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The 13th Month Pay is a crucial bonus for private-sector employees in the Philippines. In July 2025, employers must clarify payment timing and amounts following updated regulations.
This guide provides clear info on eligibility, payment schedules, and compliance.
What Is the 13th Month Pay?
The 13th Month Pay is equivalent to one month’s salary and is mandated by Presidential Decree No. 851. In 2025, every private-sector worker earns a full month’s gross salary, provided they worked in the company during the calendar year.
Who Qualifies?
| Criteria | Requirement |
|---|---|
| Employment Type | Private-sector employee |
| Work Duration | At least one month within Jan–Dec 2025 |
| Salary Basis | Based on basic salary only (excludes allowances) |
| Partial Year Work | Pro-rated amount applies |
Workers continuously employed for the full year receive the full amount. Those employed part-year get a prorated share.
Payment Schedule for July 2025
Normally due by December 24, in 2025, many private companies are arranging early payouts in July. Here’s what employees should know:
- Full-year employees receive 1-month gross salary by July 31, 2025
- Partial-year employees get a prorated amount based on months worked
- Employers are encouraged, not mandated, to pay early to help with mid-year expenses
July Payment Table
| Employee Tenure | 13th Month Pay | Payment Date |
|---|---|---|
| Full 12 months | Full month’s gross salary | By July 31, 2025 |
| 6 months | 0.5 month’s gross salary | By July 31, 2025 |
| 3 months | 0.25 month’s gross salary | By July 31, 2025 |
Why July 2025?
- Companies are proactively aligning benefit schedules with mid-year tax reporting
- Early payout supports employees managing school fees and expenses
- As the economy adjusts, companies benefit from cash flow flexibility
Although early payout isn’t required, it’s a growing trend for employer retention and goodwill.
How Employers Should Proceed
- Calculate pay: Use basic monthly salary for all eligible staff
- Prorate for partial service: Based on actual months worked
- Schedule payment: Target July 31, 2025, consistent across staff
- Provide written notice: Include date, amount, and method
- Issue tax forms (BIR Form 2316): Indicate early payout appropriately
Compliance and Taxation
- Non-payment or delay may result in BIR penalties
- 13th Month Pay is non-taxable up to ₱90,000 annually, extra is taxable
- Keep accurate payroll records and receipts for audit
In July 2025, many employers will pay the ₱13th Month Pay early, offering employees financial flexibility mid-year.
Ensure accurate calculation, timely issuance by July 31, and clear communication. This reflects both legal compliance and a commitment to employee welfare.
FAQs
Q1: Is July 2025 early payout mandatory?
No. It’s optional. Companies may elect July 31, 2025, but final due date remains December 24.
Q2: How is the 13th Month calculated?
It’s basic monthly salary × months worked ÷ 12—allowances are not included.
Q3: Is early payout subject to taxes?
3th Month Pay is non-taxable up to ₱90,000 annually, regardless of payment timing.