Presidential Decree 851
13th Month Pay Philippines: Who Gets It, How to Compute It
Maria, 32, has worked for the same BPO in Cebu City for six years. Every December like clockwork, her 13th month pay landed in her account on the 20th. This year, her company restructured, and HR sent a memo saying the 13th month pay would be "deferred to next year due to cash flow." She wasn't sure if they could legally do that.
They cannot. 13th month pay is not a bonus. It is a legal obligation under Presidential Decree No. 851, signed in 1975 and enforced ever since. This guide breaks down exactly who gets it, how it's computed, and what to do when your employer "defers," "absorbs," or refuses outright.
Your rights, simply: 13th month pay is one-twelfth (1/12) of your total basic salary earned in the calendar year. Every rank-and-file employee who worked at least 1 month gets it. The deadline is December 24 — no exceptions, no deferrals, no excuses.
What 13th month pay actually is
Presidential Decree No. 851 — issued in December 1975 — requires every private sector employer to pay rank-and-file employees an additional month's basic pay every year. It's called the 13th month pay because it gives you, in effect, 13 months of basic salary across a 12-month year.
Who qualifies — and who doesn't
PD 851 covers all rank-and-file employees in the private sector who worked at least one month during the calendar year. The law draws a clear line between rank-and-file and managerial — but most workers, regardless of title, are rank-and-file under the law's functional test.
Covered
- —Regular employees
- —Probationary employees
- —Part-time employees
- —Piece-rate workers
- —Contractual employees
- —Resigned employees (pro-rated)
- —Dismissed employees (pro-rated, for months worked)
Not covered by PD 851
- —Government employees (covered by GAA instead)
- —Managerial employees (true managers, not just titled)
- —Workers paid purely on commission (some exceptions)
- —Kasambahay (covered separately by RA 10361)
- —Self-employed / freelancers
How it's computed (with examples)
The formula is simple: total basic salary earned during the year ÷ 12. "Basic salary" means your fixed monthly pay only — not overtime, not allowances, not bonuses, not commissions (in most cases). Get the base right, and the rest is arithmetic.
Formula
13th Month Pay = Total Basic Salary Earned in Calendar Year ÷ 12
Full year: ₱30,000 × 12 months = ₱360,000 ÷ 12 = ₱30,000
Worked 8 months: ₱30,000 × 8 = ₱240,000 ÷ 12 = ₱20,000
Worked 1 month: ₱30,000 × 1 = ₱30,000 ÷ 12 = ₱2,500
Legal reference
Basic salary
Pangunahing sahod
Fixed monthly pay — excludes OT, allowances, holiday pay, bonuses
The base for 13th month pay computation
Total basic salary
Kabuuang pangunahing sahod
Sum of all basic salary actually earned during the calendar year
Add the basic pay you actually received each month
Pro-rated entitlement
Proporsyonado
Months worked ÷ 12, applied to basic salary
Resigned, separated, or newly hired employees
| Legal Concept | Filipino Term | English Meaning | When This Applies |
|---|---|---|---|
| Basic salary | Pangunahing sahod | Fixed monthly pay — excludes OT, allowances, holiday pay, bonuses | The base for 13th month pay computation |
| Total basic salary | Kabuuang pangunahing sahod | Sum of all basic salary actually earned during the calendar year | Add the basic pay you actually received each month |
| Pro-rated entitlement | Proporsyonado | Months worked ÷ 12, applied to basic salary | Resigned, separated, or newly hired employees |
The December 24 deadline
PD 851 sets a hard deadline of December 24 every year. Employers may release the 13th month pay in one lump sum, or in two tranches (up to 50% on or before May 15, and the balance on or before December 24). What they cannot do is push the full amount past December 24. "Cash flow" is not a legal excuse.
Resigned, fired, separated — you still get it
PD 851's implementing rules are explicit: an employee who resigns, is dismissed, or is separated before December 24 is still entitled to pro-rated 13th month pay for the months actually worked in the calendar year. The right accrues monthly — once you've worked the month, the corresponding 1/12 has been earned and cannot be taken back.
Mandatory section
For OFWs / Para sa OFW
13th month pay technically applies to your employment in the Philippines. Once you're deployed abroad, your POEA contract and host country laws take over — but here's how it still affects you.
- If your Philippine recruitment agency had you on local payroll before deployment, you're entitled to 13th month pay for those months under PD 851.
- The POEA Standard Employment Contract for many OFW categories includes a 13th month pay equivalent or a similar end-of-year bonus — check Clause 5 or 6 of your contract.
- Some host countries have their own version: UAE has 'gratuity pay' computed on years of service, Saudi Arabia has 'mukafa'ah,' Singapore generally does not require 13th month but many employers offer 'Annual Wage Supplement.'
- If your foreign employer denies a contractually mandated 13th month pay, file at the POLO (embassy labor office) or NLRC's POEA Adjudication Office. Your recruitment agency is solidarily liable.
