How to Compute 13th Month Pay with Absence Days
The 13th Month Pay is a bonus for all private sector employees working in the Philippines. The Presidential Decree No. 851 of Labour Law makes it a legal requirement for the employer to pay 13th Month Pay to all their employees on an annual basis.
The computation of 13th Month Pay is a bit complex. Therefore most employees prefer to use an online calculator to compute their 13th month pay amount. Here I provide the 13th Month Pay Calculator to help you compute your 13th Month Pay easily and instantly.
13th Month Pay Calculator
Enter 12 if you worked the full year. If you started or resigned mid-year, enter the actual number of months worked (e.g. 5.5).
Count only days you actually rendered service (paid leaves like SIL/VL/SL are generally still counted; unpaid absences are not). This uses the standard 313-workday-per-year divisor (6-day workweek) to derive your daily rate.
Formula used: Total basic salary earned during the year ÷ 12 = 13th month pay, per Presidential Decree No. 851 and its Implementing Rules. This tool gives an estimate for guidance only and is not a substitute for official payroll computation or legal advice.
The 13th Month Pay Calculator is an online tool for easy computation of an employee’s 13th month pay. You just need to provide your basic salary and other details, then click on Calculate/Compute Now button to get the result. The amount shown in the result is your 13th month pay.
You can also check our SSS Pension Calculator to estimate how much monthly pension you will receive when you retire.
Eligibility Criteria for 13th Month Pay
All Rank and File Employees working in the private sector are entitled and eligible for 13th Month Pay if they have worked for at least one month in the calendar year.
Who Are Rank and File Employees?
The term “Rank and File Employees” refers to all private sector employees except the employees on managerial positions.
Employment Type and 13th Month Pay
All the employees are eligible for 13th month pay including the employees hired on regular basis, project based, seasonal, part-time and probationary basis. If there is an employer-employee relationship and the employee has earned basic pay, the employee is entitled for 13th month pay and the employer is enforced by the law to pay 13th month pay to the employee.
Employees on Daily Wages and 13th Month Pay
Whether the employees earn wages on daily basis, weekly or monthly, they are eligible for 13th month pay if they have worked for at least one month in a year and has earned basic pay for that month.
Paid Leaves and Unpaid Leaves for 13th Month Pay
The paid leaves have no impact on 13th month pay computation, while the unpaid leaves affect the 13th month pay. When calculating total basic salary for the year, the unpaid leaves salaries deducted from the total salary.
Employment Status and 13th Month Pay
The employees who have worked for at least one month in a calendar year and have received their basic pay, are eligible for 13th month pay irrespective of their employment status. It means that the employee may be separated from the employer but they are still entitled for 13th month pay and the employer must pay it to the employee.
When to Pay 13th Month Pay
As per Labor Law Rules, the employer is required to pay the 13th Month Pay on or before December 24. If the employee fails to release 13th Month Pay by 24 December, they will face penalties and legal consequences from the Department of Labor and Employment (DOLE).
Can an Employer Settle 13th Month Pay in Two Parts?
Yes, the employer can settle 13th month pay to the employee in two parts. In fact, many employers in the Philippines prefer to release 13th month pay in two installments for their convenience and the employees agree with the employer.
So, the answer to above question is a clear Yes. The employer can settle 13th month pay in two parts as first payment is released in June and second payment is released in December. The employer must complete the second payment of 13th month pay by 24 December.
How to Compute 13th Month Pay
The 13th month pay is computed with help of the total basic salary of the employee in the current calendar year. Here I provide the standard formula to compute 13th month pay in the Philippines.
13th Month Pay = Total Basic Salary Earned in the Year ÷ 12
Important Notes
- Absent Days or Unpaid leaves will not be counted for 13th month pay computation.
- Maternity Leave earnings will not be counted for 13th month pay computation.
- If there is an increase in basic salary in-between the year, the increase will be considered for 13th month pay computation.
Here I provide different examples to help you compute 13th month pay in different cases and circumstances.
Example 1: Mr A has earned PHP 180,000 as total basic salary during the year. Compute his 13th month pay as per rules.
Mr A’s 13th Month Pay = Total Basic Salary Earned in the Year ÷ 12
= PHP 180,000 ÷ 12 Months
= PHP 15000
So, Mr A will receive PHP 15000 as his 13th month pay from his employer.
Example 2: Mr B earns the basic salary of PHP 12000 per month. He took the leave for 2 days in March, 3 days in June, 2 days in September and 1 day in November. The employer considers 261 days for per-day rate divisor. All leaves were unpaid, compute Mr B’s 13th month pay.
Total basic salary of Mr B for whole calendar year = PHP 12000 x 12 = PHP 144,000. Mr B took total 8 unpaid leaves for which his basic pay will be reduced for computation of 13th month pay.
Mr B’s Basic Salary per day = PHP 144000 ÷ 261 Days = PHP 551.72 (daily basic salary)
Mr B’s Actual Basic Salary for the Year = PHP 144000 – (551.72 x 8) = PHP 144000 – 4413.76 = PHP 139586.24
Now Mr B’s 13th Month Pay = Total Basic Salary Earned in the Year ÷ 12
= PHP 139586.24 ÷ 12
= PHP 11632.19
So, Mr B will receive PHP 11632.19 as 13th month pay from his employer.
Example 3: Mrs C has earned PHP 240,000 in the whole year. She took maternity leave from April to June i.e. 3 months. The whole maternity leave was paid, computer 13th month pay for Mrs C as per rules.
Mrs C has earned PHP 240,000 in 12 months which means her monthly salary is PHP 20,000. She took 3 month maternity leave. Although the maternity leave was paid, it won’t be counted for 13th month pay.
