Every December, the same question comes up in offices, shops, and group chats: how much 13th month pay should I get, and how is it computed? Many people guess it is simply one month of salary. Sometimes that guess lands close. Often it does not, especially if you started mid year or your salary changed.
The good news is that the computation is short. The Department of Labor and Employment, or DOLE, uses one formula, and you only need one number to use it: the total basic salary you earned within the calendar year.
This guide shows the formula, what counts as basic salary, and three worked examples with the arithmetic shown step by step. One note: LBC Tracks is an independent guide site. We explain topics like this in plain words, but we are not DOLE, and we cannot compute or release anyone's pay.
What 13th month pay is, and who gets it
13th month pay is a mandatory benefit under Presidential Decree No. 851. It is not a gift and it is not the same as a Christmas bonus. A bonus depends on the employer. 13th month pay is required by law for covered workers, and DOLE repeats the rules in a labor advisory, most recently Labor Advisory No. 21, Series of 2026.
DOLE states that the pay goes to rank and file employees in the private sector, regardless of their position, designation, or employment status, and regardless of how their wages are paid, as long as they have worked for at least one month during the calendar year.
That wide coverage includes, in DOLE's own list:
- Employees paid on a piece rate basis
- Employees who receive a fixed or guaranteed wage plus commissions
- Employees who have more than one employer
- Employees who resigned or were terminated during the year
- Employees who went on maternity leave and received a salary differential
So probationary, contractual, and regular rank and file staff are all covered the same way. Only the amount differs, because it follows the basic salary each person actually earned.
The DOLE formula in plain words
Here is the whole computation, exactly as DOLE illustrates it:
Total basic salary earned during the year divided by 12 = 13th month pay
DOLE also words it this way: the minimum 13th month pay is one twelfth (1/12) of the total basic salary earned within the calendar year.
Three things in that formula are worth slowing down for:
- Total basic salary earned. Add up the basic salary from January to December, using what was actually earned. If your salary rose in July, the first half counts at the old rate and the second half at the new rate.
- Earned, not promised. Use the basic salary for work actually done in the year, from your payslips.
- The divisor is always 12. Even if you worked only part of the year, you still divide by 12. That is what makes the result proportionate, or pro rated, for shorter service.
If you worked a full year at one steady salary, the answer equals one month of that salary. That is why the simple guess often works for long serving staff, and why it fails for everyone else.
What counts as basic salary, and what does not
The most common computation mistake is adding the wrong items into the total. DOLE is clear that basic salary does not include allowances and monetary benefits that are not considered or integrated as part of the regular or basic salary.
Per DOLE, leave these out of the total:
- The cash equivalent of unused vacation and sick leave credits
- Overtime pay
- Premium pay
- Night shift differential
- Holiday pay
- Cost of living allowance
Two special cases from DOLE's advisory are worth knowing:
- Piece rate workers. Their total earnings from production or output serve as the basis, divided by 12 in the same way.
- Fixed wage plus commission. Commissions are excluded when they are not part of basic salary. DOLE's own example gives an employee with PHP 235,560.04 in fixed wages and PHP 30,000 in commissions a 13th month pay of PHP 19,630, computed from the fixed wages alone: 235,560.04 divided by 12 equals 19,630.00, rounded here to whole pesos.
When in doubt, go back to your payslips and find the line that says basic salary or basic pay. That line, added across the year, is your starting number.
Worked examples, step by step
Each example below uses only the DOLE formula, and each result is rounded to whole pesos.
Example 1: A full year at a fixed salary
Ana earns a basic salary of PHP 20,000 a month and worked the whole year.
- Step 1: 20,000 x 12 months = PHP 240,000 total basic salary for the year
- Step 2: 240,000 divided by 12 = PHP 20,000
- Ana's 13th month pay is PHP 20,000.
Example 2: An employee who started mid year
Ben started work on July 1 at a basic salary of PHP 18,000 a month, so he worked 6 months of the year.
- Step 1: 18,000 x 6 months = PHP 108,000 total basic salary earned
- Step 2: 108,000 divided by 12 = PHP 9,000
- Ben's 13th month pay is PHP 9,000. Note that the divisor stays at 12, not 6.
