Law (Republic Act 11466).

18. Can an employee report an employer for not giving his/her 13th month pay?

The employee may call the DOLE 24/7 hotline at 1349. They may also fill out the DOLE online query form. Through an amazing fiber internet, you can easily accomplish this task.

Spend your 13th month pay wisely

When someone mentions 13th month pay, there’s usually a sense of anticipation and happiness. However, it’s easy to lose track of your spending, so make the most of this additional compensation given this time of the year.

One of the ways to spend your 13th month pay wisely is by acquiring necessities that can make your life more comfortable. Since technology is one of the things that make life convenient nowadays, it is highly recommended to get fiber internet from a trusted internet service provider in the Philippines.

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We have the best internet packages that afford faster internet speeds compared with traditional DSL lines. This is made possible thanks to our fiber-optic backbone link.

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Events and Observances News

See this list of the amazing online Christmas party ideas this 2021

Written by: Aiya Rodjel

While the number of cases in the country may have been lowering in recent weeks, it is still not recommended to hold in-person events. This 2021, virtual holiday parties will still remain the norm. As long as you have a fiber internet connection, you can hold virtual Christmas parties everyone can enjoy.

Just because parties are a virtual holiday event nowadays doesn’t mean they can’t be fun. In this article, we’ll discuss some of the best virtual Christmas party ideas you can try to make the holidays more enjoyable. You can tailor-fit them according to your budget and have just as much fun as you would at an actual party.

Virtual Christmas Party Ideas to Try

It may be crunch time to hold a virtual holiday event, but you can still have a blast. What’s great about virtual holiday party ideas is that you don’t have to spend as much. If you’ve got a great internet provider in the Philippines, your virtual holiday parties can be a total success.

Holiday Care Package

For your next holiday party, you should send over a care package in advance to make the online Christmas party more festive. You can send over props for the actual virtual holiday Christmas party. You can even send over items they can use for the virtual Christmas games.

Just because you’re hosting a virtual party doesn’t mean you can’t treat your remote team with some awesome goodies. Since you don’t have to rent a venue or hire a lot of suppliers, you can send over care packages to everyone. You just have to make sure you’re within your budget.

If your virtual holiday party has a certain theme, you have to make sure the items you send over match the theme. If you have some team members that are out of town, you also have to coordinate early to make sure they get their packages.

What’s great about sending over packages prior to the online holiday parties is that it will get people into the Christmas spirit. There are party suppliers that can help you organize everything and make sure the remote team gets their goodies on or before the day itself.

Online Holiday Party Costume Contest

To make the virtual office Christmas party more festive, you should have a virtual Christmas party costume contest. Dressing up will make people the holiday spirit. At the same time, it’s a great excuse for people to dress up for the virtual party.

Remote employees can dress up wherever they are. You can choose a special theme in advance so people can choose their outfits accordingly. The winning team member will get a prize. The incentive will drive people to bring their A-game for the party.

What’s awesome about having a costume contest is that

Virtual Holiday Bingo

If you’ve got remote employees all over the country, you can still have a memorable virtual party by having a virtual holiday bingo game. It’s one of the favorite holiday party games you can still have even if you’re apart from one another. You can hold the actual game on Zoom and Microsoft teams, whichever works better for your team members.

What’s great about virtual holiday bingo is that everyone can join in on all the fun. You can send over the bingo cards in advance via courier or download some for your virtual holiday party. There are a lot of bingo card templates online so you don’t have to make them yourself.

As for the actual prizes, you can opt to send a gift box or item once the event is over. Another cool option is to give away shopping vouchers instead. This way, you can save on courier fees and the winners can choose the prize of their choice.

Virtual Secret Santa

Just because you’re holding a virtual holiday party doesn’t mean you should forget about the holiday spirit. You and your ream team members can still give each other Christmas gifts while social distancing.

What’s great about having a Virtual Secret Santa is that it’s harder for people to guess who their Secret Santa is. It’s also easy to shop for gifts online. You just have to take note of the estimated delivery date to make sure the present arrives on time. It’s important that the gift arrives before the virtual holiday party. With the surge in deliveries this holiday season, it’s better to be early than late.

For everyone to open a gift on the actual virtual event, it’s important that everyone picks their Virtual Secret Santa in advance. This way, people can shop for their gifts ahead of the holiday party itself. You can opt to send virtual gifts if that’s more economical for your team members. You can also send them on or before the online holiday party date.

Christmas Carol Competition

If you’re looking for virtual Christmas party ideas that will make people bond more, you should consider holding a Christmas Carol competition. Singing Christmas carols will get people in the holiday spirit no matter where they are. This party idea will encourage remote members to virtually meet up with one another before the actual event.

The Christmas carols will make the holiday party much more enjoyable. Having some holiday songs played will get people into the spirit of Christmas. To share the Christmas spirit with others, the winning team’s favorite charity should win a cash prize. The winning team members will also get holiday goodies as well.

