Department of Labor and Employment(DOLE)

December 29, 2021 Dear Emerson Padilla, Thank you for your request dated Dec 28, 2021 07:39:53 AM under Executive Order No. 2 (s. 2016) on Freedom of Information in the Executive Branch. You asked for 13th Month Pay Calculation. 13th Month Pay is a mandatory benefit provided to employees pursuant to Presidential Decree No. 851 which requires employers to grant 13th month pay to all its rank and file employees. As a general rule, 13th month pay shall include ONLY the basic salary. “Basic salary” shall include all remunerations or earnings paid by an employer to an employee for services rendered but does NOT INCLUDE allowances and monetary benefits which are not considered or integrated as part of the regular or basic salary, such as the cash equivalent of unused vacation and sick leave credits, overtime, premium, night differential and holiday pay, and include cost-of-living allowances. However, these salary-related benefits should be included as part of the basic salary in the computation of the 13th month pay if by individual or collective agreement, company practice or policy, the same are treated as part of the basic salary of the employees. Please take note that this is based only on agreements forged by the employer and his/her employees, thus in its absence the basic salary shall NOT INCLUDE night differential and overtime pay. Thank you. Respectfully, Mark Valeros FOI Receiving Officer