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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
- Under the law, all employers are required to pay all their rank-and-file employees, their 13th month pay not later than December 24 of every year.
- The term “its equivalent” shall include Christmas bonus, mid-year bonus, profit-sharing payments and other cash bonuses amounting to not less than 1/12th of the basic salary.
- 13th month pay shall not include cash and stock dividends, cost of living allowances and all other allowances regularly enjoyed by the employee, as well as non-monetary benefits.
Under the law, all employers are required to pay all their rank-and-file employees, their 13th month pay not later than December 24 of every year. Managerial employees are not entitled to 13th month pay unless they are so granted under an employment contract or a company policy or practice.
Who are the employers not covered by the 13h month pay law?
The laws:
Section 3. Employers covered The Decree shall apply to all employers except to:
(a) Distressed employers, such as (1) those which are currently incurring substantial losses or (2) in the case of non-profit institutions and organizations, where their income, whether from donations, contributions, grants and other earnings from any source, has consistently declined by more than forty (40%) percent of their normal income for the last two (2) years, subject to the provision of Section 7 of this issuance;
(b) 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;
(c) Employers already paying their employees 13-month pay or more in a calendar year of its equivalent at the time of this issuance;
(d) Employers of household helpers and persons in the personal service of another in relation to such workers; and
(e) Employers of those who are paid on purely commission, boundary, or task basis, and those who are paid a fixed amount for performing a specific work, irrespective of the time consumed in the performance thereof, except where the workers are paid on piece-rate basis in which case the employer shall be covered by this issuance insofar as such workers are concerned. (Section 3, Implementing Rules and Regulations, Presidential Decree No. 851)
13th month pay is in the nature of additional income granted to employees who are not receiving the same.
Jurisprudence says:
The evident intention of Presidential Decree No. 851 is to grant an additional income in the form of the 13th month pay to employees not already receiving the same so as “to further protect the level of real wages from the ravages of world-wide inflation.” (Agabon v. National Labor Relations Commission, G.R. No. 158693, November 17, 2004)
What are other equivalent forms of 13th month pay?
The law says:
The term “its equivalent” … shall include Christmas bonus, mid-year bonus, profit-sharing payments and other cash bonuses amounting to not less than 1/12th of the basic salary but shall not include cash and stock dividends, cost of living allowances and all other allowances regularly enjoyed by the employee, as well as non-monetary benefits. Where an employer pays less than 1/12th of the employees basic salary, the employer shall pay the difference. (Section 3, Implementing Rules and Regulations, Presidential Decree No. 851)
Related article: Are domestic workers entitled to receive 13th month pay?
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