The fact there’s competition will make the virtual Christmas party fun. This is a great party idea for people to show off their talents. Some teams might even make a virtual production number to take their performance to the next level. The possibilities are endless.

Virtual Christmas Trivia

To test the holiday knowledge of your party guests, you can hold a Virtual Christmas Trivia game. From Christmas movie titles to holiday songs, there are a lot of Christmas-themed topics to choose from.

Having a virtual holiday trivia game will make the holiday gathering so exciting. You just need to research holiday-related trivia ahead of the online event itself. You can have the actual virtual holiday trivia game on Kahoot and Zoom simultaneously.

You can have this fun game for individual players or teams. This virtual Christmas party activity invites everyone to use their brains and have some fun at the same time.

Virtual Holiday Party Parlor Games

Virtual holiday party games will liven up the party and encourage people to participate more. There are a lot of apps online that you can use for your virtual Christmas party.

From Pictionary to Charades, having some virtual holiday party games at your virtual party will be a total hit. You just need to divide your teams into groups so they can work together.

Having some virtual holiday party games will make people feel like they’re together even if they’re social distancing. Plus, you have technology on your side to help organize the virtual Christmas games for you. You just have to make sure you have a reliable internet service provider in the Philippines. This way, the Christmas-themed games will take place without a hitch.

Holiday Scavenger Hunt

One creative way to invite some participation among team members is having a holiday scavenger hunt. You can send over a list of items and encourage people to collect the items accordingly. There are lists online you can take inspiration from. From holiday traditions to novelty items, you can ask people to look for interesting items.

The winning team member gets a cool prize as an incentive. What’s awesome about having a holiday scavenger hunt is that it will get people moving. This way, the team members won’t just be in front of their computer screen for the entire holiday party.

Virtual Photo Booth

Just because you’re on a video call doesn’t mean you can’t take fun photos together. You can still have a virtual photo booth for your team members to take photos together. You can choose whatever props you have at home to make your photos more memorable. You can also ask people to wear Santa hats or other Christmas-related decors as well.

What’s great about having a virtual photo booth is that you don’t even need a third-party supplier to take fun, wacky photos. However, if you want to send over some holiday cheer by sending the photos over after, you should get a supplier to handle the printing for you.

Christmas Decorations contest

Even though you’re not in the office, you can still spread the Christmas cheer with some Christmas decorations. People can show off their Christmas tree at home or you can opt to have a home office decoration contest.

If that’s too complicated, you can have a miniature Christmas tree designing contest instead. People can decorate their own little Christmas trees. The team member with the most beautiful design gets to win a fun prize.

Holiday Happy Hour

Even though you’re on a video call doesn’t mean you can’t enjoy holiday-themed cocktails together. To make the online party more jolly, you can send over drinks to your remote team right before the holiday celebrations begin. You can also send over recipe ideas for everyone to enjoy the same drinks.

Having some cocktails will make the online holiday party much more enjoyable. You can also send over some snacks or food if you’ve got the budget for it. The refreshments will make the virtual holiday party a better experience for everyone in attendance.

If you’ve got team members that don’t drink alcohol, they can still join in on the Holiday happy hour. They can have mocktails or other juice drinks. Having some drinks on hand means can still hold some toasts at the end of the holiday celebrations.

Christmas Movie Showing

To close off the virtual Christmas party, you should have a Christmas movie screening. You can stream the movie via Discord, Zoom, or Microsoft Teams. Capping off the virtual holiday party with a feel-good movie will make people relax.

Having a movie screening is a great way to remind people what the holiday season is all about. Plus, team members can invite their families to enjoy the movie as well. The holiday season is about spending time with people you love. Having a Christmas movie showing will make the party end on such a sweet note.

Applying Virtual Holiday Party Ideas

What’s great about these virtual Christmas party ideas is that people can join in on the fun wherever they are. If you’re looking to apply these virtual holiday party ideas, it’s important you coordinate with your suppliers as soon as you can. That’s why it’s important for you to have a fiber internet connection.

With a reliable internet service provider in the Philippines such as Streamtech Inc., you can make your virtual Christmas parties more dynamic. Applying these cool virtual holiday party ideas won’t be a problem with the right partners.

This holiday season and beyond, it’s essential that you have a fiber internet connection. With great internet, you can join all the virtual holiday parties without stressing about your internet speed. Plus, you can shop for all the virtual Christmas party needs as well.

One of the newest internet service providers in the Philippines, Streamtech is your best partner to make sure the virtual holiday party you’re organizing will be a total success. With Streamtech, you can search for virtual holiday party ideas that are within your working budget. Plus, you can even watch your favorite television shows through our cable bundles with Planet Cable.

To make sure your virtual Christmas parties will be a hit, you need to exceed your limits with Streamtech. Contact our team today to get started. You may also visit the Streamtech official Facebook page for more details.