No. SSS sickness benefit is generally not included in the 13th month pay computation in the Philippines because 13th month pay is based on the employee’s basic salary earned during the calendar year, while SSS sickness benefit is a social security cash benefit paid because the employee could not work due to sickness or injury. The practical effect is simple but important: if you were on sick leave without employer-paid salary and you received only SSS sickness benefit for those days, that SSS amount is not added to your 13th month pay base. This article explains the rule, the legal basis, sample computations, payroll scenarios, and what employees can do if the computation looks wrong.
The Short Answer: SSS Sickness Benefit Is Not Basic Salary
For 13th month pay, the key question is:
Did the employee earn basic salary from the employer for that period?
If the answer is yes, the amount is generally included in the 13th month pay base.
If the answer is no, and the employee received only SSS sickness benefit, then that SSS benefit is generally excluded.
SSS sickness benefit is not a salary payment for work performed. It is a daily cash allowance under the Social Security System for qualified members who cannot work due to sickness or injury. Under the SSS rules, the benefit is computed based on the member’s average daily salary credit, not on the employee’s actual payroll salary for 13th month pay purposes.
So in ordinary payroll terms:
| Payment received during sickness period | Included in 13th month pay computation? | Why |
|---|---|---|
| Regular basic salary paid by employer | Yes | It is basic salary earned |
| Company sick leave with full pay, paid as regular salary | Usually yes | No salary deduction was made |
| SSS sickness benefit | No | It is an SSS benefit, not employer-paid basic salary |
| Cash conversion of unused sick leave credits | No, unless company policy treats it as basic salary | It is usually a separate monetary benefit |
| Employer salary top-up during sickness | Depends | Include only the portion treated as basic salary under contract, policy, CBA, or consistent company practice |
Legal Basis for 13th Month Pay in the Philippines
The main law is Presidential Decree No. 851, commonly called the 13th Month Pay Law. It requires covered employers to pay 13th month pay not later than December 24 of every year.
The original decree had a salary ceiling, but this was later removed by Memorandum Order No. 28, s. 1986, so the benefit now generally applies to rank-and-file employees in the private sector, regardless of salary amount, provided they worked for at least one month during the calendar year.
The basic formula is:
Total basic salary earned during the calendar year ÷ 12 = 13th month pay
DOLE’s annual 13th month pay advisories, including Labor Advisory No. 16, Series of 2025, follow the same principle: the minimum 13th month pay must not be less than one-twelfth of the employee’s total basic salary earned within the calendar year.
The Supreme Court has also repeatedly emphasized that 13th month pay is based on basic salary, not every amount appearing in the payslip. In Central Azucarera de Tarlac v. Central Azucarera de Tarlac Labor Union-NLU, G.R. No. 188949, July 26, 2010, the Court discussed that allowances and monetary benefits not integrated into regular or basic salary are generally excluded, unless company policy, agreement, or established practice treats them as part of basic salary.
What “Basic Salary Earned” Means in Real Payroll Practice
“Basic salary earned” usually means the employee’s regular pay for normal work or paid employment time. It does not automatically include every benefit, allowance, premium, reimbursement, incentive, or government benefit received by the employee.
Usually included
These are commonly included in the 13th month pay base:
- Monthly basic salary actually earned
- Daily wage for regular workdays actually paid
- Hourly basic pay for regular hours
- Piece-rate earnings of covered piece-rate employees
- Fixed or guaranteed wage plus commission, when the commission forms part of the employee’s wage structure
- Salary differential for maternity leave, because DOLE treats it as part of basic salary for 13th month pay purposes
- Employer-paid salary during approved leave with pay, if the employee’s regular basic salary continues and no salary deduction is made
Usually excluded
These are commonly excluded unless clearly integrated into basic salary by contract, collective bargaining agreement, company policy, or long-established practice:
- SSS sickness benefit
- SSS maternity benefit itself
- Cash equivalent of unused vacation or sick leave credits
- Overtime pay
- Night shift differential
- Holiday premium
- Rest day premium
- Cost-of-living allowance not integrated into basic pay
- Transportation, meal, rice, communication, or clothing allowance
- Reimbursements and liquidation of expenses
- Profit-sharing
- Discretionary bonuses
- Christmas bonus or 14th month pay, unless treated differently by company policy
The mistake many employees and employers make is looking only at the total amount received during the year. For 13th month pay, the better approach is to separate basic salary from non-basic-salary payments.
