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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
- 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 which 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 cost of living allowance (COLA).
- However, these salary-related benefits should be included as part of the basic salary in the computation of the thirteenth-month pay if these are treated as part of the basic salary of the employees, through individual or collective agreement, company practice or policy.
The thirteenth-month pay shall not be less than one-twelfth (1/12) of the total basic salary earned by an employee in a calendar year.
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.
Labor Advisory No. 18, series of 2018, or the Guidelines in Payment of 13th Month Pay, provides that:
“2. “Basic Salary” shall include all remunerations or earnings paid by an employer to an employee for services rendered but may not include cost-of-living allowances, profit-sharing payments, cash equivalent of unused vacation and sick leave credits, overtime pay, premium pay, night shift differential, holiday pay, and all allowances and monetary benefits which are not considered, or integrated as part of thee regular basic salary of the employee.” (Labor Advisory No. 18, Series of 2018)
The 2022 Handbook of Workers’ Statutory Monetary Benefits provides that:
“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 which 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 cost of living allowance (COLA). However, these salary-related benefits should be included as part of the basic salary in the computation of the thirteenth-month pay if these are treated as part of the basic salary of the employees, through individual or collective agreement, company practice or policy.” (Emphasis supplied.)
Question: Are commissions part of the basic salary for the purpose of computing their 13th month pay of an employee?
Yes, to be part of 13th month pay, commissions must be part of the basic salary of an employee.
PH Duplicators, Inc. v. National Labor Relations Commission (G.R. No. 110068, February 15, 1995) provides that salesmen commissions are included in the term “basic salary: for the purpose of computing 13th month pay.
Jurisprudence says:
“Thus, the salesmen’s commissions, comprising a pre-determined percent of the selling price of the goods sold by each salesman, [are] included in the term “basic salary” for purposes of computing their 13th month pay.” (PH Duplicators, Inc. v. National Labor Relations Commission, G.R. No. 110068, February 15, 1995)
In order to be considered to be part of the 13th month pay, the commission should be part of the basic salary of the employee. (Reyes v. NLRC, G.R. No. 160233, August 8, 2007)
Related article: What is the minimum amount of 13th month pay?
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