Check the details about How to Compute 13th Month Pay? What is 13th Month Pay in Philippines? All We Know here. The employees earn over the months to receive the 13th-month paychecks at the year’s end. This initiative to encourage the workers to earn is prominent. There is complete information about How to Compute 13th Month Pay in this article.
How to Compute 13th Month Pay?
The month of December is a wonderful time of the year, full of occasions and holidays. It is often accomplished with gifts, offerings, and family gatherings. These eves are also expensive, and 13 months’ pay is the key helper for all of them. The 13th-month paychecks are the bonus or the accomplishment deposit offered to the employees for their hard work over the year.
The paycheck depends upon the basic salary of the employees and their work contribution to the company. In the Philippines, the disbursement of the paycheck is mandatory, while there are many other countries that are introducing the 13-month pay as the customary. In some countries, the paycheck is considered as the extra paycheck, so they are calculated by the average salary received throughout the year.
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What is 13th Month Pay in the Philippines?
The thirteen-month pay was introduced in 1976 under Presidential Decrees 851. The employees are entitled to receive another month’s salary. The paychecks are mandatory in the Philippines. The Department of Labour and Employment has announced that employees in the private sector will receive an additional month’s paycheck before Christmas. According to the advisor of the department, the candidates who have worked for at least one month will receive their 13th-month paycheck.
The amount will be paid irrespective of their rank, status designation, employment status, and respective of the method they are paid. For the candidates who have resigned, are on their material leave, or are terminated from employment, everyone will reach the amount. The PD states that the employees who receive at least 1000 PHP each month are eligible to receive the benefit amount. It is part of the welfare program not only for the employees but also for the entire household.
How To Calculate 13th Month Pay?
In some countries, the amount is classified as an extra bonus after a successful contribution to the company. That is why they consider the 12-month payments. They compute the total salary with the time period of employment. That is the total salary / 12 months. In other words, it is equivalent to the monthly paycheck. In the Philippines, the formula used for the calculation of the paycheck is:
13th-Month Pay = Total Basic Annual Salary % 12 Months.
The basic salary of the employee in the private sector is expected to be around PHP 172,140. If this is considered for calculating the 13th paycheck. The amount of the paycheck will be around PHP 14,345.
In other countries like Brazil and Italy, the amount is calculated as part of the annual salary. The total salary is divided by 13 months. The annual package includes 13 months of the duration. This leads to a reduction in the monthly paychecks.
While in countries like Argentina, the amount is issued as 50 percent of the highest amount paid in the monthly deposits the formula is calculated for only the time period they have worked instead of 12 months. In South Asian countries, the amount is issued as the average percentage of the total salary.
Is the 13th Month Pay Taxable?
The paycheck tends to be taxable, but in some countries, they have removed the tax charges. In the Philippines, any amount above PHP90,000 is taxable. Candidates receiving more than the specified amount are subject to paying the tax credits. In other countries like Austria, the amount is signified to pay the lower tax rates of 6 percent.
The payment does not include the additional insurance amount, such as the health insurance and the security deposit. It only includes the basic payslips. The other types of allowance that are not included in the paycheck are overtime, holiday bonuses, unpaid absences, night shift pay, and unused paid leave.
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All We Know About 13th Month Pay
Some employees who are considered lucky will also receive the 14th-month paycheck. The calculation to receive the amount is the same as of the 13th-month paychecks. However, the discussion for issuing the additional paycheck is still being considered. However, to date, the 14th paychecks are for volunteers and completely depend upon the employers.
If the bill passes the 14, the paycheck will also become a legal obligation. However, Government workers are eligible to receive both payments. Freelancers, household helpers, and contract-based employees are also expected to receive such incentives.