Law and rules on 13th month pay

WHAT MATTERS MOST - Atty. Josephus B. Jimenez - The Freeman

It has been more than forty years now since President Ferdinand Marcos issued Presidential Decree 851 making it mandatory on all employers to pay all their employees the thirteenth month pay. After all those years, many employers and employees still do not know the basic legal provisions and administrative rules to implement the law. They either entrust these matters to HR managers, and other subordinates. But, judging from the many cases filed in the NLRC and some even reach the Supreme Court, it appears abundantly clear that many HR professionals are not really well-versed with the fundamentals of the labor law.

There are a number of rules that we wish to remind both employers and employees alike, and HR and personnel managers as well. First, the provision of law explicitly provides that only rank-and-file employees are entitled to thirteenth month pay. But if the employer has voluntarily granted the benefit to executives, managerial and supervisory personnel, and this grant has become an established practice, then, management can not withdraw it anymore. Second, the thirteenth month pay is different from a Christmas bonus. The pay is legally demandable. The bonus is an act of grace that cannot be demanded as a matter of right.

Third, all employees, whether regular, probationary, casual, contractual, project or seasonal, are entitled to thirteenth month pay, regardless of the nature of their employment and irrespective of the manner by which their wages or salaries are computed and paid, whether daily-paid, monthly-paid or by quincena (every 15th and 30th), they are all entitled. The only requirement is that they have worked at least one month in that particular year. Fourth, the amount to be paid is one-twelfth of the total basic pay within that particular year. And so, if the salary of the employee is P12,000 and he worked only for one month, he should be granted at least one thousand pesos.

Fifth, the basis for the computation should be all the remunerations and wages received from the employer but should not include Vacation Leave, Sick Leave, Night Time Differential, Holiday Pay and Overtime Pay. It does not include the other benefits received under special law, unless the law itself specifies that it should be included. Sixth, the original provision of P.D. 851 limited the pay to those workers receiving a basic salary of not more than P1,000 a month. President Corazon Aquino removed the ceiling. Today, the amount of basic salary is immaterial. Sixth, employees with multiple employers should get one 13th month pay per employer.

Seventh, the employer has the choice whether to pay the whole amount before December 24 or to give half of it in June before the opening of the school semester. Eighth, for those who resign or retire before paying time must be paid proportionate thirteenth month pay -that is total basic pay for the whole year divided by twelve. Ninth, the tax exemption that has been raised to P82,000 has not been signed by the President. If at all, the same will take effect next year.

Tenth, a claim for payment of thirteenth month pay is a money claim. And so, it can be filed only within the four year prescriptive period, after which, the same is deemed abandoned and waived.

We hope that all employers and employees should remember all these ten points by heart. Many cases are filed not just because of intent to evade by employers but also due to ignorance of some employees, employers and even HR managers. It is high time to go back to basic and learn these fundamentals governing the law on thirteenth month pay.

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