Example 3: A salary increase during the year
Carla earned PHP 22,000 a month from January to June, then her basic salary rose to PHP 25,000 a month from July to December.
- Step 1: 22,000 x 6 months = PHP 132,000 for the first half
- Step 2: 25,000 x 6 months = PHP 150,000 for the second half
- Step 3: 132,000 + 150,000 = PHP 282,000 total basic salary earned
- Step 4: 282,000 divided by 12 = PHP 23,500
- Carla's 13th month pay is PHP 23,500, which sits between her old and new monthly salaries, as it should when a raise lands mid year.
If you worked less than a full year
You do not need a full year of service to receive 13th month pay. One month of work within the calendar year already qualifies a rank and file employee, and the formula handles the rest: divide the basic salary you actually earned by 12, so a shorter year produces a smaller, proportionate amount.
DOLE applies the same rule to people who leave before December. An employee who resigned or was terminated is still entitled to the proportionate amount for the months worked. DOLE's own example covers an employee who earned PHP 177,236.28 in basic salary before resigning in September: 177,236.28 divided by 12 equals PHP 14,769.69, or about PHP 14,770 in whole pesos.
So if you left a job this year, check that the proportionate 13th month pay for your months there is part of what you receive. And if you changed jobs, each employer computes from the basic salary you earned with that employer.
Notes for small employers and online sellers
If you run a small shop or an online selling business with staff, the same formula is your payroll checklist. For each rank and file employee, add the basic salary earned from January to December, divide by 12, and set that amount aside before December.
A few habits make this easier:
- Keep payslips and payroll records per employee, per month. The year end total is then a simple addition.
- Budget monthly. Setting aside one twelfth of each month's basic payroll as you go means December does not arrive with one large surprise bill.
- Separate the benefit from sales cash flow. If your shop collects cash on delivery, our guide to LBC COD delivery and what buyers should know explains that payment flow, and our tips on LBC shipping for online sellers cover the delivery side. Staff pay follows the DOLE formula above, whatever the sales month looked like.
The formula gives the minimum. An employer may give more, but not less.
The December 24 deadline
13th month pay must be released on or before December 24 of the year. That date is in Presidential Decree No. 851 itself, and DOLE repeats it every year.
DOLE also states that no exemption from, or deferment of, the payment is allowed. A slow year is not a legal reason to skip or delay it.
For employers, there is one more date after payment. DOLE requires a report of compliance, submitted through the DOLE Online Compliance Portal not later than January 15 of the following year. DOLE regional offices monitor compliance under Department Order No. 238, Series of 2023.
For employees, the takeaway is simple: if December 24 passes and nothing has arrived, the deadline has passed, and you can raise it with your employer, with your own computation in hand.
Frequently asked questions
Is 13th month pay the same as a Christmas bonus?
No. 13th month pay is required by law for covered rank and file employees, computed with the DOLE formula. A Christmas bonus is extra and depends on the employer's policy. One does not replace the other.
I am probationary or contractual. Am I covered?
Yes, if you are a rank and file employee in the private sector and you worked at least one month during the calendar year. DOLE states that coverage applies regardless of employment status, position, or how wages are paid.
I resigned before December. Do I still get 13th month pay?
Yes. DOLE confirms that employees who resigned or were terminated during the year are entitled to the proportionate amount: total basic salary earned before you left, divided by 12.
Do overtime pay and allowances count in the computation?
No. DOLE excludes overtime, premium pay, night shift differential, holiday pay, cost of living allowance, and the cash equivalent of unused leave credits, when these are not part of basic salary. Only basic salary earned goes into the total.
I have two employers. How is mine computed?
Workers with multiple employers are covered, per DOLE. Each employer computes your 13th month pay from the basic salary you earned with that employer, using the same formula.
Can my employer delay payment because business was slow?
No. DOLE states that no exemption or deferment of 13th month pay is allowed, and the release deadline stays on or before December 24.
Your next step
Do the computation yourself today. Gather your payslips, add up the basic salary line from January to December, and divide by 12. If your figure matches what you receive, you can enjoy December in peace. If it does not match, you now have your own arithmetic to show your payroll officer, line by line, which is a calmer conversation than a guess.