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Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
AT A GLANCE:
Employees who are not rank-and-file employees are not covered by the 13th Month Pay Law.
The Labor Code distinguishes a rank-and-file employee from a managerial employee. It provides that a managerial employee is one who is vested with powers of 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. All employees not falling within this definition are considered rank-and-file employees.
The above distinction shall be used as guide for the purpose of determining who are rank-and-file employees entitled to the mandated 13th month pay. (Revised Guidelines on the Implementation of the 13th Month Pay Law)
The Christmas and New Year season brings joy and excitement, especially with the anticipation of receiving the long-awaited 13th-month pay. However, is every employee entitled to receive this additional benefit? And who falls outside the scope of eligibility as per the provisions of the 13th-month pay law?
Presidential Decree No. 851 says:
Section 1. All employers are hereby required to pay all their employees receiving a basic salary of not more than P1,000 a month, regardless of the nature of their employment, a 13th-month pay not later than December 24 of every year.
Section 2. Employers already paying their employees a 13th-month pay or its equivalent are not covered by this Decree.
The 13th-month pay mandated by Presidential Decree (P.D.) No. 851 represents an additional income based on wage but not part of the wage. It is equivalent to one-twelfth (1/12) of the total basic salary earned by an employee within a calendar year. All rank-and-file employees, regardless of their designation or employment status and irrespective of the method by which their wages are paid, are entitled to this benefit, provided that they have worked for at least one month during the calendar year. (Central Azucarera de Tarlac v. Central Azucarera de Tarlac Labor Union-NLU, G.R. No. 188949, July 26, 2010)
Why is the entitlement to receive the 13th-month pay limited to rank-and-file employees?
Presidential Decree No. 851 says:
WHEREAS, it is necessary to further protect the level of real wages from the ravage of worldwide inflation;
WHEREAS, there has been no increase in the legal minimum wage rates since 1970;
WHEREAS, the Christmas season is an opportune time for society to show its concern for the plight of the working masses so they may properly celebrate Christmas and New Year.
Presidential Decree No. 851, otherwise known as the 13th Month Pay Law, which required all employers to pay their employees a 13th month pay, was issued to protect the level of real wages from the ravages of worldwide inflation. It was enacted on December 16, 1975 after it was noted that there had been no increase in the minimum wage since 1970 and the Christmas season was an opportune time for society to show its concern for the plight of the working masses so that they may properly celebrate Christmas and New Year. (Honda Philippines, Inc. vs. Samahan ng Malayang Manggagawa sa Honda, G.R. No. 145561, June 15, 2005)
Read also: Who are the employers exempted from giving 13th month pay to their employees?
Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries regarding taxation and taxpayer’s remedies, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.
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