In the Philippines, the 13th month pay isn’t just a holiday bonus—it’s a legally mandated benefit under Presidential Decree No. 851. For employers, getting the calculation of 13th month pay right is essential to staying compliant and keeping employees satisfied.

The Standard Formula

The basic formula for calculation of 13th month pay is:

13th Month Pay = Total Basic Salary Earned ÷ 12

This applies to all rank-and-file employees who have worked for at least one month during the calendar year. It’s important to note that only basic pay is considered—excluding allowances, bonuses, or overtime.

How to Compute Prorated 13th Month Pay

Not every employee works a full year. If someone joins mid-year or leaves early, they are still entitled to a proportionate share. Here’s how to compute prorated 13th month pay:

Prorated 13th Month = (Basic Salary Earned During Employment ÷ 12)

For example, if someone worked only from July to December, only those six months are counted in the computation.

How to Compute 13th Month Pay for 6 Months of Work

If an employee has only worked for half the year, businesses should compute accordingly. Here’s how to compute 13th month pay for 6 months:

1. Add up the basic salary received from July to December.
2. Divide the total by 12.

This ensures partial-year employees receive a fair and accurate share of their 13th month pay.

Accuracy Matters for Compliance

Incorrect or delayed 13th month payments can lead to DOLE complaints, employee dissatisfaction, and even legal repercussions. For HR teams managing large workforces or multiple employment types, manual calculations can be risky and time-consuming.

The best way to avoid these errors? Automate it.

PAYDAY.PH: Your Partner for Smart, Compliant Payroll

With PAYDAY, you can automatically compute accurate 13th month pay—including prorated amounts—based on actual salary data. Whether your team has part-time, full-time, or project-based employees, our platform adjusts calculations seamlessly.

Let PAYDAY simplify payroll season. From daily time tracking to 13th month computation, we make year-end stress-free for your HR and finance teams.

Use payday.ph to get your 13th month pay computations right—every time.