Quick Answer: 13th Month Pay = Total Basic Salary Earned (January 1 – December 31) ÷ 12
- Who gets it: Rank-and-file employees in the private sector who worked at least one month during the calendar year. This applies regardless of position, employment status, or how they’re paid.
- Deadline: On or before December 24.
- Prorated: Worked less than a full year? You receive 1/12 of the basic salary you actually earned.
- Tax: Tax-free up to ₱90,000 when combined with your other bonuses and benefits. Only the excess is taxable.
The 13th month pay is one of the most important benefits Filipino workers receive each year. It’s also one of the most commonly miscomputed.
For employees, knowing how it’s computed helps you check that you receive the correct amount. This matters most if you were hired mid-year, are paid daily, resigned, or took unpaid leave. For employers, accurate computation keeps payroll compliant with Department of Labor and Employment (DOLE) rules and avoids disputes with employees.
2026 Update Watch
DOLE typically issues its annual 13th month pay advisory in November. Congress is also considering proposals to raise the ₱90,000 tax-exempt ceiling. As of this update, none has been signed into law, so ₱90,000 still applies. We’ll update this guide when the 2026 advisory is released or the tax ceiling changes.
In this guide:
- What Is 13th Month Pay?
- Who Is Entitled?
- What Counts as Basic Salary?
- How to Compute: Worked Examples
- Prorated 13th Month Pay Table
- Is 13th Month Pay Taxable?
- Deadline and Payment Rules
- Employer Compliance Checklist
- Smart Ways to Use Your 13th Month Pay
- FAQs
13th Month Pay vs. Bonus: What’s the Difference?
| 13th Month Pay | Bonus (Christmas, Performance, Productivity) | |
| Legal basis | PD 851 | Company policy, contract, or collective bargaining agreement |
| Mandatory? | Yes, for rank-and-file employees in the private sector | Only if promised by policy, contract, or established company practice |
| Based on | Basic salary only | Whatever the employer’s policy sets |
| Amount | At least 1/12 of annual basic salary | Varies |
| Deadline | On or before December 24 | Per company policy |
| Tax treatment | Combined with bonuses: tax-free up to ₱90,000 | Combined with 13th month pay: tax-free up to ₱90,000 |
Who Is Entitled to 13th Month Pay?
You’re entitled if you meet all three conditions:
- You are a rank-and-file employee.
- You work in the private sector.
- You worked at least one month during the calendar year.
Your position, designation, employment status, and how your wages are paid don’t affect eligibility.
| Employee Type | Entitled? | What’s Divided by 12 |
| Regular, full-year | ✅ Yes | Total basic salary for the year |
| Probationary | ✅ Yes | Basic salary earned |
| Part-time | ✅ Yes | Basic pay actually earned |
| Contractual / project-based | ✅ Yes | Basic salary earned during the contract |
| Hired mid-year | ✅ Yes, prorated | Basic salary from start date |
| Resigned or terminated | ✅ Yes, prorated | Basic salary up to the last day |
| Piece-rate workers | ✅ Yes | Total earnings from production |
| Fixed or guaranteed wage plus commission | ✅ Yes | See “Commissions” below |
| Working for more than one employer | ✅ Yes, from each employer | Basic salary earned from each employer |
| Kasambahays (domestic workers) | ✅ Yes, under RA 10361 | Basic salary earned |
| Managerial employees | ❌ Not covered by the mandate | Only if company policy or contract grants it |
| Government employees | ❌ Not covered by PD 851 | Governed by separate year-end benefit rules |
Worked less than one month this year? The legal mandate doesn’t cover you for that year. Your employer may still grant it voluntarily.
Are Managers Entitled to 13th Month Pay?
No. The legal requirement applies only to rank-and-file employees. Managerial employees aren’t covered by PD 851.
Many companies still give 13th month pay to managers as a policy benefit. If yours does, the amount follows company policy rather than the legal minimum. If you’re promoted to a managerial role mid-year, check your company policy to see how your rank-and-file months are treated.
