Dear PAO,
I have a question about the Christmas bonus. I got a job in July 2024 and believe I am entitled to a Christmas bonus. However, my workmates informed me that our company has never given such a bonus. Aren’t employers legally required to provide a Christmas bonus? Can you enlighten me on this matter?
Jenna
Dear Jenna,
In the Philippines, the concept of a Christmas bonus is deeply rooted in our culture and is often seen as a gesture of appreciation from employers. Many workers eagerly await this additional pay to help ease the financial strain of holiday expenses.
The primary legal framework governing bonuses in the Philippines is Presidential Decree (PD) 851 or the “13th Month Pay Law.” This law mandates employers to provide a 13th-month pay, equivalent to one-twelfth (1/12) of an employee’s basic salary within a calendar year.
As per Labor Advisory 25, Series of 2023, dated Nov. 8, 2023, issued by the Department of Labor and Employment (DOLE), it is provided: “The 13th month pay shall be paid to rank-and-file employees in the private sector regardless of their position, designation, or employment status, and irrespective of the method by which their wages are paid, provided that they have worked for at least one (1) month during the calendar year. It shall be given to rank-and-file employees who are paid on a piece-rate basis, fixed or guaranteed wage plus commission, those with multiple employers, those who resigned, were terminated from employment, or were on maternity leave and received salary differential.”
While 13th month pay is a guaranteed benefit, it is distinct from the traditional Christmas bonus, which some companies may choose to give as an additional incentive.
According to the decision of the Supreme Court in the case of Producers Bank of the Philippines v. NLRC, GR 100701, March 28, 2001, through Associate Justice Minerva Gonzaga-Reyes, “bonuses are not part of labor standards in the same class as salaries, cost of living allowances, holiday pay, and leave benefits, which are provided by the Labor Code.” The Supreme Court further held that “by definition, a ‘bonus’ is a gratuity or act of liberality of the giver which the recipient has no right to demand as a matter of right. It is something given in addition to what is ordinarily received by or strictly due to the recipient. The granting of a bonus is basically a management prerogative which cannot be forced upon the employer, who may not be obliged to assume the onerous burden of granting bonuses or other benefits aside from the employee’s basic salaries or wages, especially so if it is incapable of doing so.”
Thus, Christmas bonuses can be considered discretionary if they are not stipulated in an employee’s contract or company policy. Employers may decide on the amount, timing, and even whether to grant them at all.
The confusion often arises because many employees have come to expect a Christmas bonus as part of their annual compensation package. Employers may promote these bonuses as a tradition, creating a perception that they are mandatory. However, unless explicitly stated in a contract or company policy, there is no legal basis for employees to demand a Christmas bonus.
Hence, in the situation you mentioned, it is within the discretion of your employer if it will provide a Christmas bonus to its employees. While many companies generously offer these bonuses as a gesture of goodwill, they are not legally required to do so. The practice of giving Christmas bonuses is often a company policy or part of collective bargaining agreements, but there is no law mandating them.
We hope that we are able to answer your queries. This advice is based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.
Thank you for your continued trust and support.
Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to [email protected].