Why SSS Sickness Benefit Is Different From Salary
SSS sickness benefit comes from the Social Security System under Republic Act No. 11199, the Social Security Act of 2018, and its implementing rules. The SSS describes sickness benefit as a daily cash allowance paid for the number of days a qualified member is unable to work due to sickness or injury.
Under the SSS sickness benefit rules, an employed member generally notifies the employer, the employer submits the sickness notification to SSS, and the employer advances the approved benefit before seeking reimbursement from SSS.
That advance payment can confuse employees because it may pass through the employer’s payroll or cash release system. But legally and practically, the SSS sickness benefit remains an SSS benefit. The employer is usually only advancing it because the SSS system requires the employer to pay first and then seek reimbursement.
That is why the amount should not be treated the same way as basic salary for 13th month pay computation.
Important Distinction: Paid Sick Leave vs. SSS Sickness Benefit
This is where many payroll disputes happen.
A sick employee may receive one or more of the following:
- Company sick leave with pay
- SSS sickness benefit
- Employer salary top-up
- No salary for some days
Each one can have a different effect on 13th month pay.
Scenario 1: Employee used company sick leave with full pay
Example:
- Monthly basic salary: ₱30,000
- Employee was sick for 5 days
- The company paid the full ₱30,000 salary for the month using paid sick leave credits
For 13th month pay purposes, the month is usually counted as ₱30,000 basic salary earned because the employee still received regular basic salary and there was no salary deduction.
Scenario 2: Employee had no paid sick leave left and received only SSS sickness benefit
Example:
- Monthly basic salary: ₱30,000
- Employee had 10 unpaid sick days
- Employer deducted ₱10,000 from salary
- Employee received ₱7,000 SSS sickness benefit
For 13th month pay purposes, the ₱7,000 SSS benefit is not added to the basic salary base.
If the employee’s actual basic salary for that month after unpaid sick days is ₱20,000, then ₱20,000 is the amount included for that month, not ₱27,000.
Scenario 3: Employer gave a sickness top-up
Example:
- Employee’s deducted salary for sick days: ₱10,000
- SSS sickness benefit: ₱7,000
- Employer voluntarily gave ₱3,000 top-up
Whether the ₱3,000 top-up is included depends on how it is treated.
If it is clearly a salary continuation or paid leave benefit forming part of basic pay, it may be included. If it is a special assistance, allowance, discretionary subsidy, or non-basic benefit, it is generally excluded unless the employer’s policy, employment contract, CBA, or consistent practice says otherwise.
Sample 13th Month Pay Computation With SSS Sickness Benefit
Assume the employee earns ₱30,000 monthly basic salary.
The employee worked the whole year but had one month with unpaid sick days.
| Month | Basic salary counted for 13th month pay |
|---|---|
| January | ₱30,000 |
| February | ₱30,000 |
| March | ₱30,000 |
| April | ₱30,000 |
| May | ₱30,000 |
| June | ₱30,000 |
| July | ₱30,000 |
| August | ₱20,000 |
| September | ₱30,000 |
| October | ₱30,000 |
| November | ₱30,000 |
| December | ₱30,000 |
| Total basic salary earned | ₱350,000 |
The employee also received ₱7,000 SSS sickness benefit for August.
The correct 13th month pay base is still ₱350,000, not ₱357,000.
Computation:
₱350,000 ÷ 12 = ₱29,166.67
So the minimum 13th month pay is ₱29,166.67.
If the employer mistakenly includes SSS sickness benefit, the computation would be:
₱357,000 ÷ 12 = ₱29,750
That higher amount is not required by law, unless the employer voluntarily grants it or has a policy or practice that gives a more generous computation.
