The Difference Between 13th-Month Pay and Christmas Bonus
Updated: April 17, 2024
The distinction between the 13th-month pay and the Christmas Bonus is significant for Filipino employees. Apart from the joyous celebration of Christmas, the anticipation of the annual guaranteed 13th-month pay bonus adds to the festive spirit, applicable even to foreign employees with valid working visas in the Philippines.
Legal requirements dictate that employees must receive their 13th-month pay each year on or before December 24. If the employer fails to pay the 13th-month pay, the employer can be subjected to administrative cases.
The mandatory provision of this extra pay aims to provide Filipino workers the means to allow them to enjoy the Christmas and New Year festivities fully.
How is it computed?
Presidential Decree No. 851 solidifies the 13th-month pay calculation, which is determined as one-twelfth (1/12) of an employee’s basic salary within a calendar year. Below is a scenario and computation of the 13th-month pay:
- Scenario – A monthly paid employee earning a fixed-basic salary employed by the company since January 1, 2023
Pro-rating may apply if an employee commences service at any time within the calendar year, having rendered at least a month of service.
On the other hand, a Christmas Bonus constitutes additional compensation provided to employees by their employer. The management holds complete discretion in determining the amount to distribute and the timing of disbursement for this supplementary bonus.
No legal provisions exist that could impede employers from deciding whether to grant or forego this bonus in a given year.
It is essential to highlight that if your employment contract explicitly specifies the Christmas Bonus as “Guaranteed,” employers are prohibited from altering or eliminating this form of compensation. Any attempt to do so would constitute a violation of the principle of diminution of benefits.
Understand the Difference Between 13th-Month Pay and Christmas Bonus
Holidays are getting nearer, and what excites employees is their most awaited 13th-month pay. However, 13th-month pay and Christmas Bonus are always mistaken to be the same.
In the Philippines, every entity is mandated to provide their employees with 13th-month pay. Violating this will result in fines and penalties. On the other hand, giving employees a Christmas bonus is up to the employer.
On top of that, did you know?
All employers are also mandated to report the 13th-month pay to the Department of Labor and Employment (DOLE) no later than January 15 of the year following. Reporting can be done through the DOLE Report System.
Release 13th-Month Pay On Time
With our end-to-end business-centered services, we are dedicated to helping you understand the concept of a 13th-month pay and assisting you with your payroll process to ensure that you provide this benefit.
It is very helpful to have this information for categorizing he difference between Christmas and bonuses by the way. As for another concern, I was wondering if the Collective Negotiation agreement, Service Recognition Incentive, and cash gift. Are this related to the Christmas? or the same as a 13 months bonus that is unrelated? Thank you!
Hello Jamar,
Items specified in the CBA of your company, such as the Service Recognition Incentive and cash gift, are considered additional bonuses and are not included in the calculation of the 13th-month pay.