In the Philippine employment landscape, the 13th Month Pay is one of the most anticipated benefits. However, a common misconception persists that an employee must be physically present in the office come December to receive it.
If you are planning to resign before the holiday season, the short answer is: Yes, you are still entitled to your 13th month pay.
Under Presidential Decree No. 851 and its implementing rules, this benefit is not a "bonus" given at the employer's whim—it is a statutory requirement. Here is everything you need to know about your rights when leaving a company mid-year.
1. The Pro-Rated Rule
The law specifies that 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 amount will be pro-rated based on the total basic salary you earned during the calendar year. Since the 13th month pay is technically "earned" every month you work, you do not forfeit it by resigning in, say, May or September.
2. Eligibility Requirements
To qualify for the pro-rated 13th month pay upon resignation, you only need to meet one primary condition:
- Minimum Service: You must have worked for at least one (1) month during the calendar year.
It does not matter if your resignation was voluntary or if you were terminated for authorized causes. As long as you served the minimum one-month period, the benefit is legally yours.
3. How to Calculate Your Pro-Rated Pay
The formula for calculating your 13th month pay is straightforward:
Note: "Basic Salary" excludes allowances and monetary benefits which are not considered or integrated as part of the regular financial remuneration (such as unused vacation/sick leave credits, overtime pay, night shift differential, and holiday pay), unless these are treated as part of the basic salary by individual company policy or collective bargaining agreement.
4. Payment Timeline
When you resign, your 13th month pay is typically released as part of your Final Pay (also known as "Back Pay").
According to Labor Advisory No. 06, Series of 2020, employers are generally required to release the final pay within thirty (30) days from the date of separation or termination of employment, unless a more favorable company policy or individual contract exists.
5. Tax Implications
Under the TRAIN Law, 13th month pay and other benefits are tax-exempt up to a ceiling of ₱90,000. If the total of your 13th month pay plus other productivity incentives remains below this threshold, no withholding tax should be applied to it.
Summary Table: Resignation vs. 13th Month Pay
| Scenario | Entitled? | Basis |
|---|---|---|
| Resigned in June | Yes | 6/12 of total basic salary earned |
| Terminated for Cause | Yes | Pro-rated based on months served |
| Worked for 2 weeks only | No | Must serve at least 1 month |
| Probationary Employee | Yes | As long as 1 month of service is met |
Important Reminder
Ensure that you complete your clearance process. While the 13th month pay is a legal right, employers often withhold the release of the final check until all company properties are returned and accountabilities are settled.
Would you like me to create a sample computation based on a specific monthly salary and resignation date to help you estimate your final pay?