13th Month Pay 2026: Who Gets It and How to Compute It
Every rank and file employee who worked at least one month in 2026 is owed 13th month pay, on or before December 24. It is one twelfth of the basic salary earned in the year, so someone paid ₱25,000 a month all year receives ₱25,000.
That is the short answer. Below is the longer one, written as a checklist for payroll teams. It also covers the two cases we get asked about most in December: resigned employees and unpaid leave.
Who is entitled to 13th month pay?
Under Presidential Decree No. 851 and its Revised Guidelines of 1987, all rank and file employees in the private sector are entitled. Their position, employment status, and the way they are paid do not matter. The only condition is that they worked at least one month during the calendar year.
Memorandum Order No. 28 removed the old salary ceiling in 1986, so the size of the salary does not matter either. Probationary, contractual, and project employees are covered. So are piece rate workers and employees paid a fixed wage plus commission. Someone with two employers is owed 13th month pay by each.
Managerial employees are not covered by the law, although many companies include them by policy. The law also exempts a few employers, such as government agencies and employers of workers paid purely on commission, boundary, or task basis.
When is 13th month pay due?
On or before December 24, 2026, which falls on a Thursday this year. The guidelines allow you to pay half before the opening of the school year and the other half by December 24. DOLE repeats the deadline every year in a labor advisory; the most recent one is Labor Advisory No. 16, Series of 2025.
How is 13th month pay computed?
Add up the basic salary the employee actually earned from January 1 to December 31, then divide by 12.
What counts as basic salary?
Basic salary is the pay for services rendered: the regular monthly salary or daily wage. The DOLE handbook lists what is generally left out:
- Overtime pay and premium pay for rest days and special days
- Night shift differential and holiday pay
- The cash conversion of unused vacation and sick leave
- Cost of living allowance and other allowances not built into the basic salary
The exception is your own policy. If a company practice, policy, or collective bargaining agreement treats any of these as part of basic salary, include them. If you are unsure how your holiday pay is set up, our holiday pay guide walks through it.
What about unpaid leave and absences?
Because the computation uses basic salary actually earned, unpaid leave and unpaid absences lower it. Paid leave does not, since the employee is still paid their salary on those days.
For example, an employee on ₱25,000 a month had ₱11,500 deducted for unpaid absences during the year. Their basic salary earned is ₱288,500, so their 13th month pay is ₱24,041.67.
What about employees who resigned or joined mid year?
Employees who resigned or were separated are owed a proportionate amount. It is based on the basic salary they earned from January 1 to their last day. It is usually settled with their final pay. New hires are prorated the same way, from their start date.
| Employee, ₱25,000 a month | Basic salary earned in 2026 | 13th month pay |
|---|---|---|
| Worked all year | ₱300,000 | ₱25,000.00 |
| Resigned effective August 31 | ₱200,000 | ₱16,666.67 |
| Joined on September 1 | ₱100,000 | ₱8,333.33 |
| Worked all year, ₱11,500 unpaid absences | ₱288,500 | ₱24,041.67 |
Is 13th month pay taxable?
Only above ₱90,000. Under Section 32(B)(7)(e) of the Tax Code, as amended by the TRAIN Law (Republic Act No. 10963), 13th month pay and other benefits are tax exempt up to a combined ₱90,000 a year. Other benefits include a Christmas bonus, productivity incentives, and similar year end pay.
Say an employee receives ₱25,000 in 13th month pay and an ₱80,000 year end bonus. The total is ₱105,000, so ₱15,000 is added to their taxable compensation and the rest stays tax free.
Bills raising the ceiling to ₱150,000 have been filed in both houses of Congress, including Senate Bill No. 56. None has become law as of this writing, so ₱90,000 still applies for 2026. We will update this page if that changes.
Payroll checklist before December 24
- List every rank and file employee who worked at least one month in 2026, including those who left.
- Pull each person's basic salary earned from January 1, net of unpaid leave and absences.
- Leave out overtime, premiums, night differential, holiday pay, and allowances, unless your policy includes them.
- Check that resigned employees received their prorated 13th month pay with their final pay.
- Add 13th month pay to other bonuses and tax only the amount above ₱90,000.
- Release on or before December 24 and keep the payroll register on file.
Zalamea's payroll team computes 13th month pay, final pay, and the year end tax adjustment for client companies every December. See our payroll and HR solutions.
Sources: Presidential Decree No. 851 and the Revised Guidelines on the Implementation of the 13th Month Pay Law (1987); DOLE Handbook on Workers' Statutory Monetary Benefits, 2023 edition; DOLE Labor Advisory No. 16, Series of 2025; Section 32(B)(7)(e) of the National Internal Revenue Code, as amended by Republic Act No. 10963.
Frequently asked questions
Who is entitled to 13th month pay in the Philippines?
All rank and file employees in the private sector who worked at least one month during the calendar year, under Presidential Decree No. 851. Salary level, employment status, and the way they are paid do not matter.
How is 13th month pay computed?
Add up the basic salary the employee earned from January 1 to December 31, then divide by 12. An employee paid ₱25,000 a month for the whole year receives ₱25,000.
When is the deadline for 13th month pay in 2026?
On or before December 24, 2026. Employers may pay half before the opening of the school year and the rest by December 24.
Do resigned employees get 13th month pay?
Yes. They are owed a proportionate amount based on the basic salary they earned from January 1 up to their last day, usually paid with their final pay.
Is 13th month pay taxable?
13th month pay and other benefits are tax exempt up to a combined ₱90,000 a year under Section 32(B)(7)(e) of the Tax Code. Only the amount above ₱90,000 is taxable.
Make payroll easier for your team
Computing 13th month pay for every employee takes time, especially with resignations and new hires in the mix. We can run your payroll for you through payroll outsourcing, or set your team up on our cloud payroll software so you run it in house. Either way, computations and government contributions stay up to date. Tell us about your company and our payroll team will reach out.