13th Month Pay is PHL's mandatory year-end bonus, required by Presidential Decree 851. Equal to 1/12 of total basic salary earned during calendar year.
Calculation:
13th Month = Total Basic Salary in Year ÷ 12
Coverage:
- All rank-and-file employees regardless of position, salary, or status
- Required regardless of profitability
- Must be paid by December 24
Tax treatment:
- First ₱90,000 is tax-exempt
- Excess (above ₱90,000) is taxable
What it means for you:
- Plan for it in financial planning (predictable income boost)
- Often used for: holiday spending, savings, debt payment, investment
- Pro-rated for partial-year employment
- Government employees have separate "Year-End Bonus" (similar)
- Some employers also pay 14th month or performance bonus on top