Senator Sonny Angara has reminded employers on the proper computation and payment of 13th month pay and yearend bonus for both private and government employees given the increased tax exemption cap on such benefits.
Under Republic Act 10653, the 13th month pay and other benefits, including productivity incentives and Christmas bonuses, not exceeding P82,000 provided to both government and private sector employees are exempted from tax, he said.
Before RA 10653 was signed into law in February last year, only bonuses not exceeding P30,000 were exempted from tax.
Angara said Filipino workers benefit so much from the 13th month pay toward the end of the year.
“We increased the tax exemption cap so their take home bonus could be higher for their family,” said the Senate ways and means committee chairperson who sponsored the law.
The 13th month pay law was enacted pursuant to Presidential Decree No. 851 in 1975, mandating employers in the private sector to pay their employees not earning more than P1,000 a month an amount equivalent to 13th month pay.
Through Memorandum Order No. 28 in 1986, the monthly salary cap was removed thereby entitling all rank and file employees to 13th month pay.
The senator stressed that all employers in the private sector must pay their rank-and-file employees a 13th month pay regardless of the nature of their employment and whatever the method their wages are paid, provided they worked for at least one month during a calendar year.
The 13th month pay should be paid not later than December 24, and must be equivalent to one-twelfth (1/12) of the basic salary of an employee within a calendar year.
He said not only regular employees in the private sector should get 13th month pay. Even contractual, casual, fixed term, probationary and seasonal employees have the right to receive this according to the Labor Code as long as they have given servicd for one month only, said Angara, vice chairman of the labor committee.
“And although you entered a job in the middle of the year, you should also be paid 13th month on pro-rated basis,” the lawmaker added.
Angara, one of the authors of RA 10361 or the Batas Kasambahay, further noted that kasambahays are entitled to 13th month pay as well.
Meanwhile, pursuant to RA 8441, government employees and officials should have rendered at least four months of service from January 1 to October 31 to receive a Christmas bonus equivalent to one month basic salary and additional cash gift of P5,000. Macon Ramos-Araneta