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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 EMPLOYEES MEANING 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 total basic salary earned 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, , 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