Is the 13th month required? Yes.
Well, it kind of depends…
But, what is the 13th month bonus?
Once you start to feel the chill in the air, Filipino workers start anticipating for that most magical day of the year.
No, not Christmas day. That’s a close 2nd though. What I’m talking about is the day they get their 13th month bonus.
Does the Philippines have a secret calendar that nobody else in the world knows about?
The 13 month bonus is actually an employee benefit unique to Filipino workers. It was first given back in the late 1970’s under the administration of Ferdinand Marcos (yes, that Marcos). This law (Presidential Decree 851) basically says that at the end of the year, workers are entitled to an extra month’s salary.
This was done to achieve a few things:
- give workers more money during the Christmas holidays
- stimulate the holiday economy
- reduce absenteeism
- reduce worker sluggishness during the holidays.
This has been the practice in the Philippines for generations. To adapt to this, most employers automatically add in the 13th month bonus as part of labor costs.
Also, this benefit isn’t automatically given. Most business owners require employees to work at least 3 to 6 months to avail it. How much a worker would receive would depend on how long he or she has worked. The amount could also be less if the worker has too many unauthorized absences or punctuality problems.
Now that you have a general idea of what the 13th month benefit is, let’s dive into the math.
Computing for the 13th Month bonus
Let’s say you have an Filipino VA, Mario, who you pay P12,000 a month. He started working for you April of this year. How much is he entitled to get for his 13th month?
Here’s the basic formula:
Since Mario is earning P12,000 per month, you need to divide that number by 12 for the 12 months of the year.
You get P1,000. For every month Mario has been working for you, he is entitled P1,000 for his 13th month.
If he started working for you in January, he would get the full month’s salary, P12,000. But since Mario only started in in April, that means he’s only been working 9 months. So he’s only entitled P9,000 in his 13 month bonus.
Here’s the formula with the sample:
Another Way To Compute the 13th Month
If have a VA on a part-time or hourly basis, another way to compute for the 13th month is to get the total of how much you’ve paid them for a year and divide it by 12 months. Let’s say you’ve paid your part-time virtual assistant P72,000 for the year. You can simply divide that number by 12 and you have the 13th month bonus amount.
This formula works better if you also have some special virtual assistants that aren’t hired full time, but you feel also deserves the 13th month.
Do I Really Need to Pay 13th Month?
It’s a benefit we strongly encourage because it’s really a good motivator for employees. Getting their 13th month on time and in full can sometimes make the difference between having a great Christmas or just getting by.
But I agree that there are some cases that the 13th month doesn’t apply.
It is legally required if you’ve set up shop in the Philippines. Like if you’re registered in the Philippines, you have office space there and you’re paying taxes. But otherwise, not really.
If you’re paying your worker by the hour, the 13th month bonus might not make sense.
If your virtual assistant doesn’t do long term work for you, or they work mainly on short term projects with gaps in between tasks, then the 13 month bonus wouldn’t work as well.
But just because they’re not entitled to a bonus doesn’t mean you can’t send them a little extra over the holidays.
Anything Else I Should Know?
Remittances to the Philippines usually peak during the last quarter of the year. And if you send your 13th month in the last few weeks in December, you’ll run into multiple bank holidays. So if you want your virtual assistant to receive their 13th month on time, send it early. The first week of December is usually best.
Or ask your VA if they want to receive their bonuses on January (some prefer this). That way, you can avoid any salary issues over the holidays.
Do you have any other burning questions about outsourcing you need answers to? Let us know in the comments below and we’ll try to answer them in future blog posts.
Julia has been working for OnlineJobs.ph since 2012, first as a writer and now as its social media manager and content development specialist. She also founded the Davao Virtual Assistants Association, the biggest VA association in Davao City.
She’s a full-time wife and mom and volunteers her time as an internet rights advocate.
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