It is already December. By now, your social media feed is likely filled with friends flexing their "Thank you, Lord" posts or photos of grocery carts filled for Noche Buena. But if you are staring at your bank account wondering why your 13th-month pay looks smaller than expected—or worse, hasn't arrived yet—you are not alone.
Every year, the confusion isn't just about when it arrives (the deadline is December 24, by the way), but how it was calculated. Did they deduct your sick leaves? Why is there withholding tax? And if you resigned last October, do you still get a cut?
Here is the no-nonsense guide to auditing your bonus before you spend it.
The Golden Formula: It’s Not Just "Divide by 12"
Most employees assume that 13th-month pay is simply your monthly salary given twice. In a perfect world where you never took a day off or arrived late, that would be true. But for the rest of us, the computation is based on Total Basic Salary Earned during the calendar year.
The formula authorized by DOLE is:
What is "Basic Salary"?
This is where many companies get sneaky. Your "Basic Salary" excludes allowances and monetary benefits which are not considered part of your regular wage. This usually means:
- Excluded: Overtime pay, night shift differential, holiday pay, and cost-of-living allowances (COLA).
- Included: Your fixed monthly rate minus unpaid absences.
Scenario: If your contract says you earn ₱20,000 but ₱2,000 of that is "De Minimis" or "Rice Allowance," your 13th month is computed based on ₱18,000, not ₱20,000.
The "Tax Trap": Why Was My Bonus Deducted?
Nothing hurts more than expecting ₱30,000 and receiving ₱25,000. Before you march to HR, check the TRAIN Law tax exemption cap.
For 2025, the 13th-month pay and other benefits (like Christmas bonuses and productivity incentives) are tax-exempt only up to ₱90,000.
If your total bonuses for the year exceed ₱90,000, the excess amount is added to your taxable income. This often happens to mid-level managers or tenured employees. If you noticed a deduction, you likely hit this ceiling, or your employer annualized your income tax early to avoid a "tax shock" in January.
For the Resigned: The Pro-Rated Rule
A common misconception is that you must be employed until December to qualify. This is false. If you worked for at least one month in 2025 and then resigned (or were terminated), you are entitled to a pro-rated 13th-month pay.
How to compute:
- Salary: ₱25,000
- Months worked: January to August (8 months)
- Calculation: (₱25,000 x 8) ÷ 12 = ₱16,666.66
This amount should have been included in your back pay (final pay) released within 30 days of your separation. If you resigned in November, expect this to be credited either with your final pay or during the regular 13th-month pay cycle of the company.
What If My Employer Doesn't Pay?
The Department of Labor and Employment (DOLE) is strict about the December 24, 2025 deadline. Employers cannot claim "financial distress" to defer payment unless they have a rare, approved exemption from the government.
If your employer is ghosting you:
- Send a formal demand letter (email is fine) citing Presidential Decree No. 851.
- File a complaint via e-SENA. This is DOLE’s Single Entry Approach for a fast settlement. You don't need a lawyer; you just need your payslips and employment contract.
Money is tight, and you worked hard for every peso. Don't leave your bonus on the table just because the math looks complicated.
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