Are Resigning Employees Entitled to Bonuses During the Rendering Period? (Philippines)

Last updated: reflects Philippine law and doctrine generally in force up to 2024. This is general information, not legal advice.

Executive summary

13th month pay is statutory (Presidential Decree No. 851) and must be paid pro-rata up to the employee’s actual last day of work, even if the payout date falls after separation.
Bonuses other than 13th month (e.g., performance, Christmas, mid-year, profit-sharing, retention, sign-on) are not automatically demandable. Entitlement depends on (a) contract/CBA, (b) company policy or established practice, and (c) any valid conditions (e.g., “must be employed on payout date,” performance targets).
Company practice can make a bonus enforceable, but only if the grant has been consistent, deliberate, long-continued, and unconditional. If the practice has clear conditions (like “active on payout date”), those conditions usually control.
During the 30-day rendering period, the employee remains employed and continues to earn any benefits that accrue by service (e.g., pro-rated 13th month, prorated performance metrics if the plan says so). Once separation takes effect, post-separation conditions may cut off non-statutory bonuses unless a contract/CBA or practice says otherwise.
Unused Service Incentive Leave (SIL), if applicable, is commutable to cash upon separation; this is separate from bonuses.
Tax: 13th month and “other benefits” are tax-exempt up to ₱90,000 per the NIRC (TRAIN law). Excess is taxable.

The legal scaffolding

Employment status during rendering period An employee who resigns but is still rendering the 30-day notice (Labor Code, Art. 300 [formerly 285]) remains a regular employee until the effective date of resignation, unless the employer waives the notice (often called “immediate resignation” or “pay in lieu”). Wages and wage-related benefits continue to accrue until the last day actually worked.
Statutory benefit: 13th month pay (PD 851 and DOLE rules)
- Coverage: Rank-and-file employees, regardless of position or payment method, who have worked at least one month during the calendar year.
- Timing: Typically on or before 24 December, but pro-rata payment upon separation is required.
- Effect of rendering period: Work performed during the rendering period counts toward the pro-rated computation.
Non-statutory bonuses and the “act of liberality” doctrine
- As a rule, bonuses (other than 13th month) are not wages and are gratuities, unless promised by contract/CBA or ripened into a company practice.
- The Supreme Court has repeatedly held that a bonus is demandable only when:
  - It is expressly stipulated (employment contract, plan, or CBA), or
  - It has become part of compensation through a consistent, deliberate, and unconditional long-standing practice.
- If the bonus plan contains clear conditions (e.g., profitability triggers, performance ratings, “must be employed on payout date”), courts generally enforce those conditions—and the bonus may be forfeited if the condition is unmet at payout.
Company practice—when does it bind the employer? Indicators that a bonus practice is legally enforceable:
- Consistency: given regularly (e.g., every Christmas for several years).
- Deliberateness: paid as a matter of policy, not sporadically.
- Duration: granted over a considerable time (often several consecutive years).
- Unconditional nature: not expressly tied to profits, targets, or active-employment clauses. If any of these is missing—especially if documents show profit/performance or “active-on-payout” conditions—the practice likely remains discretionary.
Collective bargaining agreements (CBAs)
- If a CBA guarantees a bonus or provides pro-ration upon separation, that governs—even if the employee resigns.
- If silent or expressly conditional, CBA language controls.
Service Incentive Leave (SIL)
- Employees who qualify for SIL (five days/year) are entitled to cash conversion of unused SIL upon separation, independent of any bonus issue.
Tax and payroll closure
- 13th month and other benefits: tax-exempt up to ₱90,000 annually; the excess is subject to withholding tax.
- Employers should finalize quit claims and BIR Form 2316 reflecting all income and taxes up to the last day.

What counts as a “bonus” in practice?

Statutory:
- 13th month pay → always pro-rated upon separation (including during rendering period).
Contractual / CBA-based:
- Guaranteed 14th month, mid-year bonus, CBA signing bonus → follow the exact contract/CBA text. If it says “pro-rated upon separation,” pay it pro-rata. If it says “must be employed on payout date,” non-retained resignees typically forfeit it.
Plan-governed incentives:
- Sales commissions, performance bonuses, profit-sharing → look at plan rules (eligibility on payout date? proration formula? treatment upon separation?).
- If performance is met and the plan allows proration upon separation (or is silent but historically paid to separated employees), payment is more likely.
Discretionary / goodwill bonuses:
- Christmas cash gifts, anniversary giveaways, ex gratia → generally not demandable unless they evolved into a binding practice without conditions.
Sign-on / retention / stay bonuses:
- Usually have clawback or minimum-service requirements. Resignation before the required period commonly triggers repayment or forfeiture.

