13th month pay is a mandatory benefit under Presidential Decree 851 that private employers must give their rank-and-file employees every year, equal to at least one-twelfth of the basic salary earned within the calendar year. It must be paid no later than December 24. Every year, the Department of Labor and Employment (DOLE) issues a labor advisory reminding employers of these rules; the 2025 version was Labor Advisory No. 16.
Who is entitled to 13th month pay
DOLE’s guidelines cover all rank-and-file employees in the private sector who have worked for at least one month during the calendar year, regardless of their position, designation, employment status, or the method by which their wages are paid. That means probationary, contractual, project, and seasonal workers qualify, as long as they are rank-and-file.
Originally, PD 851 covered only employees earning not more than ₱1,000 a month. That salary ceiling was later removed, so today there is no salary cap for rank-and-file employees.
Who is not covered
The implementing rules and later DOLE guidelines exclude several groups:
- Managerial employees. The mandate is for rank-and-file workers, although many companies give managers a 13th month anyway.
- Government employees. Workers in national agencies, LGUs, and most GOCCs receive a year-end bonus under separate government rules instead.
- Employers already paying an equivalent. A Christmas bonus, mid-year bonus, or other cash bonus of at least one-twelfth of basic salary counts as the equivalent. Cash and stock dividends, cost-of-living allowances, and other allowances regularly enjoyed do not.
- Workers paid purely by commission, boundary, or task, where pay does not depend on time spent. However, workers on a piece-rate basis are covered.
The original rules also mentioned distressed employers, but any exemption required prior DOLE authorization. In recent advisories, DOLE has stressed that the deadline applies without deferment.
How to compute 13th month pay
The basic formula is simple:
Total basic salary earned during the calendar year ÷ 12 = 13th month pay
Basic salary means remuneration for services rendered. Under DOLE’s rules, it excludes overtime pay, night shift differential, holiday pay, and allowances that are not part of the basic wage, unless the company treats them as part of basic pay by policy or agreement.
For example, an employee earning ₱18,000 a month from January to December has total basic pay of ₱216,000. Divided by 12, the 13th month pay is ₱18,000. If she took five days of unpaid leave worth ₱4,000 in total, her basic salary earned drops to ₱212,000, and her 13th month becomes about ₱17,667.
Pro-rated 13th month pay for new hires and resigned employees
Because the computation uses salary actually earned, someone who worked only part of the year gets a proportional amount. A worker hired in July at ₱15,000 a month and still employed in December earns ₱90,000 in basic salary, so the 13th month is ₱7,500.
Employees who resign or are separated before December are also entitled to a pro-rated amount covering the months they worked that year. It is usually released with their final pay. When you leave a job, therefore, ask HR for the final pay computation and check that the pro-rated 13th month is listed.
Timing when you leave a job
For separated employees, DOLE Labor Advisory No. 06, Series of 2020, says final pay should generally be released within 30 days from the date of separation, unless a more favorable company policy or agreement applies. The pro-rated amount is part of that final pay, together with unpaid salary and the cash conversion of unused service incentive leave. Also, the employer should issue a certificate of employment within three days of the employee’s request. If the release drags on past 30 days, a polite written follow-up to HR, citing the advisory, usually moves things along.
The December 24 deadline
PD 851 requires payment not later than December 24. Employers may also pay half before the start of the regular school year and the other half on or before December 24. Where a union is recognized, the frequency of payment can be agreed in the collective bargaining agreement.
In practice, many companies release it in early December or with the last November payroll. Either way, as long as the full amount reaches you by December 24, the employer has complied.
13th month pay and taxes
Under the TRAIN Law (RA 10963), 13th month pay and other benefits such as Christmas bonuses are tax-exempt up to a combined ₱90,000 a year. Only the amount above ₱90,000 is added to taxable compensation. For most rank-and-file workers, therefore, the 13th month is received in full without withholding tax.
The figure appears on your BIR Form 2316 as non-taxable 13th month pay and other benefits. If you are filing your own return, our guide on filing an annual ITR explains where that number goes.
Kasambahays and 13th month pay
The Batas Kasambahay (RA 10361) states that domestic workers are entitled to 13th month pay as provided by law, which in practice means the same one-twelfth computation. Household employers sometimes forget this, especially when the kasambahay is a relative or lives in. Our guide to kasambahay benefits lists the other mandatory benefits.
13th month pay in special situations
- Employees on maternity leave. The SSS maternity benefit itself is paid by SSS, not as salary, so how the leave period is treated in the computation can depend on company policy or a CBA. Ask HR how your company handles it. See our RA 11210 guide for the leave itself.
- Private school teachers. DOLE’s clarification says they get one-twelfth of their annual basic pay regardless of the number of months they teach.
- Workers with multiple employers. Each employer pays its own 13th month based on what it paid you.
- Agency workers. The contractor or agency, as the employer, is responsible, though the principal can be held jointly liable.
Compliance reports from employers
DOLE asks employers to submit a 13th month pay compliance report online through its establishment reporting system after the December payout; for the 2025 payout, the deadline was January 15, 2026. This report helps DOLE flag non-compliant companies for inspection. Employees do not file anything themselves, but it is useful to know that the employer has this obligation.
What to do if you are not paid
Start by asking HR or payroll in writing, since errors in computation are common, especially for workers with unpaid leaves or mid-year salary changes. Keep your payslips for the whole year, because they are your proof of basic salary earned.
If the issue is not resolved, you can bring it to DOLE. Non-payment of 13th month pay is treated as a money claim. DOLE’s Single Entry Approach (SEnA) offers 30-day conciliation-mediation, which often settles such claims without a formal case. If no settlement is reached, the claim can proceed to the proper labor office or the NLRC. Money claims under the Labor Code generally must be filed within three years.
Worked example with a mid-year raise
Salary changes are a common source of confusion. Suppose an employee earned ₱16,000 a month from January to June and ₱19,000 from July to December. Her total basic salary is (₱16,000 × 6) + (₱19,000 × 6) = ₱210,000. Her 13th month pay is ₱210,000 ÷ 12, or ₱17,500. It is not simply her December salary, which many people assume.
Now suppose she also earned ₱12,000 in overtime and ₱6,000 in night differential during the year. Neither is added, unless company policy says so. As a result, her 13th month stays at ₱17,500.
Checking your payslip
To verify the amount, add the basic pay lines from every payslip of the year, subtract any unpaid absences already deducted, and divide by 12. If your company pays half in mid-year, subtract that first installment from the total. Then compare the result with the 13th month pay line on your December payslip. A difference of a few pesos is usually rounding. Larger gaps are worth raising with payroll before the year closes, because corrections are easier before the BIR Form 2316 is finalized.
Common misunderstandings
- “It is a Christmas bonus.” It is a legal obligation, not a gift. A bonus can count as the equivalent, but only if it reaches one-twelfth of basic salary.
- “Probationary employees do not get it.” They do, once they have worked at least a month in the year.
- “Resigning in October means no 13th month.” A pro-rated amount is still due.
- “Overtime counts.” Usually not, unless company policy says otherwise.
Budgeting your 13th month pay
Since it arrives at the busiest spending time of the year, many workers find it helps to decide in advance how to split it. Some use part of it for Pag-IBIG MP2 savings, which pays dividends and can be opened online; see our MP2 guide. Others use it to settle a loan before the new year. Either way, remember that the 13th month pay is based on the past year’s work and does not repeat until the following December.
Last checked against PD 851 and its implementing rules on Lawphil and the Department of Labor and Employment annual 13th month advisory on October 2026. DOLE usually releases the current year’s advisory in November or December.
