In the Philippines, the 13th Month Pay is not just a holiday bonus given at the employer's discretion; it is a statutory right protected by law under Presidential Decree No. 851. While typically associated with the December festivities, the obligation of an employer to pay this benefit persists even when an employee resigns mid-year or has served for only a short period.
I. Legal Entitlement Upon Resignation
Under the Labor Code of the Philippines and the Rules and Regulations Implementing P.D. No. 851, an employee who has resigned or whose services were terminated at any time before the time for payment of the 13th month pay is entitled to this benefit.
The law is clear: Resignation does not forfeit your right to the 13th month pay. It is considered "accrued" income based on the service you have already rendered.
II. The "One Month" Rule
The most critical eligibility requirement for short service is the duration of employment. To be entitled to the 13th month pay, an employee must have worked for at least one (1) month during the calendar year.
- Scenario A: You started January 1 and resigned February 15. You are entitled.
- Scenario B: You started January 1 and resigned January 20. You are technically not entitled under the one-month rule.
III. Computation Formula
The 13th month pay is not necessarily equivalent to one full month's salary if you did not work the entire year. It is computed pro-rata.
The standard formula provided by the Department of Labor and Employment (DOLE) is:
What is included in "Basic Salary"?
- Included: Total remuneration or earnings paid by an employer for services rendered.
- Excluded: Allowances (COLA), overtime pay, night shift differential, holiday pay, and unused vacation/sick leave conversions, unless these are integrated into the basic salary by individual or collective bargaining agreement.
IV. Sample Computation for Short Service
If an employee earns PHP 30,000 per month and resigned after working for exactly 4 months in a calendar year:
- Calculate Total Basic Salary:
- Divide by 12:
- 13th Month Pay Due: PHP 10,000.00
V. Frequently Asked Questions
| Question | Legal Standing |
|---|---|
| Is it taxable? | 13th month pay and other benefits are tax-exempt up to a ceiling of PHP 90,000. |
| When should it be paid? | For resigned employees, it is typically released as part of the Final Pay (Backpay). |
| Can the employer withhold it? | Only if the employee has existing liabilities to the company (e.g., unreturned equipment, pending liquidated damages). |
| Are Rank-and-File only? | P.D. 851 specifies rank-and-file, but most company policies extend this to managerial employees as well. |
VI. Release and Compliance
According to DOLE Labor Advisory No. 06, Series of 2020, final pay (including the pro-rated 13th month pay) should be released within thirty (30) days from the date of separation or termination of employment, unless a more favorable company policy or individual agreement exists.
Failure of an employer to pay the 13th month pay is a violation of labor standards and can be the subject of a money claim filed before the National Labor Relations Commission (NLRC) or the nearest DOLE Regional Office.
Note: Always ensure you receive a BIR Form 2316 and a Quitclaim/Release document upon receiving your final pay to formalize the end of the employer-employee relationship and confirm the correct taxes were withheld (if any).
Would you like me to create a step-by-step checklist for calculating your total final pay, including leave conversions and tax adjustments?