In the Philippine employment landscape, the "Midyear Bonus" is often a point of confusion. Whether an employee is entitled to it—especially if they were recently hired—depends heavily on whether they work in the public sector or the private sector.
While the law is rigid for government workers, it is largely discretionary or contractual for those in the private sphere. Here is a comprehensive guide on the eligibility rules for newly hired employees.
1. Public Sector (Government Employees)
For government personnel, the Midyear Bonus is standardized under Budget Circular No. 2017-2 (issued by the Department of Budget and Management). This applies to all positions (regular, casual, or contractual) in the Executive, Legislative, and Judicial branches, as well as LGUs and GOCCs.
Eligibility Criteria for New Hires:
To receive the Midyear Bonus (equivalent to one month’s basic pay) on or after May 15, a new employee must meet these specific requirements:
- Service Requirement: The employee must have rendered a total or an aggregate of at least four (4) months of service from July 1 of the previous year to May 15 of the current year.
- Active Status: The employee must still be in the service as of May 15 of the current year.
- Performance Rating: The employee must have obtained at least a "Satisfactory" performance rating in the immediately preceding rating period or the applicable performance appraisal period.
Note for New Hires: If you were hired in March, you would only have roughly 2.5 months of service by May 15. In this case, you would not be eligible for the Midyear Bonus for that year, as you failed the 4-month minimum service rule.
2. Private Sector Employees
Unlike the 13th-month pay, which is mandated by Presidential Decree No. 851, there is no law requiring private employers to provide a "Midyear Bonus."
The Rule of "Contractual Entitlement"
For a newly hired private employee, eligibility is governed by:
- The Employment Contract: Check if the bonus is explicitly stated as a benefit.
- Company Policy/Employee Handbook: Most companies that offer a midyear bonus require a "regularization" status or a minimum of six months of service.
- Collective Bargaining Agreement (CBA): If the company has a union, the midyear bonus might be a negotiated benefit with its own set of eligibility dates.
13th Month Pay vs. Midyear Bonus
Many private companies split the mandatory 13th-month pay into two tranches: one in May/June and one in December.
- If the "Midyear Bonus" is actually a pre-payment of the 13th-month pay, a new hire is entitled to a pro-rated amount, provided they have worked for at least one (1) month during the calendar year.
3. Key Distinctions for Newly Hired Staff
| Feature | Public Sector (Government) | Private Sector |
|---|---|---|
| Legal Basis | DBM Budget Circular 2017-2 | Contract / Company Policy |
| Minimum Service | At least 4 months | Usually 1 month (if 13th month) |
| Amount | Full 1 month's salary | Pro-rated or Discretionary |
| Cut-off Date | Must be active as of May 15 | Depends on company policy |
4. Frequently Asked Questions
Can a new hire get a pro-rated Midyear Bonus in the government?
No. Unlike the Year-End Bonus, the Midyear Bonus in the public sector is an "all-or-nothing" benefit. If you have not reached the 4-month service mark by May 15, you receive nothing for that specific period.
Is the Midyear Bonus taxable?
Under the TRAIN Law, bonuses (including 13th-month pay and other benefits) are tax-exempt up to a ceiling of ₱90,000. If the total of your midyear bonus plus other productivity incentives and the year-end bonus exceeds this amount, the excess is subject to income tax.
Can an employer withhold the bonus because of a "Probationary" status?
- In Public Service: If the 4-month service and satisfactory rating are met, the status (even if temporary/casual) generally doesn't bar the employee.
- In Private Service: Yes, an employer can limit "optional" bonuses to regular employees only, provided this is stated in the company policy and does not violate the 13th-month pay laws.
Summary for New Hires
If you are newly hired, your first step should be to determine if your "Midyear Bonus" is a voluntary benefit from your employer or a mandatory advance of your 13th-month pay. If you are in the government, ensure you have crossed the 120-day (4-month) service threshold by May 15 to qualify.
Would you like me to draft a formal inquiry letter to an HR department to clarify your specific bonus eligibility based on your start date?