By The Philippines Department of Labor and Employment (DOLE) has reminded private sector employers that the 13th month pay for rank-and-file workers must be paid on or before Thursday, December 24, 2026, according to Philippine News. Labor Secretary Francis Tolentino signed Labor Advisory No. 21, Series of 2026 on November 6, 2026, and DOLE stated that no company will be allowed to skip or delay the payment.
The advisory confirms that the mandatory benefit applies to rank-and-file private sector employees “regardless of their position, designation, or employment status, and irrespective of the method by which their wages are paid, provided that they have worked for at least (1) month during the calendar year.” Employers must report compliance through the DOLE Online Compliance Portal at reports.dole.gov.ph no later than January 15, 2027.
Who qualifies for 13th month pay in 2026
The coverage rules for 2026 are broad. Any rank-and-file private sector employee who worked for at least one month during the calendar year qualifies, even if they no longer work for the employer on the payout date. DOLE explicitly includes piece-rate workers, employees receiving a fixed or guaranteed wage plus commission, and workers with multiple employers.
Employees who resigned or were terminated before December 24 still receive a prorated amount, calculated from their start date up to their last day of work. Workers who went on maternity leave and received salary differential are also covered. The advisory makes no distinction between regular, probationary, contractual, or project-based employees, as long as they meet the one-month service threshold.
How to compute the 13th month pay correctly
The formula is straightforward: total basic salary earned during 2026 divided by 12. For an employee who earned ₱120,000 in basic salary across the full year, the 13th month pay is ₱10,000. A worker hired in September with a monthly basic salary of ₱25,000 and four months worked would receive ₱8,333.33.
The definition of basic salary is where payroll teams most often make mistakes. Basic salary covers all earnings paid for services rendered. It excludes cash conversion of unused vacation and sick leave credits, overtime pay, premium pay, night shift differential, holiday pay, and cost of living allowance. These excluded items may only be counted if an individual or collective agreement, company practice, or policy treats them as part of the basic salary.
| Employee scenario | Monthly basic salary | Months worked | Total basic salary | 13th month pay |
|---|---|---|---|---|
| Full year | ₱10,000 | 12 | ₱120,000 | ₱10,000 |
| Resigned in June | ₱15,000 | 6 | ₱90,000 | ₱7,500 |
| Full year | ₱20,000 | 12 | ₱240,000 | ₱20,000 |
| Hired in September | ₱25,000 | 4 | ₱100,000 | ₱8,333.33 |
No exemptions or deferments will be accepted
DOLE has taken an unusually firm position for 2026. The advisory states that no request or application for exemption from paying the 13th month pay, or for deferring its payment, will be accepted. This removes a compliance question that has surfaced in past years, when some employers sought relief during economic downturns.
The 13th month pay is also separate from any extra bonuses given under company policies, employment contracts, or collective bargaining agreements. Employers cannot offset a Christmas bonus or performance incentive against the statutory 13th month pay obligation. The legal basis remains Presidential Decree No. 851, the 1975 law that created the benefit, read together with Article 5 of the Labor Code.
Compliance reporting and enforcement steps
Employers must submit their compliance report through the DOLE Online Compliance Portal at reports.dole.gov.ph no later than January 15, 2027. The DOLE regional, field, or provincial office with jurisdiction over the workplace will monitor compliance.
Payroll and HR teams should prepare the report early rather than waiting until the January deadline. The report requires accurate records of basic salary paid during 2026, which means payroll systems need to track basic salary separately from excluded allowances and premium payments throughout the year. Employees who believe their 13th month pay was wrongly computed or withheld may seek help from the DOLE regional office that covers their workplace.
Practical steps for HR and payroll teams
Start by auditing payroll records now to confirm that basic salary is correctly classified. Review employment contracts and company policies to determine whether any allowances are treated as part of basic salary under an existing agreement. For employees who left during the year, calculate prorated amounts from their start date to their separation date.
For multi-employer situations, each employer is responsible for paying the 13th month pay based on the basic salary that employer paid. Government employees are not covered by this advisory, as the mandate applies to the private sector. Employers with questions about specific cases should confirm details with the DOLE regional office that has jurisdiction over their workplace.
Sources: Philippine News
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