Overview

In the Philippines, 13th month pay is a mandatory benefit for most rank-and-file employees, governed primarily by Presidential Decree (P.D.) No. 851 and its implementing rules and long-standing labor standards principles.

When an employee has been suspended or has a prolonged absence, the most important concept is this:

13th month pay is based on “basic salary actually earned” during the calendar year. So, unpaid days usually reduce (prorate) the 13th month pay, while paid days generally count.

This article explains how entitlement works in the real-world situations that commonly cause confusion: preventive suspension, disciplinary suspension, AWOL, unpaid leaves, long illness absences, floating status, and separations—all in Philippine labor context.

The Legal Baseline: Who Must Receive 13th Month Pay

Covered employees (general rule)

13th month pay is due to rank-and-file employees in the private sector who have worked for at least one month during the calendar year, regardless of:

employment status (regular, probationary, project, seasonal, fixed-term), or
method of wage payment (monthly, daily, piece-rate), as long as they are rank-and-file and not otherwise excluded.

Common exclusions (general guidance)

Traditionally excluded are:

managerial employees (those with powers/authority to hire/fire, discipline, etc.); and
employees who are already receiving an equivalent benefit (e.g., a “14th month pay” or guaranteed annual bonus that is at least equal to the statutory 13th month pay and is not conditional in a way that defeats equivalency).

Labels don’t control. If someone is called a “supervisor” but is still rank-and-file in legal substance, they’re generally covered.

What Counts in Computing 13th Month Pay

Core formula

13th Month Pay = (Total Basic Salary Earned During the Calendar Year) ÷ 12

The key phrase is basic salary earned.

“Basic salary” generally includes

the employee’s regular pay for work performed; and
amounts considered part of the employee’s basic wage (as structured in the employment terms), including certain paid days where the employee still receives their basic wage.

Items generally excluded from “basic salary”

Commonly excluded from the 13th month base are:

overtime pay
holiday premium (premium pay over the basic rate)
night shift differential
allowances and benefits that are not integrated into basic wage (e.g., transportation allowance, meal allowance), unless company policy or practice treats them as part of basic salary
commissions/incentives that are not part of the fixed basic wage (this area depends heavily on pay structure and whether amounts are integrated as wage)

In practice: if it’s a premium or variable add-on on top of the basic wage, it is usually not part of the 13th month base. If it’s integrated and regularly treated as wage, it may be included.

The Big Rule for Suspensions and Absences: Paid vs Unpaid

Because 13th month pay is based on basic salary actually earned, the usual effect is:

Paid days → count in the base
Unpaid days → do not count in the base (so the 13th month pay is reduced/prorated)

That single distinction drives almost all outcomes.

Suspension Scenarios

1) Disciplinary suspension (unpaid)

Typical result: 13th month pay is still due, but it is reduced because the employee did not earn basic salary during unpaid suspension days.

The employee remains employed.
The statutory benefit remains owed.
But since wages were not earned during the suspension period, the yearly total basic salary is lower.

Example (simple):

Monthly basic salary: ₱24,000
Employee worked and was paid for 10 full months; suspended unpaid for 2 months
Total basic salary earned: ₱24,000 × 10 = ₱240,000
13th month pay: ₱240,000 ÷ 12 = ₱20,000

2) Preventive suspension (pending investigation)

Preventive suspension is usually not a penalty; it is a measure while the employer investigates.

Common outcomes:

If preventive suspension is unpaid and the employee is later cleared without back pay, the unpaid period generally reduces the base (proration).
If preventive suspension is later found unjustified or the employee is reinstated with payment of wages for the period (e.g., back wages/back pay for that period), that paid amount effectively becomes part of basic salary “earned/credited,” which can restore the base for 13th month purposes.

Practical takeaway: If the employee ultimately receives wages covering the suspension period, those wages typically belong in the “basic salary earned” total.

3) Suspension that is later invalidated (e.g., illegal dismissal or illegal suspension findings with backwages)

If a labor case results in backwages, the backwages generally aim to restore what the employee should have earned. In that situation, it is common for 13th month pay to be computed in a way that reflects the restored wage entitlement for the period covered by the award.

In disputes, the exact computation can depend on the wording of the decision/settlement, the classification of amounts awarded, and whether the period is covered by backwages, separation pay, or other remedies.

Prolonged Absence Scenarios

1) AWOL (Absent Without Official Leave)

AWOL is typically unpaid. So, AWOL days usually do not count in the base, and 13th month pay is prorated.

If AWOL leads to termination, the employee is generally still entitled to a pro-rated 13th month pay for the portion of the year where basic salary was earned (subject to final pay rules).

2) Unpaid leave (LWOP), long personal leave, sabbatical without pay

If the leave is unpaid, then no basic salary is earned during that period, and the 13th month pay base is reduced accordingly.

3) Sick leave

If paid (using company sick leave credits or paid benefits that replace basic wage), it usually counts in the base.
If unpaid (no leave credits left, no wage paid), it generally does not count and reduces the base.

