1) Legal Basis & Coverage

Statute. 13th-month pay is a statutory benefit under Presidential Decree No. 851 (as amended and expanded by later issuances).
Who is covered? All rank-and-file employees in the private sector—regardless of employment status (probationary, regular, project-based, fixed-term, seasonal, casual), method of wage payment (daily, monthly, piece-rate), or position—as long as they have worked at least one (1) month within the calendar year.
Who is not covered? Government employees (who receive a separate year-end bonus/cash gift regime); certain workers whose pay is purely commission-based or who work under boundary systems (no “basic salary”), and other narrow categories recognized by jurisprudence/DOLE rules. If a worker receives a fixed/guaranteed wage plus commissions, the fixed wage is covered.

Key principle: 13th-month pay is earned proportionally to the basic salary actually earned during the calendar year. Resignation does not forfeit the earned portion.

2) What Counts (and Doesn’t) as “Basic Salary”

Included in computation

Basic pay actually earned within the year (including paid regular holidays, paid rest days, and paid leaves if they are part of the basic wage scheme).

Excluded

Allowances (transport, representation, meal, COLA), benefits in kind
Overtime pay, premium pay, night-shift differential, holiday premium (beyond basic), hazard pay
Monetary value of unused leave conversions (unless company policy treats them as part of basic wage, which is uncommon)
SSS maternity benefit or other social insurance benefits paid directly by the state (not employer-paid basic salary)

Unpaid absences or no-work-no-pay days lower the basic salary earned and therefore reduce the pro-rated amount.

3) The Formula (Including Pro-Rata on Resignation)

Standard statutory formula

13th-Month Pay = Total Basic Salary Earned within the Calendar Year ÷ 12

Pro-rated upon resignation: Count the basic salary actually earned from January 1 up to the last day of employment, then divide by 12.

Example A — Monthly-paid employee resigns on August 15

Monthly basic rate: ₱30,000
Basic salary actually earned Jan–Jul: 7 × ₱30,000 = ₱210,000
August earned (half-month): ₱15,000
Total basic earned: ₱225,000
Pro-rated 13th-month: ₱225,000 ÷ 12 = ₱18,750

Example B — Daily-paid employee with absences

Daily rate: ₱800; worked 220 paid days from Jan–Oct 5 resignation
Total basic earned: 220 × ₱800 = ₱176,000
Pro-rated 13th-month: ₱176,000 ÷ 12 = ₱14,666.67

Tip: If your pay period includes paid regular holidays/rest days as part of the daily wage, they’re already embedded in “basic earned.”

4) Timing of Payment After Resignation

The 13th-month pay earned up to separation is part of final pay.
Release deadline: As a general DOLE guideline, final pay should be released within 30 calendar days from separation unless company policy/CBAs provide an earlier date. Companies commonly pay upon clearance completion.

5) Tax Treatment

Non-taxable cap. 13th-month pay and “other benefits” are income tax-exempt up to ₱90,000 per year (TRAIN law).
Any excess over ₱90,000 (aggregated with other “other benefits” like Christmas bonus, productivity incentives, etc.) is taxable and subject to withholding tax.
Resignation does not change the cap; the employer computes the non-taxable portion year-to-date.

6) Special Employment Situations

Probationary employees. Entitled pro-rata if they worked at least one month, even if they resign before regularization.
Project/seasonal/fixed-term. Entitled for the period actually worked within the calendar year.
Commissioned employees.
- Pure commission / no basic pay → typically not entitled (no “basic salary”).
- Guaranteed wage + commission → the guaranteed wage is included in the computation; commissions remain excluded unless company policy states otherwise.
Boundary system (e.g., jeepney/taxi drivers) → generally not entitled (no basic salary).
Piece-rate workers. Entitled if the piece-rate payments are treated as basic wage for ordinary working days; compute based on the basic portion actually earned.
No work, no pay periods / suspensions. Reduce the “basic earned” base.
Maternity leave. Employer-paid portions count; SSS maternity benefit does not (it is not employer-paid basic wage).

7) Employer Deductions, Clearances, and Set-Offs

13th-month pay cannot be forfeited. It is a statutory benefit earned by work performed.
Permissible deductions against final pay (including the 13th-month component) must be lawful and authorized (e.g., government-mandated contributions/taxes; amounts the employee expressly consented to such as documented loans/cash advances; or amounts determined through due process for proven accountabilities or shortages).
Unilateral deductions without legal basis or consent may violate wage protection rules.

8) Records, Payslips, and Proof

Employers must keep payroll records and issue payslips detailing how final pay and 13th-month were computed.
Employees should retain copies of payslips, contracts, and company policies; these are helpful if disputes arise.

9) Prescriptive Period & Remedies

Money claims (including 13th-month pay differentials) prescribe in three (3) years from the date the cause of action accrued (usually separation date or when payment should have been made).
First step: SEnA (Single-Entry Approach) conciliation-mediation at DOLE.
If unresolved, file a complaint with the NLRC (Labor Arbiters) within the prescriptive period.

10) Practical Computation Checklist (for Resignees & HR)

Determine coverage. Rank-and-file? Has at least 1 month of service this year?
Establish basic salary earned YTD up to the last day worked.
Exclude allowances, overtime, premiums, and non-basic benefits; include only basic salary and paid basic-wage days.
Apply formula: (Total basic salary earned YTD) ÷ 12.
Apply taxes: Aggregate with other benefits to test the ₱90,000 tax-exempt ceiling; withhold tax on any excess.
Release within 30 days (or earlier by company policy) together with other final pay components.
Document the computation on the payslip/final pay advice.

11) FAQs

Q: I resigned in March. Do I still get 13th-month pay? A: Yes, pro-rated based on your basic salary earned from Jan–Mar ÷ 12.

Q: My employer says I’m on pure commission. Am I covered? A: If you truly have no basic salary (pure commission), you’re typically not covered. If you have a guaranteed wage plus commission, the guaranteed wage portion is covered.

Q: Are unused leave conversions part of the base? A: Generally no—they are not “basic salary actually earned” for days worked.

Q: Can my employer delay payment until I finish clearance? A: Employers usually require clearance to verify accountabilities, but final pay (including 13th-month) should still be released within 30 days of separation unless a shorter period applies by policy/CBA.

Q: Can a quitclaim waive my 13th-month? A: You cannot validly waive statutory benefits through unconscionable quitclaims; any waiver must be knowing, voluntary, and reasonable. Disputes can be brought to DOLE/NLRC.

12) Quick Reference: Employer & Employee Do’s

Employers

Compute on basic salary actually earned; pay pro-rata on resignation
Itemize the computation on the final payslip
Observe the 30-day release guideline for final pay
Avoid unlawful deductions

Employees

Keep payslips and contracts
Check inclusions/exclusions in the base
Verify tax treatment vis-à-vis the ₱90,000 cap
Seek DOLE assistance within 3 years if underpaid

Bottom Line

Upon resignation, a private-sector rank-and-file employee in the Philippines is entitled to a pro-rated 13th-month pay equal to their basic salary actually earned during the year divided by 12, payable with final pay (generally within 30 days). Only basic wage elements count; allowances, overtime, and social insurance benefits do not. Tax exemption applies up to ₱90,000 for 13th-month and other benefits combined; any excess is taxable.