Dear Atty. Kathy,
I checked the compensation and benefits policy of our new company, X, and I noticed that X does not have any provision for 13th Month Pay for its
rank-and-file employees. X only has a provision for a Christmas Bonus equivalent to one and a half (1.5) months basic salary for all employees, not just rank-and-file employees, which is scheduled to be released on the last working day of November every year. When I clarified with HR, I was told that the Christmas Bonus is already the 13th Month Pay. However, shouldn’t X be required to pay the 13th Month Pay, which is a mandatory benefit?
Jesse
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Dear Jesse,
Presidential Decree No. 851 — REQUIRING ALL EMPLOYERS TO PAY THEIR EMPLOYEES A 13TH-MONTH PAY, provides that employers already paying their employees a
13th-month pay or its equivalent are not covered by the Decree (Section 2).
Further, the Rules and Regulations Implementing PD No. 851 provides that the Decree shall apply to all employers except to employers already paying their employees 13-month pay or more in a calendar year or its equivalent at the time of said issuance (where the term “its equivalent” shall include Christmas bonus, mid-year bonus,
profit-sharing payments and other cash bonuses amounting to not less than 1/12th of the basic salary) (Section 3).
In accordance with the above provisions, and based solely on your narration, your Company does not have to pay employees any additional 13th Month Pay, since your Company has already complied with the required 13th Month Pay, by way of the Christmas Bonus, which is even more than the required amount of the 13th Month Pay, and is given well in advance of the last day of payment of the 13th Month Pay on December 24, which is more favorable to the employee. However, while no longer required under the circumstances, X still has an option to provide employees the 13th Month Pay, in addition to the Christmas Bonus being given.
Atty. Kathy Larios