Short answer

Private sector: A mid-year bonus is not mandatory.
Public sector (government): A Mid-Year Bonus is mandatory for qualified government personnel under long-standing DBM rules.
What is mandatory for private employers: 13th-month pay, a legally required benefit distinct from any “mid-year,” “Christmas,” or other bonuses.

The legal landscape at a glance

1) 13th-month pay (private sector) — mandatory

Legal basis: Presidential Decree No. 851 (PD 851) as amended/clarified by later issuances.
Who is covered: Rank-and-file employees in the private sector regardless of position, designation, or employment status, provided they have worked for at least one (1) month during the calendar year.
- While the law speaks of rank-and-file, many employers voluntarily extend 13th-month to supervisors/managers. When regularly and deliberately given, it may become contractual or a company practice that cannot be withdrawn unilaterally.
Who is not covered by PD 851’s original text: Government employees and certain categories historically excluded. Note, however, that kasambahay (domestic workers) are now expressly entitled to 13th-month pay under the Kasambahay Law.
When payable: On or before December 24 of every year. Some employers advance a portion mid-year (purely discretionary) and “true up” in December.
How to compute:
- Formula: 13th-month pay = 1/12 of the “basic salary actually earned” within the calendar year.
- Included: Basic wage; wage-integrated allowances; productivity/commission components that partake the nature of wages for work done (as recognized in jurisprudence).
- Generally excluded: Overtime pay, premium pay, holiday pay, night differential, and most allowances not integrated into basic wage.
- Leaves and benefits:
  - Paid leaves funded by the employer (e.g., paid VL/SL) count because they are part of salary actually received.
  - SSS-funded portions of benefits (e.g., maternity benefit from SSS) do not count; however, any salary differential actually paid by the employer does.
Separation/resignation: Pro-rated 13th-month is due upon separation based on the salary actually earned from January 1 up to the date of separation.
Tax treatment: 13th-month and other benefits are tax-exempt up to a statutory ceiling (commonly known as the “13th-month and other benefits” exclusion). Amounts above the cap are subject to income tax/withholding.

2) Mid-Year Bonus (private sector) — not mandatory

Definition in practice: An employer-given bonus around May–June (or any mid-year month), usually separate from the 13th-month. Sometimes called “mid-year pay,” “half 13th,” or “mid-year performance bonus.”
Legal status: Purely voluntary in the private sector unless:
- Promised by contract (employment contract/handbook/offer letter),
- Negotiated in a CBA, or
- Established as a company practice (i.e., given consistently and deliberately over a significant period without clear conditions).
Consequences of practice/contract: Once the mid-year bonus is contractualized (by express promise or established practice), the employer may not unilaterally withdraw or reduce it without lawful cause or clear, valid conditions reserved in writing.

3) Other bonuses (private sector) — generally discretionary

Christmas bonus, performance bonus, profit-sharing, loyalty bonus, retention bonus, productivity incentive, spot awards — all are gratuities unless:
- Expressly promised (contract/policy/CBA), or
- Clearly earned under objective criteria (e.g., a sales plan) that make them part of wage/compensation.
Tip: Employers should document conditions (e.g., profitability thresholds, performance metrics, employment-in-good-standing, proration, clawbacks) to avoid converting a discretionary bonus into a demandable benefit.

4) Mid-Year Bonus (public sector) — mandatory

Who gets it: Qualified government personnel (national gov’t agencies, SUCs, LGUs, GFIs/GOCCs, etc.) subject to DBM rules.
Amount & timing: One month of basic pay, typically released mid-May (e.g., not earlier than May 15), subject to minimum service (e.g., at least four months within the year) and satisfactory performance.
Separate from: The Year-End Bonus (another month’s basic pay, usually with a cash gift) given later in the year.
Private employers are not covered by these DBM rules.

Deep dive: Practical treatment and tricky areas

A. Distinguishing 13th-Month Pay from “Bonus”

13th-month pay is a statutory wage benefit tied to salary actually earned.
A bonus is typically a gratuity or incentive, dependent on employer discretion or specific conditions.
Label isn’t controlling: Calling a payment a “bonus” will not exempt an employer from paying the statutory 13th-month. Conversely, a mid-year “advance” of the 13th-month doesn’t convert it into a separate bonus; it will simply be credited against the year-end 13th-month liability.

