Christmas Bonus vs. 13th Month Pay

With the Christmas season (together with the requisite countdowns, shopping lists and family reunions) fast approaching, one thing is slowly creeping into the consciousness of the great host of salaried employees in the country – the Christmas Bonus. Indeed, many a gift is being thought of and many a budget is being drawn-up in anticipation of this gratuity, a reward if you will, for another year’s worth of blood, sweat and tears. But what exactly comprises this year-end gratuity? Who are entitled to receive a Christmas bonus? Can one correctly call the 13th-month pay a Christmas bonus?

The term bonus is defined as:

. . . an amount granted and paid to an employee for his industry and loyalty which contributed to the success of the employer’s business and made possible the realization of profits. It is an act of generosity granted by an enlightened employer to spur the employee to greater efforts for the success of the business and realization of bigger profits. The granting of a bonus is a management prerogative, something given in addition to what is ordinarily received by or strictly due the recipient. Thus, a bonus is not a demandable and enforceable obligation, except when it is made part of the wage, salary or compensation of the employee.

Generally speaking, therefore, a bonus is a gift or reward given voluntarily by an employer outside of an employee’s regular compensation for his or her industry and/or contribution to making the employer’s enterprise successful or profitable.

This is to be distinguished from the 13th-month pay which is required by law (Presidential Decree No. 851, as amended, and its Implementing Rules). All rank and file employees, regardless of status, who have worked for at least one (1) month are entitled to receive 13th month pay. Prior to 1986, only those who receive a monthly salary of at least PhP1,000 are entitled to receive 13th month pay, but this cap was removed under Memorandum Order No. 28 issued by former President Corazon Aquino.

The 13th month pay is essentially a form of monetary assistance equivalent to the monthly basic compensation received by an employee, computed pro-rata according to the number of months within a year that an employee has rendered service to an employer, (basic monthly pay/12 x number of months actually worked).

Again, in general terms, we may distinguish the term christmas bonus from 13th month pay thus:

* 13th month pay is mandatory and shall be received by all employees who have worked at least one month within a calendar year; a bonus, being an act of liberality or a gift from the employer cannot be demanded unless certain conditions apply.

*The law provides for what shall comprise the 13th month pay; a bonus depends fully on the generosity (or the absence of such) of the employer.

*An employer may provide conditions as to who shall be entitled to various classes of bonuses; not so with the 13th month pay.

*The 13th month pay shall be paid on or before December 24; the release of Christmas bonuses and/or other forms of bonuses may be released at any time upon the discretion of the employer/management.

There are however instances when a bonus, even though clearly an act of generosity on the part of the employer, may become demandable. In instances where the granting of a bonus have already become a long-standing practice or policy, the employer can no longer withdraw and to do so is tantamount to a diminution of benefits. This is prohibited under the Labor Code.

So, before you splurge on Christmas shopping in anticipation of the Christmas bonus, think again.

Sources: Supreme Court (Producers Bank of the Philippines vs. NLRC, G.R. No. 100701, 28 March 2001), Department of Labor and Employment (DOLE).

38 thoughts on “Christmas Bonus vs. 13th Month Pay

  1. docomoITstupid

    Please can anyone help answer this

    Company made our 13 month pay included on the mid pay this December which is always a taxable payslip but the 13 month was included in the tax which is not suppose to be. Company stated that threshold was the reason for this since we had a performance bonus last year but was given by February this year which they did not deduct any tax. I think this should not be the case as 13 month is not subject to tax or inclusive of regular pay tax withholding.

  2. karrflow

    i work in a distribution utility particularly an electric power distributor and i’ve been working there for 11mos.(3mos contractual, 4mos probationary & 4mos regular).. there has already been a resolution passed regarding our x’mas bonus stating that “All regular employees shall receive 110% of their regular salary.” Would this also be computed pro-rata according to the number of months that i have been a regular employee, i.e (basic monthly pay*110% /12 *4)? Could someone share his own interpretation or reaction on this computation coz i believe that i am entitled if not the full amount but at least the 11mos. that i have actually worked for the organization.

  3. catnight

    good day sir. i have a question regarding 13th month pay. i am working in a drugstore franchise, and the owner told us we wont get a 13th month pay because of his losses. we’ve been operating for more than a year now. i hope you can help me about this inquiry. thank you very much sir.

    please email me.

  4. Succubus

    My company has been giving us referral incentives for the past few months. We noticed that the incentives were not being taxed. Our finance department mentioned that the tax for the referral incentives will be deducted on our 13th month pay. Is that allowed? I understand that we needed to be taxed for the incentives that we teceive but ahould’t it be done pn the same pay out we received our incentives and not when pur 13th month pay is released

  5. Gian

    Hi Atty.,

    Good day!

    I quit my job last July 31 2014 and has not processed my clearance due to some pressing matters and my immediate supervisor has “banned” me from entering the office. I understand that my unpaid salaries, incentives and sick leave conversion pay are put on hold until completion of the clearance but can my former employer put my prorated 13th month pay on hold as well? I am hoping for a payout tomorrow as my former employer releases 13th month pay every mid-November.

    Just in case I don’t receive it tomorrow, can I demand from my former employer that they should release my prorsted 13th month pay ASAP?

    Hoping for your reply.


  6. Doris

    Gusto ko lang po itanong. Empleyado po ako ng National Housing Authority.Two years npo,ang tawag sa amin ay Emergency Hirees (EH).Marami sa mga kasamahan ko ay limang taon at higit nang EH employees.Last year po ay may natanggap po kaming Php2,500 n Gift Check at Php2,500 n cash gift. Ngayong Christmas ay wala n daw po kaming matatanggap.Tama po b un?Para sa regular employees lng daw at hindi kami kasama dun.

    thank u po.

  7. loyd

    In 2015, we just want to clarify…. what are the legal benefits for the govt, employees.. aside from the ff.:

    A. 13th month pay-equals 1 month salary
    B. Cash Gift of 5,000.
    c. PBB.
    d. Addtional bonus of 5,000..
    what does it mean with Year end Bonus issue by DBM equivalent to 1 month salary

    plz send us ur reply and comments to our email add

  8. liza

    have an employee who worked on a regular permanent basis from Jan to Sept. However, starting from October to December she started working two days a week only and is paid on a daily rate. Is the income generated for the remaining 3 months inlcuded in the calculation of her 13th month pay?

  9. garot

    our company has included those allowances from CBA negotiations in determining gross income for the purpose of taxation yet we haven’t seen tax return form. it means it was not included of the exemption even those benefits do not exceed the exemption of 82,000

  10. Bing

    Hi, recently our employer (a Jesuit institution) issued a memo – “Since we had a net loss from the previous school year, I regret there will be no Christmas Gratuity for 2016.

    Our Christmas Bonus has been a long-standing practice in our university, in fact, for almost 21 years now.

    This is the first time that our university is doing this to us, when in fact, there were times when our enrolment went down, but we were still given our bonuses.

    Can we claim our bonus as demandable?

  11. ziahd

    ,,tanung lang Po kasama din po ba sa 13month pay na mkakareceved …yong mga tulad naming salon staff even maliliit na salon LNG Po pinapasokan nmin … &wala din po kmi sss. Phil health or any benefit s ……pls answer & San kmi pwdi lumapit just &case wala kmi ma riceved…..tnx

  12. herminio

    is J.O. or what they call it job order employee entitle to receive 13 month or bonus pay specially if they are working for a very long time under the local city government? i was asking coz ever since they were employed never they were given any such bonus specially during x-mass season.

    1. herminio

      please atty.reply for those people are relying on someone who could help them if in anyway they could get something for their x-mass family expenses,thanks


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