13th Month Pay in the Philippines: Who Gets It and How to Compute It

By the PH Trend Watch team · Updated October 29, 2026

Every December, millions of Filipino workers look forward to their 13th month pay. It is not a bonus your employer can choose to skip — it is required by law. Here is how it works.

What the law says

13th month pay comes from Presidential Decree No. 851, issued in 1975. It requires employers to give their rank-and-file employees an extra payment equal to at least one-twelfth (1/12) of the basic salary they earned during the calendar year.

Who is entitled

All rank-and-file employees in the private sector, whatever their position or how they are paid (monthly, daily, piece rate or commission-based with a fixed wage component).
Employees who worked at least one month during the calendar year.
Employees who resigned or were separated before December — they are entitled to a pro-rated amount, paid with their final pay.

Managerial employees are not covered by PD 851, although many companies give them a 13th month pay anyway as a company policy. Government employees receive a separate year-end bonus under their own rules.

How to compute it

The formula is simple:

13th month pay = total basic salary earned during the year ÷ 12

"Basic salary" means your regular pay for work done. It generally does not include overtime pay, night shift differential, holiday pay, cash allowances or other benefits, unless your company's policy or contract says otherwise. Unpaid absences are deducted, because you did not earn salary for those days.

Example 1: worked the whole year

Ana earns a basic salary of ₱20,000 a month and worked January to December with no unpaid leave. Her total basic salary for the year is ₱240,000, so her 13th month pay is ₱240,000 ÷ 12 = ₱20,000.

Example 2: joined mid-year

Ben started on 1 June at ₱18,000 a month. By December he has earned 7 months × ₱18,000 = ₱126,000, so his 13th month pay is ₱126,000 ÷ 12 = ₱10,500.

Example 3: salary increase during the year

Carla earned ₱25,000 a month from January to June and ₱28,000 from July to December. Her total is (6 × ₱25,000) + (6 × ₱28,000) = ₱318,000, so her 13th month pay is ₱26,500.

When it must be paid

The deadline is on or before 24 December each year. Employers may pay it in two parts — for example, half in June and the rest in December — as long as the full amount is paid by the deadline.

Is 13th month pay taxed?

Under the TRAIN Law, 13th month pay and other benefits are tax-exempt up to a combined ₱90,000 a year. Only the amount above ₱90,000 is added to your taxable income. Thresholds can change, so check the latest rules from the Bureau of Internal Revenue (BIR).

What to do if you don't receive it

Talk to your HR or payroll team first — sometimes it is a computation error. If the issue is not resolved, you can seek help from the Department of Labor and Employment (DOLE) through its Single Entry Approach (SEnA) for a free and quick settlement.

This guide is general information, not legal advice. For your specific situation, check with DOLE or your company's HR team.

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