John Jonas explains the 13th month pay, a mandatory benefit for offshore staff in the Philippines. It matters for job stability and holiday budgeting, and employers who offer it see better retention. Pay it in December if you can, or at least advertise it to attract talent.
Questions this episode answers
Episode 43
December 20, 2021
John Jonas
Add the total amount paid to the employee over the year and divide by 12.
Chapters
Hello and welcome to the Secret Sauce of Outsourcing Podcast, the podcast that's dedicated to making you better at outsourcing your work. My name is John Jonas, and this is episode 43, why the 13th month is so important to your OFS. So I know that I've talked about this a bunch already. However, I keep getting questions about it, so I'm going to give a couple more answers and then kind of explain the situation. So I keep getting questions specifically about, if I just hired my OFS in November or December, do I need to pay the 13th month? The answer is no, it is not expected. If someone helps has worked for you for such a short time, if they worked in October or September, then probably. It's not that hard, though, because you're just gonna add up the total amount you paid them over the year divided by 12. So if you just hired them in October, you probably only paid them October and November. And so take those two and divide it by 12. It's not that much money. Another question I'm getting. I've already given bonuses to my people throughout the year for different things. Do I need to pay the 13th month? Well, you know, that depends on you and your situation. I had someone ask me, my OFS was gonna lose their house in June, and so I gifted them $4,000. So they didn't lo do I need to pay the 13th month? I was like, well, you know, like, that's a pretty good 13th month bonus in June. I don't. I think you're good, right? It's kind of up to you, your situation. But if you haven't paid it, now's a good time. So listen to what Julia wrote about this. And she just sent this to me because she knew that I was getting questions because she sees my emails. So Julia writes, when people find out that I work for onlinejobs ph, they immediately ask me whether we have job openings. They asked because it's known throughout the Philippine outsourcing industry that Onlinejobs ph offers the 13th month pay. And I'm just gonna add to this. That's prob. Because I talk about it a lot. So she continues not to brag, but we are the envy of freelancers all over the country. It's such a big deal that some workers are willing to take lower salaries if the job offers the 13th month. So to be completely honest, it's one of the reasons why most of us continue to work for Onlinejobs ph over the years. So why is the 13th month such a big deal in the Philippines. So number one, the 13th month equals job stability. We know that you have made it. If the job offers the 13th month, it tells us that the business we're working for is profitable. It means we have a job all year round. If there's no 13th month, it. It means that you could lose your job anytime. Two, no need to hustle harder over the holidays. Freelancers can flex about how much they make because they're handing multiple clients all the time, which none of my people who work for me consider themselves freelancers. They have a job, they work for us. They're not a freelancer out getting clients. So she's saying that freelancers are flexing about, oh, I have these clients, and these clients, I make this much money. But you know what? They don't have rest over the holiday to afford the added holiday expenses. They have to work harder and find more clients. And that kind of defeats the purpose of enjoying the holidays with your family and all of your flexing about all the clients you have. So she Sundays, with the 13th month, we keep working as normal or even have time off, and we usually still make more money than freelancers do. So the 13th month also allows them to budget for bigger expenses. And so, as Julia says, Christmas and New Year's are when many Filipinos make big purchases like appliances and furniture. This because businesses clear out their inventory at the end of the year and there's usually really big discounts on things. So if you're a freelancer, you can work harder over the holidays, but there's no guarantee you'll meet your earning target. And there's usually a hiring slump over the holidays. Even before the pandemic, this was happening. So looking for work around this time is more challenging. Also, I've talked about this before where I don't think you should be posting a job right now. You should probably be waiting until January because Filipinos are scared to start a job mid or late December. So all these reasons add up to why someone in the Philippines will almost always take a job with a 13th month benefit versus not so in your recruiting process. I would encourage you to talk about the 13th month or just say that you pay a 13th month. I would encourage you, if you haven't yet pay paid it, to pay it this year for the people that you work for. Hopefully it's not too late to send it to them for them to them to enjoy it. I did get a question earlier that said I was gonna send the 13th month in mid January. I hope that's okay. What do you think I was like, yeah, that's not really okay. I mean, it's better than nothing. But, yeah, sending it earlier in December or still late in December is better than January.
