Presidential Decree No. 851 requires every employer to give rank-and-file employees a 13th month pay of at least one-twelfth of the basic salary they earned in the calendar year, by 24 December. Here are the rules employers need: who is covered, how much, when, and what to report.
- Who: every rank-and-file employee who worked at least one month in the year.
- How much: total basic salary earned from January to December, divided by 12.
- When: on or before 24 December; it may be paid in two parts.
- Tax: exempt up to ₱90,000 a year, together with other bonuses and benefits.
- Report: the 13th Month Pay Compliance Report to DOLE, usually by 15 January.
Who is covered
All rank-and-file employees are covered, whatever their designation, employment status or how their wage is paid, as long as they worked for at least one month during the calendar year. Memorandum Order No. 28 removed the old ₱1,000 salary ceiling, so the amount of the salary does not matter.
- Probationary, contractual, project and part-time employees are covered.
- Daily-paid and piece-rate workers are covered.
- Employees on a fixed wage plus commission are covered.
- Kasambahay are covered by the Batas Kasambahay (RA 10361), after one month of service.
The Revised Guidelines exclude a few groups: managerial employees, government employees (who have their own year-end bonus), and workers paid purely on a boundary or commission basis or for a specific task regardless of time spent, except piece-rate workers. An employer already paying a 13th month or a Christmas bonus of at least one-twelfth of the basic salary is also treated as complying.
How much: basic salary earned ÷ 12
"Earned" matters: unpaid absences, lates and undertime are not earned, so they lower the amount. Overtime, holiday premiums, night differential and most allowances are not basic salary, so they are left out. The full list is in what counts toward 13th month pay.
| Employee on ₱18,000 a month | Basic salary earned in 2026 | 13th month pay |
|---|---|---|
| Worked the whole year | ₱216,000.00 | ₱18,000.00 |
| Whole year, with ₱2,400 of unpaid absences | ₱213,600.00 | ₱17,800.00 |
| Hired on 1 April | ₱162,000.00 | ₱13,500.00 |
Employees who leave before December get the prorated amount with their final pay; see prorated 13th month pay.
When to pay it
The deadline is 24 December. The law lets employers split it, for example half before the school year opens in June and the rest by 24 December. Paying it with the second December cutoff is common, but make sure that payday falls on or before the 24th.
- Paid in June (half of the estimate)
- ₱9,000.00
- Paid by 24 December (the balance)
- ₱9,000.00
- 13th month pay for 2026
- ₱18,000.00
Compute the December balance from the actual basic salary earned for the year, less what was paid in June, so absences after June are reflected.
Tax: the ₱90,000 exemption
13th month pay is tax exempt up to ₱90,000, but that ceiling is shared with every other bonus and benefit given in the year, such as a Christmas bonus, productivity incentive or the excess of de minimis benefits over their ceilings. Only the amount above ₱90,000 is taxable, and it is taxed through the year-end annualization in December.
Reporting to DOLE
After paying, employers file the 13th Month Pay Compliance Report online at reports.dole.gov.ph. It asks for the establishment's details, the number of workers who received 13th month pay and the total amount paid. The deadline has been 15 January in recent years; DOLE confirms it each year in a labor advisory.
If it is not paid
Unpaid 13th month pay is a money claim. Employees can bring it to DOLE through the Single Entry Approach or file a complaint, and it is collectible together with any other unpaid wages. It cannot be offset against loans or deductions the employee did not authorize.