Kasambahays (Domestic Workers)
Kasambahays such as household helpers, cooks, yayas, and gardeners are entitled to 13th month pay under Republic Act No. 10361, the Domestic Workers Act (Batas Kasambahay), if they have worked at least one month in the year.
The computation is the same: total basic salary earned during the year, divided by 12.
Example (illustrative only, not a minimum-wage figure):
- Monthly salary: ₱7,000 × 12 months = ₱84,000
- 13th month pay: ₱84,000 ÷ 12 = ₱7,000
For a kasambahay who started in April:
- ₱7,000 × 9 months = ₱63,000
- 13th month pay: ₱63,000 ÷ 12 = ₱5,250
Kasambahay minimum wages differ by region. Check the current wage order for your region before using these figures.
What Counts as “Basic Salary”?
This is where most miscomputations start. DOLE defines basic salary as earnings for services rendered. It excludes allowances and monetary benefits that aren’t part of basic salary.
Included:
- Regular monthly, semi-monthly, or daily wages for work actually rendered
- Salary increases, counted from their effective date
- Salary paid for approved leave with pay, where treated as part of basic pay
Generally excluded:
Overtime pay
- Holiday pay and rest-day premium pay
- Night shift differential
- Cash conversion of unused vacation or sick leave credits
- Allowances (transportation, meal, rice, communication, and similar) not integrated into basic salary
- Profit-sharing, performance bonuses, and other incentives
Is Overtime Included in 13th Month Pay?
No. Overtime pay isn’t part of basic salary, so it doesn’t count toward your 13th month pay. The same applies to holiday premiums, rest-day premiums, and night shift differential.
Your employer can choose to include them by company policy, but the law doesn’t require it.
Does 13th Month Pay Deduct Absences?
Unpaid absences reduce it; paid absences don’t. The computation uses basic salary actually earned.
Days on leave without pay (LWOP) aren’t earned salary, so they lower your annual total before it’s divided by 12. See Scenario 5 below for the math.
Is Paid Leave Included in 13th Month Pay?
Generally, yes. Salary paid for approved vacation or sick leave with pay is usually treated as part of basic salary earned, so it counts.
The cash conversion of unused leave credits, often paid at year-end or on resignation, is a separate benefit. It’s generally excluded.
Is Maternity Leave Included in 13th Month Pay?
DOLE’s 2025 advisory includes employees on maternity leave who receive a salary differential among those covered by 13th month pay. The maternity benefit itself is paid by the Social Security System (SSS), not as salary from your employer. How the employer-paid portion is counted depends on your pay structure. Confirm with your HR or payroll team.
Commissions, Hazard Pay, and Other Gray Areas
- Commissions: Employees paid a fixed or guaranteed wage plus commission are covered by 13th month pay. Whether the commissions themselves count depends on whether they form part of the wage structure. Treatment varies by arrangement, so get HR or legal confirmation for your setup.
- Hazard pay: Counts only if it’s integrated into basic salary. It doesn’t count if it’s paid as a separate allowance.
How to Compute 13th Month Pay: Worked Examples
Every example below uses the legal minimum of exactly 1/12. Your employer may pay more.
Scenario 1: Full-Year Monthly Employee
- Monthly basic salary: ₱25,000 × 12 months = ₱300,000
- 13th month pay: ₱300,000 ÷ 12 = ₱25,000
A full-year employee with no unpaid absences receives one month’s basic salary.
Semi-monthly pay? The computation is the same. Add the basic pay from all 24 cutoffs, then divide by 12.
Scenario 2: Hired Mid-Year (Worked 6 Months)
- Hired July 1 at ₱20,000/month; worked July–December
- ₱20,000 × 6 months = ₱120,000
- 13th month pay: ₱120,000 ÷ 12 = ₱10,000
Scenario 3: Contractual Worker (6-Month Contract)
- ₱15,000/month × 6 months = ₱90,000
- 13th month pay: ₱90,000 ÷ 12 = ₱7,500
Scenario 4: Salary Increase During the Year
- January–June: ₱18,000 × 6 = ₱108,000
- July–December: ₱21,000 × 6 = ₱126,000
- Total basic salary: ₱234,000
- 13th month pay: ₱234,000 ÷ 12 = ₱19,500
Count each salary rate only from its effective date.
