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7 Things You Need to Know About Your Christmas Bonus

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Aneth Ng-Lim

<div class="embed-wrap"><figure data-feedback="fb:likes,fb:comments"><img src="http://sa.kapamilya.com/absnews/abscbnnews/media/2018/news/12/03/20181203_xmas.jpg"/><figcaption>Children pose for pictures beside a giant Christmas tree as the 2018 holiday shopping season kicks off with workers&#x27; receiving their yearend bonuses. <em>Jonathan Cellona, ABS-CBN News/File</em></figcaption></figure></div><p>MANILA -- With the holidays just around the corner, employees from both the private sector as well as government agencies can look forward to bonus pay.</p><p>That’s right – with few exceptions, majority of the estimated 40 million workers in the country are entitled to receive either a 13th month pay or a yearend bonus with cash gift.</p><p>In the case of private sector employees, this welcome benefit was introduced back in 1975 with the signing of Presidential Decree 851. However, at that time, only employees earning below P1,000 a month could get a 13th month pay.</p><p>Thankfully, this was amended by then President Corazon Aquino in 1986 and the salary ceiling was removed allowing all rank and file workers of covered employers to enjoy this too.</p><p>For government employees, Executive Order No. 201 signed by then President Benigno S. Aquino III in 2016 granted a mid-year bonus payable in May, a yearend bonus payable in November, a Productivity Enhancement Incentive (more popularly known as cash gift) of P5,000 released towards yearend, and an enhanced performance-based bonus system that can range between 1 to 2 months basic salary, usually paid out the following calendar year.</p><p>If you’re in doubt as to whether you are qualified for a bonus, or how much you should be getting, or when you will receive it, check out below for the most common questions around bonus pay to make sure that you will get what you rightly deserve.</p><div><strong>Question #1: How can I compute for my 13th month pay? Knowing will help me with my budget for the holidays.</strong></div><p>Ah, the most important question for workers everywhere: how much? With government employees, you can count on a yearend bonus equivalent to 1-month of your basic salary if you worked at least 4 months of satisfactory service and are still in their employ by October 31. Plus, you also qualify for the cash gift of P5,000. If you have left government employ or worked less than the four months, the bonus and/or cash gift will be pro-rated as below:</p><div class="embed-wrap"><figure data-feedback="fb:likes,fb:comments"><img src="http://sa.kapamilya.com/absnews/abscbnnews/media/2018/news/12/03/20181203_xmas1.jpg"/></figure></div><p>If you rendered service less than 4 months, no yearend bonus for you but you can get a pro-rated cash gift:</p><div class="embed-wrap"><figure data-feedback="fb:likes,fb:comments"><img src="http://sa.kapamilya.com/absnews/abscbnnews/media/2018/news/12/03/20181203_xmas2.jpg"/></figure></div><p>For private sector employees, it’s a straight forward formula where the 13th month pay is one twelfth (1/12) of the basic salary the employee received within a calendar year. Here’s how you can easily compute:</p><div><strong>Basic salary earned in the year/12 months = 13th month pay</strong></div><p>Basic salary here is your regular pay exclusive of allowances, profit-sharing, vacation pay, overtime pay, premium pay, holiday pay, and night shift differential. Note as well that if you took any leaves without pay, that will decrease your basic salary and leave you with a smaller 13th month pay. So let’s try to do a simple math where we assume your basic salary is P20,000 a month x 12 months and you did not take any unpaid vacations. Your 13th month pay should be the same as your monthly salary:</p><div><strong>P240,000 / 12 months = P20,000</strong></div><div><strong>Question #2: Do I need to be working 1 whole year before I can receive a bonus pay?</strong></div><p>No. Private sector employees can get a 13th month pay even if you’ve only been with your employer for one month during the calendar year. Meanwhile, government employees are entitled to a yearend bonus plus a cash gift if you worked a total or aggregate of 4 months between January 1 to October 31 this year.</p><p>For those with less than 4 months’ tenure, you will get a pro-rated cash gift based on the length of your employment as outlined in our answer to question #1.</p><div><strong>Question #3: If I already resigned, can I still get a bonus?</strong></div><p>Yes. Employees who resigned or whose services were terminated are still entitled to bonus pay. With private sector employees, it’s a pro-rated bonus so long as you worked for 1 month. It’s a bit trickier for government employees as we explained to our answer in question #1.</p><p>If you meet the minimum 4 months’ employment and are still employed with the concerned government agency, you will get a bonus equivalent to one month’s pay plus a P5,000 cash gift. If you are resigned by Oct. 31, you will get a pro-rated share between 50 percent to 95 percent of your 1 month pay and cash gift.</p><div><strong>Question #4: How much tax should be deducted from my bonus pay? Are bonuses tax-exempt?</strong></div><p>With the Tax Reform for Acceleration and Inclusion Act, bonus pay is now exempted up to P90,000. So if you’re monthly pay is P50,000, you will receive your 13th month pay in full. If you’re receiving a P100,000 monthly salary, the P10,000 in excess of P90,000 will be taxed according to your full year taxable income. This tax shield or tax rate applies to employees from both private companies and government agencies.</p><div><strong>Question #5: My friend who is working in another company got her bonus in November. I haven’t received mine yet. Is there a deadline for employers to pay out bonuses?</strong></div><p>Government employees started receiving their yearend bonuses mid-November. According to the Department of Labor and Employment (DOLE), private companies must distribute their employees’ 13th month pay on or before December 24 of every year.</p><p>Some companies choose to pay earlier, and others even adopt a twice a year payout schedule: they give half as early as June (to help with tuition expenses understanding that most workers are parents with school-age children) and the other half in December. Note too that private employers are required to attest with DOLE that they complied with the 13th month pay distribution by January 15 of the following year. An employer who fails to do so can be subjected to administrative cases.</p><div><strong>Question #6: I received a poor rating from my boss. Will I still get a bonus?</strong></div><p>Yes, if you work in the private sector, but sadly, no if you are a government employee. Your performance rating has no weight when your private employer computes for your 13th month pay. However, government agencies require their personnel to at least have a satisfactory performance rating in the applicable appraisal period to be eligible for the yearend bonus and cash gift. The same caveat applies for the midyear bonus and the performance-based bonus also awarded to government employees.</p><div><strong>Question #7: After working with the same company for 5 years, I was promoted to a manager position. Am I still eligible for 13th month pay?</strong></div><p>The law concerning 13th month pay only covers rank-and-file employees, but many private employers have adopted it for their employees across the board, regardless of their position. You may want to check your updated list of benefits as a manager, usually handed out with every promotion. If there is no mention, consult your Human Resources Department for clear guidelines.</p><p>Regardless of where you work, the yearend bonus and 13th month pay were designed to provide workers extra cash for the holiday season.</p><p>While it is tempting to spend it all for a memorable celebration with family and friends, consider saving a portion of it for a brighter 2019. Don&#x27;t blow it all away with holiday shopping. Instead, use half or less to kickstart a savings plan or even better, an investment portfolio.</p><p>Even just P10,000 saved this year, left alone for the next 10 years at 10 percent interest will give you almost P26,000! Just imagine if you make it a habit to set aside P10,000 every year or every month – your 60-year old self will thank you!</p>

<p>With few exceptions, majority of the estimated 40 million workers in the country are entitled to receive either a 13th month pay or a yearend bonus with cash gift.</p>

With few exceptions, majority of the estimated 40 million workers in the country are entitled to receive either a 13th month pay or a yearend bonus with cash gift.