One more look at the 13th month pay law and bonuses
There are many among us who do not know the difference between the 13th month pay and the Christmas bonus. Most of us believe that they are one and the same. The truth of the matter is that they are not the same. The 13th month pay is mandated by law; it has to be paid by all employers to all rank-and-file employees. Christmas bonus is not obligatory, it is just a gift that is granted out of the employer's goodness of heart, or as a result of negotiations either individually (and embodied in the employment contract) or collectively (and contained in the CBA or collective bargaining agreement when there is a union). Also, there are bonuses that are given as a company practice, and cannot be withdrawn unilaterally anymore.
It should be recalled that it was President Ferdinand Marcos who issued Presidential Decree 851 making it mandatory to pay all rank-and-file workers on December 16, 1965, but only those whose monthly salary was not more than one thousand pesos (that was the time when daily pay was only six pesos a day). President Cory and such removed the salary ceiling by virtue of M.O. 28 on August 28, 1986. But until now, it should be made clear that managerial employees, executives, and members of the board of directors and company executives are not supposed to be entitled to 13th month pay. If any managers are receiving this benefit now, it was out of either a mistake or an expression of liberality, or voluntary grant. And such grant cannot be withdrawn anymore if it has been repeated more than three times, and thus has ripened into a company practice.
Those who are paid purely on commission or boundary basis, like commission sales agents and bus and taxi drivers are not entitled to 13th month pay. We should take note that in computing 13th month pay, only the basic salary should be computed, and that would exclude overtime pay, maternity benefits and sales commissions. But if, in the past, these workers were granted out of mistake or errors in judgment, such grant can no longer be withdrawn. The reason for this is that a company practice becomes an integral part of the terms and conditions of employment. To unilaterally withdraw the same would be tantamount to diminution of pay. It is considered a violation of Article 100 of the Labor Code, as it has always been interpreted by the Supreme Court.
A Christmas bonus is different from 13th month pay. A bonus is not dictated by law; it is driven by the employer's exercise of free will due to a prosperous business result or any other positive development. This is usually practiced by the banking industry. Some banks give 14th month bonus, 15th month bonus, 16th month bonus and even 17 month bonus. Most banks hire top-notch executives for an annual compensation package consisting of fifteen to even eighteen months. These would all depend on the business results. For the rest of humanity, there are no bonuses, only 13th month pay. A blessed Christmas to all of us!
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