Entitlement of new employee to 13th month pay

Dear PAO,

This year, I recently got my first job as a finance analyst at a company in Quezon City. As the holiday season draws near, one of the topics of discussion among my workmates is the 13th month pay. I wonder if I am already entitled to it even if I only joined the company on Oct. 1, 2023, and what would be the possible amount I would receive if I am entitled.

Flaire

Dear Flaire,

The grant of 13th month pay to rank and file employees is provided under Presidential Decree (PD) 851 dated Dec. 16, 1975, of then President Ferdinand E. Marcos. Under this PD and as elaborated under the 2023 Handbook on Workers Statutory Benefits, rank-and-file employees in the private sector shall be entitled to 13th month pay 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 month during the calendar year. (Sec. 4, PD 851) The minimum 13th month pay required by law shall not be less than one-twelfth (1/12) of the total basic salary earned by an employee within a calendar year. (Sec. 2, Id.)

The “basic salary” of an employee for the purpose of computing the thirteenth-month pay shall include all remunerations or earnings paid by his or her employer for services rendered. It does not include allowances and monetary benefits that are not considered or integrated as part of the regular or basic salary, such as the cash equivalent of unused vacation and sick leave credits, overtime, premium, night shift differential, and holiday pay, and the cost of living allowance (COLA). (Ibid.) This minimum amount shall be provided without prejudice to existing company practice and policy, employment contract, or collective bargaining agreement, if any. Further, the employer shall pay the 13th month pay on or before December 24 of every year. (Sec. 1, Id.) An employer, however, may give to his or her employees one-half of the thirteenth-month pay before the opening of the regular school year and the remaining half on or before December 24 of every year.

It is important to note that a rank-and-file employee must render at least a month of service for him or her to be entitled to the benefit of receiving 13th month pay. (Sec. 4, Id.) Thus, in your case, you will be entitled to the 13th month pay, considering that you started employment on the first of October. However, since you only started this last quarter of the year, the basis of your 13th month pay will be relatively small compared to your other workmates. You need to sum up your total basic pay for the calendar year and divide it by 12 to determine your possible 13th month pay.

We hope that we were able to answer your queries. This advice is based solely on the facts you have narrated and our application of the same. Our opinion may vary when other facts are changed or elaborated on.

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]