Whether or not you subscribe to Christmas or the many holy days lined up every December, it really is the season to be jolly. For those employed in the private sector, it’s the 13th-month pay and Christmas bonus season!
Here’s everything you need to know about what you’ll be expecting to receive in the coming days.
13th-Month Pay and Christmas Bonus: What’s the Difference?
The main difference between the 13th-month pay and the Christmas bonus is that the former is mandated by law and the latter is voluntarily given.
The 13th-month pay, which labor leaders in the mid-70s conceptualized and the Labor Code decreed, requires private sector employers to give an additional pay to those who have worked for at least one month during the year. All rank-and-file employees regardless of employment status and methods by which the receive their wages, can expect under the law to receive one-twelfth of the basic salary they have for the year.
Employers, on the other hand, must submit a compliance report to the Department of Labor and Employment.
Meanwhile, those in managerial positions, in the government, in personal service to another person (such as personal drivers), and paid on task basis don’t receive this monetary benefit. Giving 13th-month pay for those in managerial positions depends on the discretion of the employer.
(However, it’s important to note that employers cannot simply give managerial titles to employees performing rank-and-file duties in the hopes of escaping giving the 13th-month pay.)
On the other hand, the law doesn’t require a Christmas bonus. Rather, it depends fully on the discretion of the employer.
(It’s also worth nothing that under Republic Act No. 10361 or the Kasambahay Law, our kasambahays are entitled to 13th-month pay. Like yours, this is equivalent to one month basic wage or depending on their length of service. Our kasambahays include gardeners, yayas, cooks, all-around help, and laundrywomen.)
Will you be having a Christmas bonus?
As mentioned above, giving Christmas bonus is on a voluntary basis only. There is no law that requires employers to give this bonus to their employers, so we cannot say for sure that you will be having a Christmas bonus and how much you can expect to receive.
For employers who choose to give Christmas bonuses to their employees, even the amount is on your discretion. They also decide on what kind of Christmas bonus it will be; this can also be in the form of groceries, vouchers, or other supplies.
This simply means you can’t demand your employer to give you a Christmas bonus. As a non-statutory benefit, it’s only up to the generosity of the employer. They’ll give it as an incentive for employees to work hard to achieve company targets.
(So now we kind of understand those TikToks about elaborate song-and-dance numbers in corporate Christmas parties…)
As such, there is no exact computation on how much you will be receiving as Christmas bonus, if at all.
Are the 13th-month Pay and Christmas Bonus Taxable?
(I’m not an accountant or a tax expert, so these are purely based on my research. Take these with a grain of salt; better yet, consult an accountant to help you with taxation matters.)
Your 13th-month pay is not taxable as long as it does not exceed PhP 90,000.00 (under TRAIN Law). If your 13th-month pay goes beyond this amount, the excess is added to your salary and included in computing your income tax.
On the other hand, your Christmas bonus is split into non-performance-based and performance-based incentives. For the former, usually referred to as “Other Benefits,” it is not taxable if the amount does not exceed PhP 90,000.00 (same as the 13th-month pay).
Meanwhile, if the performance-based bonus exceeds PhP 10,000.00, the whole amount is treated as “Other Benefits” and becomes taxable.
I just resigned. Can I still receive my 13th-month pay?
Yes. According to the law, you are still entitled to receive the additional pay corresponding to the time you have worked.
A Note for Government Employees
As you’ve read above, government employees are exempted from the 13th-month pay and Christmas bonus law. But, don’t panic! Government workers are given Mid-year (given around May 15) and Yearend (given around November 15) bonuses and a fixed cash gift of PhP 5,000.00 from the Department of Budget and Management. Each bonus should be equivalent to your one month basic salary as of October 31, so that’s two months of additional pay in total.
Unfortunately, those with no employer-employee relationship, such as those under Job Order or Contract of Service, won’t receive these monetary benefits. Last year, however, national government JOs and COSs received a one-time gratuity pay of PhP 5,000.00 under President Ferdinand Marcos Jr.’s Administrative Order No. 3.
References:
- https://laborlaw.ph/13th-month-pay/10883/
- https://verafiles.org/articles/who-should-filipino-workers-thank-the13th-month-pay
- https://car.dole.gov.ph/news/understanding-13th-month-pay-and-christmas-bonus/
- https://www.aseanbriefing.com/news/understanding-the-13th-month-pay-and-christmas-bonuses-in-the-philippines/
- https://laborlaw.ph/managerial-staff/10788/
- https://www.smartparenting.com.ph/life/home/guide-to-kasambahay-law-a00228-20200104-lfrm