Real Filipino scenario
Maria Lopez, BPO operations specialist
Maria has worked at her BPO for six years. Her basic monthly pay is ₱32,000. This year, the company sent a memo on December 15 deferring 13th month pay to 'Q1 next year due to cash flow constraints from a major client loss.' No DOLE exemption was filed. Maria is supporting her parents and was counting on the December 22 release.
What Maria Lopez should do
- Compute: ₱32,000 × 12 ÷ 12 = ₱32,000 owed by December 24
- Save the company memo deferring payment — it's documentary evidence of the violation
- Send a written demand to HR citing PD 851 §1 and IRR §6, deadline to pay before December 24
- If unpaid after December 24, file a SEnA Request for Assistance at DOLE Region VII in Cebu
- Tip DOLE through hotline 1349 — DOLE can inspect the company independently of Maria's individual claim
What most Filipinos get wrong about this
MythIf I resigned mid-year, I lose my 13th month pay.
Truth: False. PD 851 and DOLE's implementing rules grant pro-rated 13th month pay to resigned, separated, or terminated employees. Your right accrues monthly — once earned, it cannot be forfeited.(PD 851 IRR §6)
MythProbationary employees and contractuals don't qualify.
Truth: False. The law covers all rank-and-file employees regardless of status. Probationary, casual, contractual, project-based, and seasonal employees all qualify as long as they worked at least 1 month during the calendar year.(PD 851 IRR §3)
MythMy employer can deduct cash advances or loans from my 13th month pay.
Truth: Only if you signed a written authorization for the specific deduction. Without it, the deduction is illegal. Even with authorization, the deduction cannot bring your 13th month pay below the legally mandated amount.(PD 442, Art. 113)
MythIf I was fired for just cause, I forfeit my 13th month pay.
Truth: False. Dismissal for just cause does not strip you of 13th month pay already earned. You're still entitled to a pro-rated amount for the months you actually worked before dismissal.
What to do if your employer refuses
Compute what you're owed
Formula: Total basic salary earned during the calendar year ÷ 12. Save your payslips — they're your proof of basic pay for each month.
Send a written demand to HR
Cite PD 851 §1. Attach your computation. Give a clear 7-day deadline. Keep a copy of the letter and proof of delivery (email timestamp, registered mail receipt).
File a Request for Assistance at DOLE
Walk into the nearest DOLE Regional Office. SEnA is free and starts a 30-day mandatory conciliation between you and your employer.
Escalate to NLRC if unresolved
If SEnA fails, file a formal complaint at NLRC. Money claims have a 3-year prescriptive period under Art. 306 of the Labor Code.
Report non-compliance to DOLE labor inspectors
DOLE conducts compliance inspections. You can also tip them through the DOLE hotline 1349. They can issue compliance orders independently of your individual claim.
Frequently asked questions
Is 13th month pay the same as a Christmas bonus?
No. 13th month pay is a legal right under PD 851 — mandatory and computed based on a fixed formula. A Christmas bonus is a discretionary gift from the employer. The two are separate, and a bonus does not substitute for 13th month pay unless your employer explicitly designates and computes it as such, equal to or more than the legal minimum.
Are commissions included in the 13th month pay computation?
Generally no. PD 851 uses 'basic salary' as the base, which excludes overtime, allowances, and most commissions. The exception is commissions that are an integral part of basic salary (e.g., for sales personnel where commissions are the dominant compensation component). DOLE Labor Advisory No. 18-21 clarifies this with examples.
Can my employer pay 13th month pay in two tranches?
Yes. PD 851 allows an optional first tranche (typically up to 50%) on or before May 15, and the remaining amount on or before December 24. The full amount must be paid by December 24 of each year regardless. The deadline is not negotiable.
What if my employer fails to pay 13th month pay before December 24?
It becomes a labor standards violation. You can file a Request for Assistance with DOLE (SEnA), which usually resolves in 30 days. If unresolved, escalate to NLRC. Money claims under the Labor Code prescribe in 3 years, so file within 3 years of the missed deadline.
Do I get 13th month pay if I worked only one month?
Yes. The minimum requirement is at least 1 month of service during the calendar year. If you worked just one month, you get 1/12 of that month's basic salary — pro-rated. The Code does not require minimum tenure beyond 1 month.
Sources
- 01.Presidential Decree No. 851 (13th Month Pay Law, December 16, 1975, officialgazette.gov.ph)
- 02.DOLE Labor Advisory No. 18, Series of 2021 — Guidelines on 13th Month Pay, dole.gov.ph
- 03.DOLE Labor Advisory No. 06, Series of 2020 — Guidelines on Payment of Final Pay and Issuance of Certificate of Employment, dole.gov.ph
About the author
Written by Irvin Abarca with research support from Claude AI. Irvin is the founder of BatasKo, based in Dumaguete City.
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