Author: Atty. Angeli Andan
Q: Who are legally entitled to 13th month pay?
A: Under P.D. No. 851, “Thirteenth-month pay” shall mean one twelfth (1/12) of the basic salary of an employee within a calendar year. This is the much anticipated benefit that private sector employees depend on during the holiday season.
The law provides that 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. If the employee worked for only a portion of the year, the 13th-month pay is computed pro rata. Domestic workers are also entitled to this benefit as per Section 25 of the Batas Kasambahay.
Those who are not qualified, however, are as follows:
- Distressed employers
- Government employees
- Employers already paying their employees 13-month pay or more in a calendar year of its equivalent at the time of this issuance
- 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,
According to the case of Central Azucarera De Tarlac vs. Central Azucarera De Tarlac Labor Uniuon-NLU, the term “basic salary” of an employee for the purpose of computing the 13th-month pay was interpreted to include all remuneration or earnings paid by the employer for services rendered, but does not include allowances and monetary benefits which are not integrated as part of the regular or basic salary, such as the cash equivalent of unused vacation and sick leave credits, overtime, premium, night differential and holiday pay, and cost-of-living allowances. However, these salary-related benefits should be included as part of the basic salary in the computation of the 13th-month pay if, by individual or collective agreement, company practice or policy, the same are treated as part of the basic salary of the employees.
Both employers and employees must understand the concept behind the 13th-month pay to ensure compliance with the laws and prevailing jurisprudence. Want to know if you are qualified to receive the 13th month pay? Contact us today at info@baisandanlaw.com. You can also reach us via cellphone number at 0915 968 2503 or at our telephone number (045) 281 0164.