The 13th-month pay is a legally mandated benefit in the Philippines, first introduced under Presidential Decree 851. It requires employers in the private sector to provide an extra month’s salary to their employees, ensuring workers have additional financial support during the holiday season. For 2025, the Department of Labor and Employment (DOLE) has reiterated the rules and clarified possible updates that may affect employees and employers alike.
Who Are Eligible for the 13th-Month Pay?
All rank-and-file employees in the private sector who have worked for at least one month during the calendar year are entitled to the 13th-month pay. This includes employees regardless of their designation, employment status, or the method of wage payment. However, government employees, freelancers, household helpers, and those paid on a purely commission basis are generally not covered.
How Is the 13th-Month Pay Calculated?
The standard formula is straightforward:
13th-Month Pay = (Total Basic Salary Earned During the Year ÷ 12)
This ensures that employees who worked only part of the year still receive a proportional benefit.
Sample Computation Table
| Employee’s Basic Salary per Month | Months Worked in 2025 | Total Basic Salary Earned | Computed 13th-Month Pay |
|---|---|---|---|
| ₱20,000 | 12 | ₱240,000 | ₱20,000 |
| ₱18,000 | 8 | ₱144,000 | ₱12,000 |
| ₱25,000 | 6 | ₱150,000 | ₱12,500 |
Payment Dates for 2025
By law, the 13th-month pay must be released not later than December 24, 2025. Some companies may choose to release it earlier, often splitting the payout into two half around mid-year (June) and the remainder before Christmas. This practice helps employees manage expenses better throughout the year.
Proposed Changes in 2025
Lawmakers have been discussing amendments to expand and strengthen the 13th-month pay rule. Proposals under consideration include:
- Coverage Expansion: Extending the benefit to gig workers, freelancers, and those in non-traditional employment arrangements.
- Higher Tax-Free Ceiling: Increasing the current ₱90,000 tax-free limit on bonuses and 13th-month pay, giving employees more take-home pay.
- Mandatory Advance Release: Legislators are reviewing the possibility of requiring at least half of the 13th-month pay to be released by mid-year.
If these proposed changes are approved, 2025 could mark a significant improvement in worker welfare across the country.
Importance of the 13th-Month Pay
For millions of Filipino workers, the 13th-month pay is not just a legal requirement it is a lifeline. It helps cover family expenses, tuition fees, debt repayments, and holiday celebrations. Employers, on the other hand, benefit from improved morale, productivity, and employee retention.
Final Thoughts
The 13th-month pay remains one of the most important labor rights in the Philippines. With possible reforms on the horizon, 2025 could bring even greater benefits for workers, ensuring fairer treatment in today’s evolving employment landscape. Both employees and employers should keep an eye on DOLE announcements to stay updated on any new regulations.