Eligibility for 13ᵗʰ-Month Pay After Only 5 Months of Service
(Philippine labor-law standpoint, updated to 07 July 2025)
1. Key Take-aways
| Question | Short Answer |
|---|---|
| Must an employee who has worked exactly five (5) months receive 13ᵗʰ-month pay? | Yes, proportionally. Once an employee has rendered at least one (1) month of service within a calendar year, Presidential Decree No. 851 already entitles them to 1/12 of their basic salary for every month actually worked—even if they have not reached a full year. |
| When is the amount due? | On or before 24 December of the same year (or earlier if the company chooses). |
| How is it computed? | 13ᵗʰ-Month Pay = (Total basic salary earned from 01 Jan to 31 Dec ÷ 12). For five months of work, divide only the salary actually earned during those five months by 12. |
2. Statutory Foundations
- Presidential Decree No. 851 (PD 851) – “Requiring All Employers to Pay Their Employees a 13ᵗʰ-Month Pay.”
- Revised Implementing Rules & Regulations (IRR) of PD 851 – most recently consolidated by DOLE through Labor Advisory No. 18-02 (2020).
- Article 103, Labor Code (as renumbered) – empowers the Secretary of Labor to require similar benefits.
- DOLE Labor Advisory Nos. 26-20 (2020), 23-23 (2023) – reiterate pandemic-era clarifications but do not change eligibility thresholds.
- Jurisprudence – Coca-Cola Bottlers Phils. v. Enriquez, G.R. 158682 (2005) confirms pro-rated entitlement for partial-year service.
3. Coverage Rules in Plain English
| Covered | Exempt / Qualified Exemptions* |
|---|---|
| All rank-and-file employees (regardless of position, designation, or method of wage payment) who have worked ≥ 1 month during the calendar year. | 1. Government employees (except GOCCs without original charters). 2. Household or domestic workers (though the Kasambahay Law now grants a separate 13ᵗʰ-month benefit). 3. Employers classified as distressed and granted a temporary exemption by DOLE. 4. Expatriates whose employer’s country-of-origin practice already provides an equivalent or better benefit, if DOLE grants exemption. |
*Exemptions are strictly construed and must be supported by a valid DOLE exemption order. A mere claim of financial difficulty does not excuse non-payment.
4. “Five-Month” Scenario Explained
Length of service requirement
- PD 851 never required 12 months’ service. The only quantitative threshold is one (1) month of work within the same calendar year.
How pro-rating works
- Compute the total basic salary actually earned during the five months.
- Divide that amount by 12.
- The quotient is the employee’s 13ᵗʰ-month pay.
Example
- Maria was hired on 01 August 2025 at ₱20,000/month basic pay and worked August–December (5 months).
- Total basic salary earned = ₱100,000.
- 13ᵗʰ-Month Pay = ₱100,000 ÷ 12 = ₱8,333.33.
- Payable on or before 24 December 2025.
Resignation or termination before payout date
- If Maria resigns on 30 November, the employer still owes her the pro-rated 13ᵗʰ-month pay (₱8,333.33) together with her final pay, which Labor Advisory 06-20 says must be released within 30 days from clearance completion.
5. Components & Non-components of “Basic Salary”
Included
- Contracted monthly wage
- Cost-of-living allowance (if written into the CBA or employment contract as part of basic)
- “Waiting time” hours (if considered work time)
Excluded
- Overtime, premium, holiday, or night-shift differentials
- Cash equivalents of unused leave
- Profit-sharing, Christmas bonus, mid-year bonus (unless collectively bargained to merge with 13ᵗʰ-month pay)
- Allowances not integrated into basic salary (transport, meal, de-minimis)
6. Calculation Nuances
| Situation | Effect on 13ᵗʰ-Month Entitlement |
|---|---|
| Unpaid leave without pay | Month with no earnings yields ₱0 for that month; lowers total basic salary, hence lowers 13ᵗʰ-month. |
| Maternity leave (SSS-paid) | DOLE treats SSS maternity benefit as not part of basic salary → excluded from divisor. |
| Daily-paid employees | Sum all actual days worked × agreed daily rate → divide by 12. |
| Piece-rate/ commission-based | Use the total earnings classified as basic within the period; commissions are excluded unless proven to be part of basic pay by long-standing practice or CBA. |
| Floating status (Art. 301 [286]) | Months on bona fide temporary suspension with no pay contribute nothing to the 13ᵗʰ-month computation. |
7. Payment Schedule & Manner
- Statutory deadline: on or before 24 December each year.
- Splitting the benefit: Many firms release 50 % on or before 15 June and the balance in December; this is permissible provided the total equals the correct amount by 24 December.
- Form of payment: Legal tender cash, ATM credit, or electronic transfer—not gift certificates or merchandise.
- Payslip requirements: DO No. 202-17 requires a separate payslip line. Employers should also reflect adjustments for resigned or newly hired workers.
8. Employer Non-compliance & Employee Remedies
- Administrative route: File a complaint with the DOLE Regional Office; Single-Entry Approach (SEnA) is mandatory before a formal case.
- Civil or criminal liability: Willful refusal may constitute unlawful withholding of wages (Art. 303 [288]), punishable by fine and/or imprisonment.
- Prescriptive period: Monetary claims prescribe in 3 years from accrual (Art. 306 [291]).
- Interest: Courts and NLRC may impose 6 % legal interest per annum on delayed 13ᵗʰ-month pay (e.g., Nacar v. Gallery Frames, 716 Phil. 267 [2013]).
9. Frequently Asked Questions
| FAQ | Answer |
|---|---|
| Is 13ᵗʰ-month pay taxable? | Exempt up to ₱90,000 of combined 13ᵗʰ-month and other benefits (Sec. 32(B)(7)(e), NIRC; raised by TRAIN Law). |
| Does a probationary employee get it? | Yes, probationary status does not affect entitlement if the employee rendered ≥ 1 month of service. |
| How about agency-hired security guards? | Security agency is the legal employer and must pay, unless the principal assumes liability under the Service Agreement. |
| Can the company replace it with a “Christmas bonus”? | Only if the bonus is equal to or better than the statutory formula and DOLE has approved an exemption; otherwise, the bonus is on top of the 13ᵗʰ-month pay. |
| What if payroll closes on December 15? | The employer may estimate the December 16-24 wages or pay any deficiency in the next payroll cycle, but the bulk of the correct amount must still be released by 24 December. |
10. Practical Checklist for HR & Payroll Officers
- Run a year-to-date earnings report (basic pay only) for each employee.
- Exclude all overtime, differentials, non-basic allowances.
- Divide the YTD basic salary by 12.
- Prepare separate payslip line and release on or before 24 December.
- For separated employees, compute pro-rated amount up to last day of work and include in final pay within 30 days.
- Document every payout (e-OR, bank advice) to defend against possible complaints.
11. Bottom Line
Even five months of service is enough to trigger a pro-rated 13ᵗʰ-month obligation. The Philippine rule is liberal: work one month and you already earn one-twelfth. Employers who wait for an employee to finish a “whole year” before paying risk DOLE sanctions and statutory interest. Employees, on the other hand, should track their own basic-salary totals so they can verify the accuracy of the payout each December—or upon separation—without waiting for disputes to arise.