13th Month Pay Computation: How it Works
PUBLISHED: November 1, 2021
It’s the most beautiful time of the year indeed! Christmas is just around the corner and as the much-awaited holiday comes to a close, people are also looking forward to receive their 13th month pay. Because who doesn’t want to get their pay are treat oneself, right? But do you know if you are getting the right compensation? In this article we will discuss the 13th month pay computation and how it really works.
Defining 13th Month Pay
It is the amount equal to 1/12 of the employees’ annual salary that shall be paid by 24th of December of each year. Since this law is mandatory, employers don’t have any option whether to pay it or not based on an employee’s performance or the business’ income.
13th Month Pay Computation
The 13th Month Pay Computation shall not be less than 1/12 of the total basic salary of an employee within a calendar year. The illustration below states how 13th Month Pay Computation works:
Total basic salary earned for the year = 13th Month Pay
FAQs about 13th Month Pay
- Are separated, terminated and/or resigned employees entitled to the 13th month pay?
Yes. Any employee who has resigned was terminated at any time before the time for payment of 13th month shall be entitled to the said benefit.
- How much is the 13th month pay of a separated, terminated and/or resigned employee?
The 13th month pay of a separated, terminated and/or resigned employee is in proportion to the length of time he/she has worked for the year, estimated from the time she has starting working during the calendar year or the time the last 13th month pay was given, up to the time of his/her separation, termination or resignation from the company.
- Are maternity leave benefits included in the computation of 13th month pay?
No. Unfortunately, maternity leave benefits are not included in the computation of 13th month pay.
Regardless of the employee’s salary, it would be a lot easier if a company’s payroll master has a reliable Payroll Software to help them easily comply with government requirements and company reports.