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In the Philippines, one thing people look forward to during the Christmas season is their 13th month pay. However, due to the COVID-19 pandemic, many businesses have incurred great losses and seek the possibility of being exempted from giving their employees’ 13th month pay. 

The Presidential Decree No. 851 or the 13th Month Pay Law and its Implementing Rules and Regulations (IRR) declares that “rank-and-file employees shall be entitled to 13th month pay regardless of position, designation, employment status, and irrespective of the method by which their wages are paid”. All employees that have worked for the company for at least one (1) month during the calendar year are entitled to receive 13th month pay, which shall not be less than one-twelfth (1/12) of the employee’s total basic salary within a calendar year. It should be paid not later than December 24 of each year.

On 19 October 2020, the Guidelines on the Payment of 13th Month Pay was indicated in the Labor Advisory No. 28, Series of 2020 (Labor Advisory No. 28), issued the the Department of Labor and Employment (DOLE). This makes it mandatory for employers to give 13th month pay to all their rank-and file employees. The request for exemption and deferment of payment would not be accepted despite incurring substantial losses.

Who is not covered by the 13th Month Pay Law?

1. The government and any of its political subdivisions, including government-owned and controlled corporations, except those corporations operating essentially as private subsidiaries of the Government;
2. Employers who are already paying their employees 13th month pay or more in a calendar year or its equivalent at the time of the issuance of PD 851;
3. Employers of persons in the personal service of another in relation to such workers; and
4. Employers of those who are paid on purely commission, boundary, or task basis, and those who are paid a fixed amount for performing specific work, irrespective of the time consumed in the performance thereof, except those workers who are paid on piece-rate basis, in which case the employer shall grant such workers the required 13th month pay.

Employers are also required to submit a report of compliance to the nearest Regional Office not later than 15th of January of the following year, i.e. January 15, 2021. The report shall contain the following information:

1. Name of establishment
2. Address
3. Principal product of business
4. Total employment
5. Total number of workers benefitted
6. Among granted per employee
7. Total amount of benefits granted
8. Name, position and telephone number of persons giving information.

Sources: 

• https://bwc.dole.gov.ph/faqs-on-13th-month-pay
• https://www.dole.gov.ph/news/labor-advisory-no-28-20-guidelines-on-the-payment-of-thirteenth-month-pay/