Scenario 5: Unpaid Absences (Leave Without Pay)
- Monthly basic salary: ₱20,000; annual: ₱240,000
- Unpaid absences: 5 days
- Daily rate, using a 261-day payroll factor: ₱20,000 × 12 ÷ 261 = ₱919.54
- Deduction: ₱919.54 × 5 = ₱4,597.70
- Basic salary earned: ₱240,000 − ₱4,597.70 = ₱235,402.30
- 13th month pay: ₱235,402.30 ÷ 12 = ₱19,616.86
Why the payroll factor matters: Companies convert monthly salary to a daily rate using a factor set by their work schedule, commonly 261, 313, or 365 days a year. A different factor changes the absence deduction, so use the one in your contract or company policy.
Scenario 6: Daily-Paid Employee
- Daily rate: ₱600 × 250 days actually worked = ₱150,000
- 13th month pay: ₱150,000 ÷ 12 = ₱12,500
Count only days actually worked or paid. Holiday premiums and overtime are excluded.
Scenario 7: Resigned or Terminated Employee
- Monthly basic salary: ₱30,000; last day: September 15
- January–August: ₱240,000
- September 1–15: ₱15,000
- Total basic salary: ₱255,000
- Prorated 13th month pay: ₱255,000 ÷ 12 = ₱21,250
You’re entitled to prorated 13th month pay whether you resigned or were terminated. It’s typically released with your final pay.
Scenario 8: Piece-Rate Worker
- Total earnings from production for the year: ₱132,000
- 13th month pay: ₱132,000 ÷ 12 = ₱11,000
Piece-rate workers are paid by output, not time, and are covered. The basis is total production earnings for the year.
Scenario 9: Guaranteed Wage Plus Commission
- Guaranteed monthly wage: ₱15,000 × 12 = ₱180,000
- Minimum 13th month pay on the guaranteed wage: ₱180,000 ÷ 12 = ₱15,000
- Commissions may raise this amount, depending on how they’re structured.
Prorated 13th Month Pay: Meaning and Quick Table
Prorated means your 13th month pay is proportional to the time you actually worked during the year. It applies if you were hired mid-year, resigned, were terminated, or had your contract end. Your 13th month pay covers only the basic salary you earned during those months.
Shortcut: Monthly basic salary ÷ 12 × months worked
Prorated 13th month pay at ₱20,000 monthly basic salary:
| Months Worked | Basic Salary Earned | 13th Month Pay |
| 1 | ₱20,000 | ₱1,666.67 |
| 2 | ₱40,000 | ₱3,333.33 |
| 3 | ₱60,000 | ₱5,000.00 |
| 4 | ₱80,000 | ₱6,666.67 |
| 5 | ₱100,000 | ₱8,333.33 |
| 6 | ₱120,000 | ₱10,000.00 |
| 7 | ₱140,000 | ₱11,666.67 |
| 8 | ₱160,000 | ₱13,333.33 |
| 9 | ₱180,000 | ₱15,000.00 |
| 10 | ₱200,000 | ₱16,666.67 |
| 11 | ₱220,000 | ₱18,333.33 |
| 12 | ₱240,000 | ₱20,000.00 |
For a different salary, multiply your monthly basic salary by the months worked, then divide by 12. Partial months count only for the salary actually earned in them (see Scenario 7).
Month-by-Month Breakdown
Tracking basic salary month by month makes proration and absence deductions easy to check and audit.