During the rendering period: typical scenarios

Employee resigns effective October 31; company pays Christmas bonus in December, conditional on being active on payout date.
- 13th month: Pay pro-rata Jan 1–Oct 31.
- Christmas bonus (non-statutory): If policy/contract says must be active on payout date, the resigning employee is not entitled.
Employee resigns but achieves all performance metrics by September 30; bonus plan provides for proration upon separation.
- Pay the prorated performance bonus per plan formula, plus pro-rated 13th month.
Company has given a fixed “Christmas gift” every year for 8 years, without written conditions; no profits-based language; paid even in bad years. Employee resigns Oct 15.
- A court may view this as company practice that ripened into a benefit; pro-rata or full payment can be argued depending on historical treatment of separated employees. Document the pattern.
Immediate resignation with employer’s waiver of the 30-day notice; last day is today.
- Compute everything up to today (wages, pro-rated 13th month, SIL conversion if any). For non-statutory bonuses, apply the plan/contract conditions—active-on-payout clauses will typically bar payment.

How to decide—fast checklist

For employers (HR/Legal/Payroll)

Identify the benefit
- Is it 13th month? → Always pro-rate.
- Is it a non-statutory bonus? → Go to step 2.
Locate the governing document
- Employment contract, CBA, bonus/incentive plan, handbook, memos. Flag clauses on eligibility, payout timing, active-employment, separation, proration, forfeiture, performance gates.
Check company practice
- Have you consistently paid this bonus to resignees (not just stayers)? Was payment unconditional? For how many years?
Apply the rule
- Clear condition present (e.g., “must be employed on payout date”)? → If it’s a discretionary bonus, condition controls (no entitlement when resigned before payout).
- Contract/CBA mandates payment or proration? → Follow it.
- Ambiguity + long, unconditional practice? → Lean toward payment (often pro-rated), or document why not.
Compute and document
- Cut-off: last day actually worked.
- Pro-rations: follow formulas; keep worksheets.
- Taxes: apply ₱90k ceiling for 13th month/other benefits.
Closeout
- Include in Clearance/Last Pay: wages to last day, pro-rated 13th month, SIL cash-out, any due bonuses, authorized deductions (e.g., sign-on bonus clawbacks if triggered), and final taxes.
- Issue quit claim and BIR Form 2316 appropriately.

For employees

Collect the papers: your contract, bonus plan letters, policy handbook, CBAs, HR memos, and past payslips.
Check the conditions: look for eligibility on payout date, proration, and whether bonuses were paid to resignees in prior years.
Time your resignation: if feasible, align your last day to meet any active-employment or cut-off conditions.
Ask HR in writing: request a last-pay breakdown (with 13th month proration) and the basis for any bonus inclusion/exclusion.
If disputed: elevate internally; if unresolved, consider filing with the DOLE or NLRC (observe prescriptive periods).

Computation basics

Pro-rated 13th month
- Formula (typical):
  
  $$ \text{13th month} = \frac{\text{Basic salary actually earned Jan 1 to last day}}{12} $$
  
  Exclude allowances not integrated into basic pay unless company policy says otherwise.
Performance / sales bonus proration
- Use the plan’s formula (e.g., by months worked, actual days, or quota attainment). If silent but historically prorated, use the most defensible, consistently-applied method.
SIL conversion
- Unused SIL days × regular daily rate at the time of separation.

Common pitfalls & how to avoid them

Assuming all “Christmas bonuses” are mandatory. Only the statutory 13th month is mandatory; others depend on contract/practice.
Ignoring “active on payout date” clauses. Courts often enforce them for discretionary bonuses.
Overlooking company practice evidence. Payslips and HR memos can make or break a claim.
Misclassifying commissions. Many sales commissions are earned wages once the sale is closed/paid; different from discretionary bonuses.
Forgetting tax ceilings. Track the ₱90,000 exemption across all “other benefits.”

Sample fair-practice clauses (for HR drafting)

Pro-ration upon separation: “Eligible employees who separate during the plan year (including due to resignation) shall receive a pro-rated incentive based on months of active service and final performance rating, payable on the regular cycle.”

Active-employment condition (discretionary bonus): “The Year-End Bonus is a gratuitous benefit. Employees must be actively employed on the payout date and not serving notice of resignation to be eligible. The Company may modify, suspend, or discontinue this bonus at any time.”

Clarification on 13th month: “13th month pay shall be paid pro-rata upon separation, consistent with PD 851 and implementing rules.”

Quick decision tree

Is the payment the statutory 13th month? → Yes → Pay pro-rata up to last day. → No → Go to 2.
Is there a contract/CBA or written plan covering it? → Yes → Follow its conditions (proration? active on payout date?). → No → Go to 3.
Has a clear, unconditional company practice ripened? → Yes → Pay (often pro-rata) consistent with past treatment. → No → Discretionary; employer may withhold if conditions aren’t met.

Bottom line

During the rendering period, a resigning employee keeps earning what the law and the governing documents allow.
13th month is always pro-rated.
Other bonuses depend on contract, CBA, plan rules, or proven practice—and active-employment/payout-date conditions are usually decisive unless overridden.

If you want, I can turn this into a one-page last-pay checklist or a customizable policy template you can drop into your handbook.