13ᵗʰ-Month Pay for Resigned Employees in the Philippines A Comprehensive Legal Guide
1 | Statutory Foundation
| Legal Source | Key Provisions |
|---|---|
| Presidential Decree (PD) 851 (1975) | Mandates every private-sector employer to pay rank-and-file employees a 13ᵗʰ-month pay not later than 24 December every year. |
| Implementing Rules & Regulations (IRR) of PD 851 | Define basic salary, coverage, exemptions, and the pro-rata rule for separated employees. |
| Labor Advisories (e.g., LA No. 9-2016; LA No. 18-2018) | Re-affirm that employees who resign or are terminated at any time of the year are still entitled to the benefit in proportion to their service. |
| Labor Advisory No. 06-20 (Final Pay) | Requires employers to release all due wages—including pro-rated 13ᵗʰ-month pay—within 30 days from date of separation. |
| RA 10378 & RA 10963 (TRAIN Law) | Raise the tax-exempt cap for 13ᵗʰ-month pay and other bonuses to ₱90,000. |
Take-away: Resignation does not forfeit the right; it simply converts the benefit into a proportional—“pro-rata”—amount.
2 | Who Is Covered After Resignation?
Rank-and-File Employees
- Those not managerial in nature (managerial employees are exempt under PD 851, though many companies still grant the benefit contractually).
Regardless of Employment Status
- Regular, probationary, project-based, seasonal, and casual workers all accrue a pro-rated 13ᵗʰ-month pay for every month they receive a basic wage.
No Minimum Days Requirement
- Even a worker hired in mid-year and who resigns within the same year gets the corresponding fraction.
Special Notes for Wage Structures
- Commissions and productivity bonuses are excluded unless fixed as part of the basic monthly wage.
- Cost-of-living allowances (COLA), overtime, night-shift differential, and leave conversions are expressly excluded from the 13ᵗʰ-month base.
3 | How Is the Pro-Rata Share Computed?
Statutory Formula
$$ \text{13ᵗʰ-Month Pay} ;=; \frac{\text{Total Basic Salary Earned from 1 Jan to Resignation}}{12} $$
Example • Date hired : 01 March 2025 • Date resigned : 15 September 2025 • Basic monthly salary : ₱25,000 • Months actually worked with pay : March – August (6 full months) + ½ September
$$
(₱25{,}000 \times 6.5) ;=; ₱162{,}500
\quad\quad\Rightarrow\quad
\frac{₱162{,}500}{12} ;=; ₱13{,}541.67
$$
This ₱13,541.67 must be released along with the final pay, or earlier if the company has an earlier 13ᵗʰ-month schedule.
4 | Timing of Payment to Resigned Employees
| Scenario | Deadline |
|---|---|
| Employer disburses 13ᵗʰ-month in two installments (e.g., June & December) | Resigned worker receives the first installment on the common payout date if still employed then; any balance is due upon clearance/final pay. |
| Employer pays in one lump sum (on or before 24 Dec) | Entire pro-rated amount must accompany final pay, no later than 30 days after separation (LA 06-20). |
| Voluntary earlier payout by CBA/company policy | Employer may pay immediately upon resignation acceptance or last working day—whichever their rules prescribe. |
5 | Tax Treatment
- Up to ₱90,000 aggregate of 13ᵗʰ-month pay and other benefits (e.g., performance bonuses, Christmas bonus) in a calendar year is tax-exempt.
- Amounts over the cap are subject to Withholding Tax on Compensation.
- For resigned employees, compute exemption on a year-to-date basis; any excess tax withheld can be refunded or credited in the BIR Form 2316 adjustments.
6 | Documentation & Employer Obligations
- Payslip / Final Pay Computation Sheet – Must itemize the pro-rated 13ᵗʰ-month pay.
- Company 13ᵗʰ-Month Pay Report – Employers must submit to DOLE Regional Office on or before 15 January of the following year, specifying payments to all employees—including those separated.
- Retention of Records – Payroll and proof of payout should be kept at least three (3) years (Article 293, Labor Code).
7 | Enforcement & Remedies
| Non-Compliance Issue | What the Employee Can Do |
|---|---|
| Employer refuses or unreasonably delays payment | File a complaint with the DOLE Field Office (Single-Entry Approach (SEnA)) or directly with the NLRC if unresolved. |
| Under-computation (wrong exclusions, miscount of months) | Request payroll reconciliation; if denied, pursue DOLE or NLRC action. |
| Retaliatory withholding (e.g., conditioning on “quitclaim” signing) | Such quitclaims are invalid if executed under duress or without full disclosure; they can be annulled and monetary claims recovered. |
Penalty: Violation of PD 851 may lead to an order to pay (money judgment) plus legal interest and, in egregious cases, criminal prosecution under Article 303 (formerly 288) of the Labor Code.
8 | Frequently Disputed Points
| Question | DOLE / Jurisprudence Answer |
|---|---|
| Is a managerial employee entitled if the company handbook says so? | Yes—contractual grant supersedes statutory exemption. |
| Are allowances “integrated” into basic pay if given consistently? | Only if they are fixed and guaranteed every pay period and not contingent on factors other than hours worked. |
| Does AWOL forfeit the benefit? | No; compute on actual basic salary received, but days with no-pay reduce the total salary base. |
| Employee resigns effective 31 January the next year—can the employer defer payment to December? | No; the pro-rated share for Jan 1–31 becomes due within 30 days of separation under LA 06-20. |
9 | Best-Practice Checklist for Employers
- Automate pro-rata computation in the HRIS/payroll system.
- Incorporate 13ᵗʰ-month line item in the quitclaim template, stating the exact figure.
- Release final pay via cash or ATM together with the Certificate of Employment and BIR 2316.
- Educate resigning staff on the schedule to avoid disputes.
- Submit DOLE report on time and keep proof of submission.
Conclusion
Under Philippine labor law, the 13ᵗʰ-month pay is a statutory, non-negotiable benefit that follows the employee even upon resignation. The right is merely reduced to a fraction commensurate to the months of service rendered in the calendar year. Employers must compute it correctly, pay it promptly, and reflect it in the final pay. Failure to do so exposes them to labor claims, statutory interest, and possible criminal liability.
This article is for general information only and does not constitute legal advice. For specific concerns, consult a Philippine labor-law practitioner or the nearest DOLE office.