Assumptions:
- ₱20,000 monthly basic salary
- 261-day payroll factor, so the daily rate is ₱919.54
- 2 unpaid days in February and 1 unpaid day in December
| Month | Monthly Salary (₱) | Unpaid Days | Basic Salary Earned (₱) | Running Total (₱) |
| Jan | 20,000.00 | 0 | 20,000.00 | 20,000.00 |
| Feb | 20,000.00 | 2 | 18,160.92 | 38,160.92 |
| Mar | 20,000.00 | 0 | 20,000.00 | 58,160.92 |
| Apr | 20,000.00 | 0 | 20,000.00 | 78,160.92 |
| May | 20,000.00 | 0 | 20,000.00 | 98,160.92 |
| Jun | 20,000.00 | 0 | 20,000.00 | 118,160.92 |
| Jul | 20,000.00 | 0 | 20,000.00 | 138,160.92 |
| Aug | 20,000.00 | 0 | 20,000.00 | 158,160.92 |
| Sep | 20,000.00 | 0 | 20,000.00 | 178,160.92 |
| Oct | 20,000.00 | 0 | 20,000.00 | 198,160.92 |
| Nov | 20,000.00 | 0 | 20,000.00 | 218,160.92 |
| Dec | 20,000.00 | 1 | 19,080.46 | 237,241.38 |
13th month pay: ₱237,241.38 ÷ 12 = ₱19,770.12
Tip for employees and HR: Keep monthly attendance and payroll records. They make the 13th month computation transparent and easy to verify.
Is 13th Month Pay Taxable?
Only the portion above ₱90,000. Under the TRAIN Law (Republic Act No. 10963), your 13th month pay and “other benefits” are tax-free up to a combined ₱90,000 per year. Other benefits include Christmas bonuses, productivity incentives, and other non-de minimis benefits. Anything above ₱90,000 is added to your taxable compensation income and taxed at your regular graduated income tax rate.
| Employee | 13th Month Pay | Other Bonuses | Total | Tax-Exempt | Taxable Portion |
| Mia | ₱20,000 | ₱50,000 | ₱70,000 | ₱70,000 | ₱0 |
| Paolo | ₱40,000 | ₱70,000 | ₱110,000 | ₱90,000 | ₱20,000 |
How Paolo’s tax works:
- Add his 13th month pay and other bonuses: ₱40,000 + ₱70,000 = ₱110,000.
- Subtract the ₱90,000 ceiling: ₱110,000 − ₱90,000 = ₱20,000.
- Add the ₱20,000 to his taxable compensation income for the year.
- His employer withholds tax on it using the BIR withholding tax table.
Tax Edge Cases
- Mid-year hires: A prorated 13th month pay plus bonuses is less likely to exceed ₱90,000, but compute the total anyway.
- Multiple benefits: The ₱90,000 ceiling applies to the combined total, not to each benefit separately.
- De minimis benefits (for example, rice subsidy and uniform allowance within set limits) are treated separately from the ₱90,000 ceiling. BIR Revenue Regulations No. 29-2025 raised several de minimis limits effective January 6, 2026. How amounts above those limits are treated should be confirmed with your payroll or tax adviser.
13th Month Pay Deadline and Payment Rules
The deadline is on or before December 24. For 2026, that falls on a Thursday.
| Rule | What It Means |
| Deadline | Pay no later than December 24. Paying after that date violates PD 851. |
| No exemptions or deferment | DOLE does not accept requests to skip or delay payment. |
| Installments | Employers may release it in parts, for example half mid-year and the balance before December 24, as long as the full amount is paid by the deadline. |
| Minimum amount | At least 1/12 of the basic salary earned during the year. |
| Compliance reporting | Employers report payment through the DOLE Online Compliance Portal (reports.dole.gov.ph). |
Required Records
| Record | Purpose |
| Employee masterlist | Confirms eligibility, employment type, and start and separation dates |
| Payroll summaries | Show basic pay per month or cutoff |
| Attendance and leave records | Support deductions for unpaid leave and absences |
| Salary change records | Establish effective dates of increases |
| BIR withholding records | Support the tax treatment of amounts above ₱90,000 |
Common Employer Mistakes
| Mistake | How to Avoid It |
| Including overtime, premiums, or allowances in the base | Use basic salary earned only |
| Paying mid-year hires or resigned staff a full month | Prorate based on basic salary actually earned |
| Leaving out resigned or terminated employees | Include prorated 13th month pay in their final pay |
| Missing piece-rate or commission-plus-wage employees | Audit these categories before computing |
| Treating managerial pay as legally required, or denying rank-and-file supervisors | Classify by actual role, not job title |
| Paying after December 24 | Schedule the payroll run in early December |
| Confusing the DOLE report with BIR forms | File both; they’re separate obligations |
| Not setting aside cash in advance | Accrue monthly (see below) |
Employers: How to Avoid a December Cash Crunch
Because 13th month pay can’t be deferred, the simplest safeguard is to accrue it monthly. Set aside 8.33% of each month’s total basic payroll (1 ÷ 12) in a separate account. By December, the full amount is already funded.
