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HISTORICAL BACKDROP
Originally, when PD 851, issued by Pres.
Marcos, took effect on December 16, 1975,
only employees receiving a basic salary of
not more than P1,000 a month were entitled
to 13th pay.
On August 13, 1986, Pres. Aquino, through
Memorandum Order No. 28, removed the
salary ceiling of P1,000. With the removal of
the salary ceiling, all rank and file employees
become entitled to a 13th month pay
regardless of the amount of their monthly
basic salary

EMPLOYEES COVERED BY 13TH

MONTH PAY LAW
All rank-and-file employees, regardless
of their designation or employment
status, and irrespective of the method
by which their wages are paid, who
have worked at least one month
during the calendar year are entitled
to 13th month pay.

RANK AND FILE

EMPLOYEESMEANING
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.

AMOUNT OF 13TH MONTH PAY

The 13th month pay shall be in the amount not
less than 1/12 of the totalbasic
salaryearned by the employee within the
calendar year.
Computation
Only basic salary is included in the
computation of 13th month pay. 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 differential
and holiday pay, and cost-of-living
allowances, shall be excluded from the
computation.

TIME OF PAYMENT OF 13TH MONTH

PAY
The required 13th month pay shall be paid not
later than December 24 of each year. An
employer, however, may give to his
employees one half of the required 13th
month pay before the opening of the regular
school year and the other half on before the
24th of December of every year. The
frequency of payment of this monetary
benefit may be the subject of agreement
between the employer and the
recognized/collective bargaining agent of the
employees.

EMPLOYEES EXCLUDED FROM

COVERAGE OF 13TH MONTH PAY
LAW.

Managerial employees;

Those covered under the civil service law;

Those already receiving 13th month pay or its
equivalent. Christmas bonus, mid-year bonus, cash
bonuses and other payments amounting to not less
than 1/12 of the basic salary are treated as equivalent
of 13th month pay;
Household helpers and persons in the personal service of
another; and
Those paid on purely commission, boundary, or task
basis, and those who are paid fixed amount for
performing specific work except those paid on a
piece-rate basis.

BONUS VS 13TH MONTH PAY

Bonus

13th Month Pay

Not demandable

Mandatory and demandable

Depends fully on the

generosity (or absence of
such) of the employer

The law provides what

comprises the 13th month pay

An employer may provide

conditions as to who shall be
entitled

All classes of employees are

entitled

May be released anytime upon Shall be paid on or before

the discretion of the employer December 24