In the Philippine employment landscape, the 13th month pay is often misunderstood as a "bonus" subject to the discretion of the employer. This misconception frequently leads to the question: Can an employer forfeit the 13th month pay of an employee terminated for theft or gross misconduct?
Under current labor laws and prevailing jurisprudence, the answer is a categorical no.
1. The Statutory Nature of 13th Month Pay
The 13th month pay is not a gift; it is a statutory obligation mandated by Presidential Decree No. 851. Unlike a discretionary bonus, which depends on the employer’s generosity or the company’s profitability, 13th month pay is considered a form of deferred compensation for services already rendered.
- Accrual: It is earned by the employee on a monthly basis throughout the calendar year.
- Vested Right: Once the employee has worked for at least one month, the right to the pro-rated portion of this pay becomes "vested." It is property in the legal sense.
2. Forfeiture vs. Termination
When an employee commits theft or gross misconduct, the employer has the right to terminate the employment relationship following the requirements of Just Causes under Article 297 (formerly 282) of the Labor Code.
However, the power to terminate for cause does not grant the power to confiscate earned wages or statutory benefits.
Legal Principle: The penalty for gross misconduct is dismissal. Depriving the employee of earned statutory benefits would constitute an additional penalty not provided for by law, amounting to a violation of the "no-diminution of benefits" rule.
3. Pro-rated Payment upon Resignation or Termination
The Rules and Regulations Implementing P.D. No. 851 explicitly state 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 in proportion to the length of time they worked during the year.
- Calculation: (Total Basic Salary Earned within the Calendar Year) / 12.
- Example: If an employee is caught stealing and terminated in June, they are still legally entitled to 6/12 (or half) of their 13th month pay.
4. Can the 13th Month Pay be "Offset"?
Employers often attempt to withhold the 13th month pay to "offset" the value of the stolen property or damages caused by the employee. Under Article 113 of the Labor Code, wage deductions are strictly prohibited except in three specific cases:
- When the worker is insured with their consent by the employer.
- For union dues (check-offs).
- When the employer is authorized by law or regulations issued by the Secretary of Labor.
While an employer may have a claim for civil indemnity (damages) against the thief, they generally cannot unilaterally deduct the stolen amount from the 13th month pay without a court judgment or the express written voluntary consent of the employee.
5. Jurisprudential Standpoint
The Supreme Court has consistently held that even if an employee is dismissed for a valid just cause (like serious misconduct or loss of trust and confidence), they do not forfeit their right to backwages and benefits earned prior to the dismissal.
The logic is simple: The employee already worked for those months. The theft may end the employment, but it does not erase the fact that the employee provided labor for the period preceding the theft.
Summary Table: Employer Rights vs. Employee Rights
| Scenario | Employer Action | Legal Status |
|---|---|---|
| Gross Misconduct | Termination of Employment | Legal (provided due process is followed) |
| Theft | Filing of Criminal Charges | Legal |
| Theft/Misconduct | Forfeiture of 13th Month Pay | Illegal |
| Damages | Unilateral Deduction from Pay | Illegal (requires consent or court order) |
Conclusion
While the law protects employers from erring employees through the mechanism of termination, it protects the fruits of labor through statutory mandates. Forfeiting the 13th month pay as a penalty for theft is a labor law violation that can lead to a separate case for money claims, where the employer may be held liable not only for the unpaid amount but also for legal interest and attorney's fees.