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.
About Julia Jasmine M. Sta Romana
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.
If you liked this you’ll probably also like reading
Hi, my foreign employer here from OJ promised a 13th month bonus as one of the terms of our agreement but unfortunately it was not listed in the Independent Contractor Agreement I signed. I was let go and I only have a few weeks left before I’m off for good. Reason simply is that they are cost cutting and will cut back even more. In my particular situation, would it still be alright to follow up with the 13th month bonus? Hoping for your help asap.
Wow that doesn’t seem right. Sorry to hear that. (I’m a prospective employer.)
They could at least consider offering you a pro-rated 13th bonus or severance…
And that’s shady they didn’t include it in the contract.
Request it next time!
Julia- my q: if I hired someone beginning partway thru December, I can’t exactly pay them a whole month, but I think I’d try paying some kind of bonus as goodwill. But less than a month’s bonus for sure (it’s 12/16 already and I haven’t tried to hire yet). Does this seem proper to you?
JOY ANN PENDON says
Jessica Marie says
Thank you for your comment. You can apply for any of the jobs posted here by signing up for an Onlinejobs.ph jobseeker account. It’s completely free and takes only minutes to apply, though we only allow Philippine workers on the site -> http://www.onlinejobs.ph/register
Brian Lipszyc says
What day is the best to pay the 13th month bonus?
Jessica Marie says
Thank you for your email. Before Dec 24th, usually 1st or 2nd week of December
Hanah Jumawan says
i dont have back pay from our agency
Jessica Marie says
Thank you for your comment. You may email our support team (email@example.com) regarding your concern on not receiving your back pay from your employer/client. You can mention if there was a signed agreement or contract if you have any
How does the 13th month bonus work if the ‘months worked’ is years and years? Is this a bonus that gets bigger and bigger each year?
For example, if they worked for you for 5 years (60 months), and the monthly salary was 60,000 php…would it be:
60,000/12 x 60 = 300,000 php??
The 13th month pay is equivalent to 1/12 of the total basic salary earned by the employee within a calendar year. It does not increase based on the number of years they have worked. Regardless of how many years an employee has worked, the computation for their 13th month pay will always be the same.
To clarify, the 13th month pay is computed based on the employee’s total basic salary earned within the calendar year, which is the 12-month period from January 1 to December 31. Therefore, using the example you provided, if an employee worked for 6 years or 60 months with a monthly salary of 60,000, the computation for their 13th month pay would be based only on the basic salary earned within the current calendar year.
I hope this clarifies any confusion.