It’s the most wonderful time of the year! With the holiday season just around the corner, Filipinos across the country are gearing up for festivities, family reunions, and of course, the highly anticipated 13th month pay.

As Christmas approaches, employees in the Philippines are eagerly looking forward to receiving this additional paycheck, which has become an essential part of their year-end celebrations. From spreading joy and easing financial burdens to stimulating the economy, the 13th month pay holds a significant place in the hearts and pockets of Filipino workers.

The 13th-month pay is a mandatory benefit for employees in the Philippines and is equivalent to 1/12 of the basic salary earned by an employee within a calendar year.

How to Calculate Your 13th Month Pay in the Philippines

Calculating your 13th-month pay in the Philippines involves a straightforward formula mandated by the government. Here’s how you can calculate it:

1. Determine the Basic Salary: The basic salary includes all fixed or regular payments, but it does not include allowances and other monetary benefits such as overtime, night differential, and holiday pay.
2. Calculate the Total Basic Salary Earned: Add up the basic salary earned by the employee within the calendar year. If the employee has not worked the entire year, you should only consider the months in which they were employed.
3. Divide by 12: Divide the total basic salary earned by the employee by 12. This gives you the 13th-month pay that the employee is entitled to.

Here’s the formula of 13th Month Pay:

13th month pay = Total Basic Salary Earned​ / 12

Example of 13th Month Pay Calculation

Suppose an employee, has a total basic salary of PHP 20,000 per month. To calculate John’s 13th-month pay for a year, follow these steps:

1. Determine Total Basic Salary Earned:
   Total Basic Salary Earned = P20,000/month × 12 months = P240,000
2. Apply the Formula:
   13th month pay = Total Basic Salary Earned​ / 12
   13th month pay = P240,000 / 12
   13th month pay = P20,000

In this example, John’s 13th-month pay would be PHP 20,000. This means he is entitled to receive an additional PHP 20,000 as his 13th-month pay on top of his regular monthly salary.