Example: A business with a ₱300,000 monthly basic payroll sets aside ₱25,000 each month. That’s ₱300,000 by December, exactly one month of basic payroll.
If you didn’t accrue this year, start planning in October, not late December. Options include accelerating collection of receivables, timing supplier payments, and using seasonal revenue. Short-term financing is another option.
SAFC offers collateral-based loans that business owners use for working capital:
- A Sangla Titulo Loan, which uses a land title as collateral
- A Sangla OR/CR Loan, which uses a vehicle’s registration documents
Borrow only what your business can comfortably repay. Financing doesn’t change your legal deadline
Employees: Smart Ways to Use Your 13th Month Pay
Your 13th month pay is one of the few lump sums you receive each year. A simple order of priorities:
- Build or top up your emergency fund. A common guideline is 3–6 months of essential expenses.
- Pay down high-interest debt first. Start with credit card balances and informal loans. A structured debt management plan can help you decide the order.
- Lower a heavy monthly obligation. If your car loan payments strain your budget, a car loan takeout could reduce your monthly amortization, depending on your loan terms and eligibility.
- Set a Christmas spending cap before you shop. Our Christmas budget guide can help you plan the season.
- Save toward a bigger goal. A home, a vehicle, or business capital all benefit from a larger down payment.
For your regular salary, a simple budgeting rule like the 50/30/20 rule can help you plan beyond December.
Frequently Asked Questions
How is 13th month pay computed in the Philippines?
Add the total basic salary you earned from January 1 to December 31, then divide by 12. That’s the legal minimum; employers may pay more.
When is the 13th month pay deadline in 2026?
On or before Thursday, December 24, 2026.
Who is entitled to 13th month pay?
Rank-and-file employees in the private sector who worked at least one month during the year. This applies regardless of position, employment status, or how they’re paid.
Am I entitled to 13th month pay if I resigned or was terminated?
Yes. You receive a prorated amount based on the basic salary you earned up to your last day.
Do probationary and contractual employees get 13th month pay?
Yes, based on the basic salary they earned during the year.
What if I worked less than one month?
The legal mandate requires at least one month of service in the calendar year. Your employer may still grant it voluntarily.
Is 13th month pay taxable?
Only the portion of your combined 13th month pay and other bonuses that exceeds ₱90,000.
Is overtime included in 13th month pay?
No. Overtime, holiday and rest-day premiums, and night differential aren’t part of basic salary.
Does 13th month pay deduct absences?
Unpaid absences reduce it because they aren’t earned salary. Paid leave generally doesn’t.
Are managers entitled to 13th month pay?
Managerial employees aren’t covered by the legal mandate, but many companies grant it by policy.
Can 13th month pay be given in installments?
Yes, as long as the full amount is paid by December 24.
Is 13th month pay the same as a Christmas bonus?
No. 13th month pay is required by law. A Christmas bonus depends on company policy or contract.
Conclusion
Computing 13th month pay comes down to one rule: total basic salary earned during the year, divided by 12.
- Employees: Knowing what counts as basic salary helps you check that you’re paid correctly. So does knowing how proration and absences work.
- Employers: Accurate classification, clean payroll records, payment by December 24, and timely DOLE and BIR filings are what compliance looks like in practice.
Rules can change from year to year, especially DOLE’s annual advisory and the tax-exempt ceiling. Bookmark this guide; we update it when new guidelines are released.
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