Step-by-Step Guide to Check If Your 13th Month Pay Was Computed Correctly
If you were sick during the year and your 13th month pay seems lower than expected, do not look only at your monthly salary rate. Check your actual basic salary earned.
1. Get your payslips for the whole year
Look for:
- Basic salary
- Absence deductions
- Leave without pay
- SSS sickness benefit
- Allowances
- Overtime
- Premium pay
- Adjustments
- Top-ups or salary differential
If you do not have payslips, request a payroll breakdown from HR or payroll.
2. Separate basic salary from other payments
Create two columns:
| Include in 13th month base | Exclude unless treated as basic salary |
|---|---|
| Regular monthly basic salary | SSS sickness benefit |
| Daily wage for regular workdays | Overtime |
| Paid company sick leave salary | Night differential |
| Basic pay after salary adjustment | Holiday or rest day premium |
| Covered piece-rate earnings | Allowances and reimbursements |
| Wage-forming commissions | Cash conversion of unused leave |
3. Add only the basic salary earned
For each month, write the actual basic salary counted after unpaid absences or leave without pay.
For monthly-paid employees, this may be the full monthly salary if there was no deduction.
For daily-paid employees, add only the regular daily wages actually earned.
4. Divide the total by 12
The formula remains:
Total basic salary earned for the year ÷ 12
Do not divide by the number of months worked unless the company uses a more favorable method. The standard legal formula is total basic salary earned within the calendar year divided by 12.
5. Compare with what was actually paid
If the amount paid is lower than your computation, ask HR for the payroll basis.
Sometimes the difference comes from:
- Unpaid sick days
- Leave without pay
- Absences without official leave
- Late or undertime deductions
- Mid-year hiring
- Resignation before December
- Salary increase during the year
- Exclusion of allowances, overtime, or premiums
- Exclusion of SSS sickness or maternity benefits
SSS Sickness Benefit Procedure Employees Should Know
Even though SSS sickness benefit is not included in 13th month pay computation, employees should still understand the SSS process because delays and wrong filings can affect the benefit itself.
For employed members, the usual process is:
Notify the employer
- For home confinement, the employee generally notifies the employer within 5 calendar days after the start of confinement.
- For hospital confinement, employee notification to the employer is generally not necessary, but documents will still be needed.
Submit medical proof
- Medical certificate
- Diagnosis
- Recommended number of sick leave or rest days
- Supporting medical records when required
Employer submits sickness notification to SSS
- For home confinement, the employer generally submits to SSS within 5 calendar days after receiving the employee’s notification.
- For hospital confinement, the employer generally has one year from discharge.
Employer advances the approved sickness benefit
- Under the SSS rules, the employer advances the sickness benefit to the employee, then seeks reimbursement from SSS.
Employer files reimbursement
- For home confinement, reimbursement is generally filed within one year from the start of confinement.
- For hospital confinement, reimbursement is generally filed within one year from hospital discharge.
A common bottleneck is late notification. The SSS rules state that late notification can result in reduction or denial of the claim. If the employee timely notified the employer but the employer failed to notify SSS on time, the employer may lose the right to recover the advanced sickness allowance from the employee.
Documents Commonly Needed
The exact requirements may vary depending on SSS online procedures and the type of confinement, but these are commonly relevant:
| Situation | Documents or records to prepare |
|---|---|
| Employee checking 13th month computation | Payslips, payroll summary, employment contract, leave records, company handbook, HR memo on sick leave |
| SSS sickness benefit claim | Medical certificate, supporting medical records, SSS sickness notification, proof of confinement or consultation |
| Employer reimbursement | Sickness benefit reimbursement application, proof of advance payment, approved SSS notification, payroll proof |
| Dispute with employer | Payslips, computation sheet, written HR explanation, screenshots of payroll portal, attendance logs, leave approval records |
| Resigned employee | Final pay computation, certificate of employment, clearance documents if any, last payslip, resignation acceptance |
For employees abroad or OFWs dealing with SSS sickness claims, documents issued abroad may require proper authentication depending on SSS requirements. In many cross-border transactions, Philippine agencies may ask for documents to be apostilled if issued in an Apostille Convention country, or authenticated through the Philippine embassy or consulate if issued in a non-apostille country. For ordinary local sick leave in the Philippines, notarization or apostille is usually not needed unless a specific document or affidavit is required.
