AN EMPLOYER’S GUIDE FOR THE HOLIDAY SEASON
Learn about the benefits you should receive as employees during the holiday season.
By Atty. Joey Ramos, Atty. Herbert Hernane, and Atty. Mao Santos
ILLUSTRATION BY MICO FELICITAS
The holidays have always been a time of merriment and joy for the working Filipino. The Christmas parties, eventful family gatherings, and batch reunions have been a source of fun and laughter in these times. Equally joyous is opening your payslip and seeing that bonus you have long waited for. Here are the benefits typically received by employees during the holiday season.
𝟏𝟑𝐓𝐇 𝐌𝐎𝐍𝐓𝐇 𝐏𝐀𝐘
The 13th month pay is a monetary benefit equivalent to at least 1/12 of the total basic salary earned by an employee in a calendar year. Basic salary, for purposes of computing 13th month pay, shall include all remunerations or earnings paid by the employer to the employee for services rendered.
As a general rule, other benefits such as unused leave credits, overtime premium, night shift differential, holiday pay, and cost of living allowances are not part of the basic salary for purposes of computing the 13th month pay. 1 An exemption to this rule is when these benefits are included in the computation for 13th month pay under company policy, collective bargaining agreement, or have ripened into company practice.
Employers are mandated to give the 13th month pay to rank-and-file employees who have already worked for at least one month during a calendar year; employees who are paid on a piece-work basis; and employees who are paid a fixed or guaranteed wage plus commission.
The following employers are not required to pay 13th month pay: The government and any of its political subdivisions, including government-owned and controlled corporations (GOCCs), except those corporations operating essentially as private subsidiaries of the government; employers who are already paying their employees 13th month pay or more in a calendar year or its equivalent at the time of the issuance of Presidential Decree (PD) No. 851; persons in the personal service of another in relation to such workers; and employers of those who are paid on purely commission, boundary, or task basis, and those who are paid a fixed amount for performing specific work, irrespective of the time consumed in the performance thereof (except those workers who are paid on a piece-rate basis, in which case their employer shall grant them 13th month pay).
𝐓𝐈𝐌𝐄 𝐎𝐅 𝐏𝐀𝐘𝐌𝐄𝐍𝐓 𝐎𝐅 𝟏𝟑𝐓𝐇 𝐌𝐎𝐍𝐓𝐇 𝐏𝐀𝐘
The 13th month pay shall be paid not later than December 24 of every year. The employer may, at his discretion, release one-half of the 13th month pay at an earlier date.
𝟏𝟑𝐓𝐇 𝐌𝐎𝐍𝐓𝐇 𝐏𝐀𝐘 𝐅𝐎𝐑 𝐑𝐄𝐒𝐈𝐆𝐍𝐄𝐃 𝐎𝐑 𝐒𝐄𝐏𝐀𝐑𝐀𝐓𝐄𝐃 𝐄𝐌𝐏𝐋𝐎𝐘𝐄𝐄𝐒
An employee who has resigned or whose services are terminated at any time before the time of payment of the 13th month pay is entitled to this monetary benefit in proportion to the length of time he or she started working during the calendar year up to the time of his or her resignation or termination from the service. For example, if an employee worked from January to July, his proportionate 13th month pay should be equal to 1/12th of the total basic salary earned during that period.
𝐃𝐈𝐒𝐓𝐈𝐍𝐆𝐔𝐈𝐒𝐇𝐈𝐍𝐆 𝐅𝐑𝐎𝐌 𝐂𝐇𝐑𝐈𝐒𝐓𝐌𝐀𝐒 𝐁𝐎𝐍𝐔𝐒
Employers should distinguish between the 13th month pay and their annual Christmas bonus. The former is a mandated benefit under the law, while the latter is an optional benefit given by the employer as an incentive to the employees. The amount of the 13th month pay is dependent upon the total basic salary, while the amount of the Christmas bonus depends on the discretion of the employer.
Aside from the Christmas season, we also encounter various working and non-working holidays throughout the year wherein employees are not mandated to work. If they do report for work, they are entitled to holiday pay. Holiday pay refers to the payment of the regular daily wage for any unworked regular holiday, which includes the following: New Year’s Day (January 1), Maundy Thursday, Good Friday, Araw ng Kagitingan (April 9), Labor Day (May 1), Independence Day (June 12), Eid’l Fitr, Eid’l Adha, National Heroes Day (August 29), Bonifacio Day (November 30), Christmas Day (December 25), and Rizal Day (December 30).
Article 94 of the Labor Code, as amended, provides that employers may require their employees to work during the holidays provided they shall be paid compensation equal to twice their regular rate (200 percent of the daily rate). Employees who do not work on regular holidays are still entitled to 100 percent of their daily rate. However, if the employee is absent without official leave on the day which immediately preceded the regular holiday, he is not entitled to any holiday pay, unless he works on that day.
Premium pay refers to additional compensation for work performed within eight hours on non-workdays, such as rest days and special holidays.
Special non-working holidays include the following: Chinese New Year, EDSA People Power Revolution Anniversary, Black Saturday, Ninoy Aquino Day, All Saints’ Day, and Feast of Immaculate Conception of Mary. Unlike regular holidays, the “no work, no pay” principle applies to those who are not required to work during special non-working holidays. Those that are required to work during these days are entitled to additional compensation of at least 30 percent of their basic wage. Employers should also note special working days which include: All Souls Day, Christmas Eve, and the last day of the year. For work rendered on special working days, an employee is not entitled to any additional compensation except for his daily wage.
𝐇𝐎𝐔𝐑𝐒 𝐎𝐅 𝐖𝐎𝐑𝐊 𝐃𝐔𝐑𝐈𝐍𝐆 𝐓𝐇𝐄 𝐇𝐎𝐋𝐈𝐃𝐀𝐘𝐒
The general rule is that normal working hours shall not exceed eight hours a day. Any work rendered beyond eight hours is subject to payment of an overtime premium of at least 25 percent of the hourly rate.
The same rules apply to overtime work rendered during holidays, whether regular or special non-working holidays, with the sole difference being the overtime premium paid which is 30 percent of the hourly rate.
𝟏𝟒𝐓𝐇 𝐌𝐎𝐍𝐓𝐇 𝐏𝐀𝐘?
House Bill No. 520, filed by Kabayan Partylist Rep. Ron Salo last June 30, 2022, seeks to mandate employers in the private sector to provide 14th month pay, which shall also be equivalent to the employee’s monthly basic salary.
Under its explanatory note, it was stated that despite companies granting 13th month pay, many Filipino families still struggle to make ends meet due to meager salaries and the growing cost of living. In this regard, the proposed 14th month pay aims to provide additional relief to most Filipino families, especially during the holidays.
It should be noted that similar bills have been filed in previous years, but were not enacted into law by Congress.