The 13th Month pay deadline is coming! Due to popular demand, I’ve written a follow up article. Here are 3 more things you may not know about 13th Month pay.
Why isn't it called Christmas Bonus?
If you ask normal employees in the Philippines, 13th month pay is synonymous with Christmas Bonus because it is given during that season. Ever wonder why the law didnt’t call it a Christmas bonus to begin with? I have a theory about that.
Since the law takes the effort to be neutral with regard to religions, it chose to call this the 13th Month pay to be fair to other citizens who may not be Christians and yet are very much a part of the Seasons festivities.
The naming was pretty clever if you ask me. It also allows for the easy inclusion of succeeding benefits if ever (14th month pay, anyone?).
Benefit has to be paid in cash
Christmas parties in the Philippines have certain traditions attached to it. For one, the newer employees are always “encouraged” to put on a Christmas dance presentation while the veteran employees watch and eat from the sidelines.
Another tradition is the yearly raffle. The boss pulls out names from a fish bowl during the Christmas party and employees win anything from a small powerbank, a washing machine, electric fan or a 55” TV with surround sound speakers. Most of the time, these are sourced from suppliers and loyal customers of the business. Fun times!
Now, there are some employers who insist that the benefits, prizes and giveaways they provide should be considered the 13th month pay. As generous and creative as this sounds, the law forbids it.
However, in relation to the 13th month pay, the law requires that this benefit should be given in cash. It cannot be “in kind” such as gift certificates or items. It has to be in cold… hard… cash.
I guess the logic of the law is to provide employees with resources to allow them to purchase gifts or pay off bills during this season. So once again, for 13th month pay, please ensure that you release it in cash, not in kind.
It can be substituted with equivalent existing benefits
There is a little known exemption from the 13th month pay requirement. If you are already giving an equivalent amount, you no longer need to add onto that (unless you want to in the exercise of management prerogative).
For example, every December, you already release an amount called “Christmas Bonus” or “Year end Bonus”. This is equivalent to a month’s worth of salary or more, depending on the employee’s performance. Under the law, you can opt to consider this as your company’s compliance with the 13th month pay requirement.
This means that you don’t need to release a separate “13th month pay” every December since the law considers you already compliant with the requirement. The logic of the law is that employees should have a little bit of extra cash in their pockets during this season. Since you have already been providing that, then you’re already considered good to go.
So there you have it folks! 3 more facts about the 13th month pay that you may not be aware of. Now that we've simplified this for you, go out there and make better choices!