4) Vacation leave and service incentive leave (SIL)

When these leaves are paid, the employee still receives their basic wage—so these generally count in the base.

5) Maternity leave / paternity leave / parental leave

This depends on who paid and how it was paid:

If the period is covered by a paid benefit that replaces the employee’s wage (often through a social insurance benefit mechanism) and not treated as employer-paid basic salary, computation can vary by payroll practice and how amounts are legally characterized.
In many employer payroll systems, what matters for 13th month is whether the employee received basic salary from the employer during the period, versus receiving a separate benefit.

Safe practical rule:

Employer-paid basic wage during leave → typically included
Pure benefit payment not treated as basic wage → often excluded from the base, though company policy may be more generous

Because leave benefit mechanics can be technical, this is a frequent source of payroll disputes.

6) “Floating status” / temporary off-detail (common in security/service contracting)

When employees are placed on a no-work arrangement where pay is effectively “no work, no pay,” the months with no pay usually do not add to the basic salary earned. The employee may still receive pro-rated 13th month pay based on what was actually paid during the year.

If the arrangement includes guaranteed pay or a paid standby wage, that paid amount can count.

Does Suspension or Prolonged Absence Remove the Right to 13th Month Pay?

Usually, no. Suspension or absence typically affects how much is due, not whether it’s due.

When an employee is still entitled (most cases)

The employee worked at least one month in the year and earned basic salary.
Even if they resigned, were separated, were suspended, or were absent part of the year:
- they usually still get a pro-rated 13th month pay.

When entitlement can be zero

If the employee earned no basic salary at all during the calendar year (e.g., hired but never actually started work and never earned wages), then the computed amount can be zero.

Pro-Rated 13th Month Pay in Separation, Resignation, or Termination

Employees who resign or are terminated before year-end are generally entitled to pro-rated 13th month pay as part of final pay, computed using the same formula:

(Total basic salary earned up to separation date) ÷ 12

This commonly applies even if separation was due to:

resignation,
end of project,
redundancy/retrenchment,
termination for cause,
abandonment/AWOL (for periods actually worked and paid).

Frequent Misconceptions (Philippine Workplace Reality Check)

“If I was suspended, I’m not entitled to 13th month pay.”

Not correct. You’re usually still entitled, but it may be lower if the suspension was unpaid.

“The company can withhold 13th month pay as punishment.”

Generally not allowed. The 13th month pay is a labor standard, not a discretionary bonus. If an employee earned basic salary during the year, the statutory benefit is generally due.

“If I have lots of absences, I lose my 13th month pay.”

Absences typically cause proration, not total forfeiture—unless you earned no basic salary at all.

“13th month pay is based on gross pay.”

Not exactly. It’s based on basic salary (not premiums and many allowances).

Worked Examples

Example A: 15-day unpaid suspension

Daily rate: ₱1,000
Workdays in year paid: 240 days
Unpaid suspension: 15 days (not paid)
Total basic salary earned: ₱1,000 × 240 = ₱240,000
13th month pay: ₱240,000 ÷ 12 = ₱20,000

Example B: 3 months unpaid leave

Monthly basic: ₱30,000
Paid months: 9
Total basic salary earned: ₱30,000 × 9 = ₱270,000
13th month pay: ₱270,000 ÷ 12 = ₱22,500

Example C: Preventive suspension later paid via back pay

Monthly basic: ₱25,000
Preventive suspension: 1 month
Later reinstated and employer paid the 1-month wage
Total “credited” basic salary includes that month, so base returns as if paid.

Compliance Pointers for Employers (to Avoid Labor Complaints)

Document paid vs unpaid status clearly (NTEs, suspension memos, leave forms, payroll entries).
Compute from “basic salary earned”—avoid mixing allowances/premiums unless company policy integrates them.
If paying backwages/back pay, be consistent: if treated as wage replacement, consider how it affects 13th month computations.
For employees who separate, include pro-rated 13th month pay in final pay computations unless a lawful and clearly applicable exclusion exists.
If your company provides an “equivalent benefit,” ensure it is truly equivalent (at least 1/12 of annual basic salary) and not structured to deprive employees through conditions.

Practical Steps for Employees Who Want to Check Their 13th Month Pay

Gather payslips for the year and identify:
- basic salary payments
- unpaid suspension/leave periods
Compute total basic salary earned (exclude OT/premiums unless integrated as wage by policy).
Divide by 12.
If separated mid-year, use earnings up to your last day.
If there was a suspension later “reversed” and wages were restored, check if payroll included that wage in your base.

Bottom Line

Suspension and prolonged absence usually do not cancel entitlement to 13th month pay.
They usually reduce the amount only when the period is unpaid, because the computation is anchored on basic salary actually earned.
If wages are later restored (e.g., paid suspension period, backwages), the 13th month base may correspondingly increase.

If you tell me your scenario (type of suspension, whether it was paid or unpaid, dates/months involved, and your basic pay structure), I can compute a sample 13th month pay figure using the standard formula and the most likely classification rules.