Common Payroll Mistakes Involving SSS Sickness Benefit and 13th Month Pay
Mistake 1: Adding SSS sickness benefit to basic salary
This is more favorable to the employee, but it is not the legal minimum. Employers may do it voluntarily, but employees generally cannot demand it unless it is required by contract, CBA, policy, or established company practice.
Mistake 2: Deducting paid sick leave from basic salary even though it was leave with pay
If the employee had approved company sick leave with pay and the full monthly salary was paid, the employer should not treat those days as unpaid for 13th month pay purposes.
Mistake 3: Treating all “sick leave payments” the same way
Company sick leave with pay and SSS sickness benefit are not the same.
Company sick leave with pay is an employer benefit or paid leave arrangement.
SSS sickness benefit is a statutory social security benefit.
Mistake 4: Using monthly salary rate instead of actual basic salary earned
An employee with ₱30,000 monthly salary does not always have ₱360,000 basic salary earned for the year. If there were unpaid absences, leave without pay, suspension without pay, or mid-year hiring, the total basic salary earned may be lower.
Mistake 5: Forgetting resigned or terminated employees
A resigned or separated rank-and-file employee who worked for at least one month during the calendar year is still entitled to proportionate 13th month pay based on basic salary earned up to separation. This is usually included in final pay.
What to Do If Your Employer’s Computation Seems Wrong
Start with documents, not assumptions. Many 13th month pay disputes are resolved once the payroll basis is clear.
Ask HR or payroll for the computation
- Request the total basic salary used.
- Ask which months or days were reduced.
- Ask whether SSS sickness benefit was excluded.
Compare the computation with your payslips
- Check if paid sick leave was wrongly treated as unpaid.
- Check if SSS sickness benefit was correctly separated.
- Check if salary increases were reflected.
Review your contract, handbook, CBA, or company practice
- Some employers grant more than the minimum.
- Some include items not legally required.
- A long, consistent, deliberate practice may matter, especially if employees relied on it.
Put your concern in writing
- A short email is often enough.
- Attach your own computation.
- Ask for correction or written explanation.
Use DOLE’s Single Entry Approach if unresolved
- Employees may file a Request for Assistance through DOLE’s Single Entry Approach, commonly called SEnA.
- The process is designed to be speedy, accessible, and less formal than a labor case.
- Requests may be filed through the DOLE SEnA/ARMS portal or with the DOLE Regional or Provincial Office that has jurisdiction over the workplace.
For a pure 13th month pay computation issue, many employees first go through HR, then SEnA. If unresolved, the matter may proceed to the appropriate DOLE or NLRC process depending on the nature and amount of the claim and whether other issues, such as illegal dismissal, are involved.
Special Situations
Employees with multiple employers
If you work for two private employers, each employer computes your 13th month pay separately based on the basic salary you earned from that employer. SSS sickness benefit received through one employment should not be added as basic salary for the other.
Foreign employees working in the Philippines
Foreigners who are validly employed as rank-and-file employees in the Philippine private sector are generally covered by Philippine labor standards, including 13th month pay, unless a specific exemption applies. Immigration status, Alien Employment Permit concerns, and tax residency are separate issues. For 13th month pay, the main question remains whether there is an employer-employee relationship and basic salary earned in the Philippines.
OFWs and voluntary SSS members
An OFW or voluntary SSS member may qualify for SSS sickness benefit depending on SSS rules and contributions. But 13th month pay is an employer obligation under Philippine labor law. If there is no Philippine employer-employee relationship covered by the 13th Month Pay Law, SSS sickness benefit alone does not create a 13th month pay entitlement.