B. Commissioned, piece-rate, or variable-pay employees

If the commission or piece-rate partakes the nature of wages for work done, it is generally included in the 13th-month base.
Pure profit-sharing or discretionary “success fees” that are not wages for work done are typically excluded from the 13th-month base.

C. Non-work periods and benefits

No work, no pay periods (e.g., unpaid leave, AWOL) do not factor into the 13th-month computation.
SSS-funded portions of benefits (e.g., maternity SSS benefit) are not employer-paid wages and thus do not form part of the base; employer-paid salary differentials do.

D. New hires, probationary, casual, project-based, seasonal

Coverage applies so long as the worker is rank-and-file in the private sector and has worked at least one month; the 13th-month is pro-rated.
Project/seasonal workers get 13th-month based on wages actually earned during the periods they worked within the calendar year.

E. Resigned, terminated, or retired employees

Entitled to pro-rated 13th-month up to the date of separation, regardless of the reason for separation, provided wages were earned.

F. Tax and compliance housekeeping

Payroll records must support computations (per-employee ledger of basic salary actually earned).
Tax-exempt cap: The 13th-month and other benefits exclusion applies up to the statutory ceiling; any excess is taxable. Employers must withhold properly and annualize at year-end.

Is a private-sector “Mid-Year Bonus” ever legally demandable?

Yes—but only if there’s a source of obligation:

Contract/Policy: The employer promised a mid-year bonus (e.g., handbook, offer letter).
CBA: The bonus is a negotiated benefit.
Company practice: The bonus has been consistently, deliberately, and uniformly given over a significant period without express conditions or disclaimers.
- Consistency matters: Occasional, irregular, or explicitly conditional payments do not create a binding practice.
- Reserve conditions in writing: State that the bonus is discretionary, reviewable annually, contingent on company performance and employment-in-good-standing, and subject to change.

Employer checklist (private sector)

Always budget for 13th-month pay.
Cutoff planning: Decide whether to advance a portion mid-year; if so, document that it’s an advance of 13th-month (not a separate bonus).
Define your bonuses:
- Put clear, written criteria (profitability, performance, tenure).
- Add disclaimers (discretionary, non-precedent, subject to annual review).
Guard against unintended “practice.” If you pay a mid-year amount annually, use board or HR resolutions and communications that reiterate conditions each year.
Compute correctly: Track basic pay actually earned; exclude items that are not part of basic wage unless integrated.
Separation handling: Pay pro-rated 13th-month upon clearance.
Tax compliance: Monitor the exemption cap; withhold on excess.
Kasambahay compliance: If you employ domestic workers, include them in 13th-month pay computations under the Kasambahay Law.

Employee checklist (private sector)

Know your rights: You are entitled to 13th-month pay if you are rank-and-file and worked at least one month in the year.
Timing: Expect full payment by December 24 (minus any advances).
Pro-ration: If you resign, you’re still entitled to a pro-rated 13th-month.
Review your contract/policies: A mid-year bonus is not automatic—unless your contract/CBA or a clear company practice says otherwise.
Check computation: Confirm that your employer used basic salary actually earned and properly treated allowances/commissions.
Tax matters: Understand that amounts above the legal cap are taxable.

FAQs

Q: Our company pays “half the 13th” in June and the other half in December. Is that a mid-year bonus? A: No. That’s an advance/instalment of the statutory 13th-month. It’s not a separate, demandable mid-year bonus.

Q: The company has given a mid-year bonus every year for five years. Can it stop? A: If the payments were consistent, uniform, and unconditional, they may have ripened into a company practice, making unilateral withdrawal risky. If they were expressly discretionary or conditional each year, the employer retains flexibility.

Q: Are managers guaranteed 13th-month pay? A: The statute speaks of rank-and-file; many employers voluntarily extend it to higher ranks. If consistently extended, it may become demandable by practice or policy.

Q: Do sales commissions form part of the 13th-month base? A: Productivity-linked commissions that function as wages for work done are generally included. Pure profit-sharing or non-wage gratuities are generally excluded.

Q: I was on maternity leave. Will that period count? A: The SSS-funded benefit itself does not count (it’s not employer-paid salary), but any salary differential actually paid by the employer does.

Bottom line

For private employers, the only mandatory year-end wage benefit is the 13th-month pay. A mid-year bonus is optional unless promised or established as company practice.
For government employees, a Mid-Year Bonus and a Year-End Bonus are separate, mandatory benefits under DBM rules.
Clear documentation, correct computation, and proper tax treatment will keep both employers and employees compliant.