Mrs C’s total basic salary for the year = total basic salary – maternity leave earning = PHP 240,000 – 60,000 = PHP 180,000
Mrs C’s 13th Month Pay = Total Basic Salary Earned in the Year ÷ 12
= PHP 180,000 ÷ 12
= PHP 15000
So, Mrs will receive PHP 15000 as 13th month pay from her employer.
Example 4: Mr D has earned monthly basic salary of PHP 15000 from January to June and PHP 22000 from July to December. Computer his 13th month pay.
Mr D’s Total Basic Salary from January to June = PHP 15000 x 6 = PHP 90,000
Mr D’s Total Basic Salary from July to December = PHP 22,000 x 6 = 132,000
So, Mr D’s Total Basic Salary for the Year = PHP 90,000 + 132,000 = PHP 222,000
Now Mr D’s 13th Month Pay = Total Basic Salary Earned in the Year ÷ 12
= PHP 222,000 ÷ 12
= PHP 18500
So, Mr D will receive PHP 18500 as 13th month pay from his employer.
Example 5: Miss E joined the work from July month. She earns monthly basic salary of 18000 plus some allowances. Compute 13th month pay for Miss E as per labor law rules.
The Philippines Labor Law clearly states that an employee is entitled for 13th month pay if they have worked for minimum one month in a calendar year. Here Miss E has worked for six months from July to December, so she is entitled to receive 13th month pay.
Miss E’s Total Basic Salary for the Year = PHP 18000 x 6 months = PHP 108,000
Now Miss E’s 13th Month Pay = Total Basic Salary Earned in the Year ÷ 12
= PHP 108,000 ÷ 12
= PHP 9000
So, Miss E will receive PHP 9000 as 13th month pay from her employer.
How Unpaid Leaves Affect 13th Month Pay
The 13th month pay is computed on the basis of employee’s total basic salary earned in the year. The unpaid leaves are not counted as working days because the employee is absent and they have not earned anything on those days.
When computing 13th month pay, the basic salary of unpaid leave days is deducted from total salary. The employer needs to set a rate divisor to compute employee’s basic salary per day. The employer may have his (company’s) own policy to use a rate divisor considering fixed working days in a year.
Some employers consider 261 working days in a year for rate divisor. Depending upon the employer’s/company’s policy, the employer can consider 261 days or 313 days or 365 days as rate divisor to compute an employee’s basic salary per day.
You can check Example 2 above to understand how to compute 13th month pay for an employee with unpaid leaves.
Is 13th Month Pay Taxable or Tax-Free?
The 13th-month pay is not taxable as long as the total bonus of the employee does not exceed PHP 90,000 in a year. As per Labor Law Rules, up to PHP 90,000 of bonus is exempted in a year for every employee working in the Philippines.
If the total bonus of an employee exceeds PHP 90,000 then it is taxable as per rules.
For Example: If an employee Mr X receives PHP 20,000 as 13th month pay and he has received other bonus of PHP 45,000, their total bonus will be PHP 20000+45000 = PHP 65000 which is less than PHP 90,000. So, Mr X’s 13th pay is not taxable. If the total bonus goes beyond PHP 90,000 then it would be taxable.
Are Resigned or Terminated Employees Eligible for 13th Month Pay?
Yes, the resigned and terminated or separated employees are eligible for 13th month pay if they fulfill the eligibility conditions/requirements stated by the Labour Law of Philippines.
The resignation or termination does not affect an employee’s entitlement (eligibility) to receive 13th month pay from the employer if the employee has worked for minimum one month and received their basic pay for that month.
Who Are Not Eligible for 13th Month Pay?
Above I have explained about who is included for 13th month pay, here I will tell you who is not included i.e. the employees who are not eligible for 13th month pay as per Philippines Labor Law Rules.
- Government Employees are Not entitled/eligible for 13th Month Pay because they receive their Year-End Bonus as per Civil Service Rules in the Philippines.
- Private Sector Employees working on Managerial Positions (Managers and Executives) are Not eligible for 13th Month Pay.
- Private Sector Managers who have the power to hire/recruit and fire/suspend/terminate other employees, are Not eligible for 13th Month Pay.
- Private Sector Managers/Executives with a power/authority to make changes in company’s policies, are Not eligible for 13th Month Pay.
- Freelancers, Consultants and Independent Contractors operating under service contracts are Not eligible for 13th Month Pay.
- Commission-based and Boundary-based workers who earn only commissions and not any basic pay, are Not eligible for 13th Month Pay.
Basic Salary and 13th Month Pay
The 13th month pay must be at least 1/12th of the total basic salary earned by the employee in the calendar year. Kindly note that the 13th month pay is computed on basic salary and not on total salary.
The basic salary or basic pay is a fixed amount paid by the employer to the employee on monthly basis.
What’s Included in Basic Salary
The employee’s basic salary includes Standard Wages or Fixed Basic Remuneration paid by the employer to the employee.
What’s Not Included in Basic Salary
The additional allowances are not included in basic salary. Such allowances are travel allowance, house rent allowance, dearness allowance, overtime allowance, holiday allowance, night shift differentials and other allowances.
The incentives and commissions are also not included in basic salary. The employer often pays incentives and commission based on targeted milestones achieved by the employee. The incentives and commission are part of the employee’s additional perks/benefits but they are not a part of the employee’s basic salary.
Summary:
The 13th month pay is the right of every employee working in private sector in the Philippines. Above I have explained everything you need to know about 13th month pay, its eligibility and how to compute 13th month pay as per labor law rules.
The unpaid leaves and maternity leave affect the computation of 13th month pay. In case you still have any query or doubt about 13th month pay, you can ask it in the comment section below.