Independent contractors and freelancers
True independent contractors and freelancers are generally not entitled to statutory 13th month pay because they are not employees. But labels are not controlling. If the arrangement is called “freelance” but the company controls the worker’s schedule, methods, tools, attendance, and work performance like an employee, the worker may raise an employee classification issue.
Employees on long-term illness
If an employee is absent for a long period due to illness and receives no basic salary for many months, the 13th month pay will usually be lower because the total basic salary earned is lower. But the employee does not lose 13th month pay entirely if they worked for at least one month during the calendar year and are otherwise covered.
Frequently Asked Questions
Is SSS sickness benefit included in 13th month pay computation?
Generally, no. SSS sickness benefit is not included because 13th month pay is based on basic salary earned from the employer, while SSS sickness benefit is a social security cash benefit.
Does sick leave affect 13th month pay in the Philippines?
It depends on whether the sick leave was paid or unpaid. If you used approved company sick leave with pay and your regular basic salary continued, your 13th month pay usually should not be reduced for those days. If the sick leave was unpaid and you received only SSS sickness benefit, the unpaid portion reduces your basic salary earned.
If my employer advanced my SSS sickness benefit, does that make it salary?
No. The employer’s advance of SSS sickness benefit does not automatically make it basic salary. The employer is usually advancing the SSS benefit and later seeking reimbursement from SSS.
Should SSS sickness benefit appear in my payslip?
It may appear in your payslip or payroll records for transparency, but it should be identified separately from basic salary. Its appearance in payroll does not automatically mean it forms part of the 13th month pay base.
My employer deducted my sick days but SSS paid me sickness benefit. Is my 13th month pay lower?
Usually, yes. If no basic salary was earned for the unpaid sick days, your total basic salary earned for the year is lower. The SSS sickness benefit is not added back for 13th month pay computation.
Is company sick leave with pay included in 13th month pay?
Usually yes, if the company paid your regular basic salary during the approved paid sick leave and made no deduction. But cash conversion of unused sick leave credits is generally excluded unless company policy, contract, CBA, or consistent practice treats it as part of basic salary.
Can the employer voluntarily include SSS sickness benefit in the computation?
Yes. The law sets the minimum. An employer may give a more favorable benefit by including amounts that are not legally required, as long as the practice is not used to avoid the employee’s statutory minimum rights.
Is SSS maternity benefit treated the same as SSS sickness benefit for 13th month pay?
The SSS maternity benefit itself is generally not basic salary. However, maternity leave has a special rule under the Expanded Maternity Leave Law: the employer-paid salary differential for qualified female employees is treated as part of basic salary for 13th month pay computation. That special treatment does not automatically apply to ordinary SSS sickness benefit.
What if HR says “all benefits are excluded,” including paid sick leave?
Ask for the detailed computation. If you received regular basic salary during approved paid sick leave, it should not be treated the same way as SSS sickness benefit or cash conversion of unused leave. The important question is whether the payment was regular basic salary or a separate non-basic benefit.
Where can I complain about wrong 13th month pay computation?
You may first request a written computation from HR or payroll. If unresolved, you may file a Request for Assistance through DOLE’s Single Entry Approach or the appropriate DOLE Regional or Provincial Office. Prepare payslips, leave records, payroll summaries, and your own computation.
Key Takeaways
- SSS sickness benefit is generally not included in 13th month pay computation.
- 13th month pay is based on total basic salary earned during the calendar year divided by 12.
- If sick leave was paid by the employer as regular salary, it usually remains part of the basic salary base.
- If sick leave was unpaid and the employee received only SSS sickness benefit, the SSS amount is not added back.
- Employer salary top-ups during sickness depend on whether they are treated as basic salary under contract, company policy, CBA, or consistent practice.
- Always check the payroll breakdown, not just the total amount received.
- If the computation looks wrong, ask HR for the basis, compare it with your payslips and leave records, and use DOLE SEnA if the issue remains unresolved.