John Jonas explains the Filipino 13th month salary: an extra month's pay legally required for employers in the Philippines, typically paid in December. He covers how to calculate pro-rated amounts for mid-year hires and why foreign companies should offer it anyway.
Questions this video answers
In December (paid between Dec 1 and Dec 25 as an extra one-month salary).
It is legally required for employers operating in the Philippines; it is not legally required for non-Philippine businesses hiring Filipinos remotely.
Based on total pay during the year divided by 12 (speaker gives an example: hired in April → work eight months; take monthly salary × 8 then divide by 12 to compute the pro-rated 13th month).
Chapters
What is this custom? The 13th month. So if you're new to hiring people in the Philippines, you probably don't know about the 13th month. Or maybe you've heard that there's this 13th month thing. What is that? And do I need to do it? So the answer is, yes, you should be doing it. The legal answer is no, you don't need to be doing it. Here's what it is. So if you're a Philippine employer in the Philippines, like you have a business in the Philippines, then it is legally required that when someone has worked for you for a year, you give them a bonus of one month's pay called the 13th month. And actually how it works is it's paid in December and it is not a Christmas bonus. So if you hire someone in January, come December, you're going to pay them November's salary. Because we always pay after the fact, right? So December 1st, you're going to pay them November's salary, Plus sometime between December 1 and December 25. And the earlier the better. You're going to pay them one month's extra salary as a bonus, the 13th month. And then January 1st, you're going to pay them December's normal salary. So when you hire someone, you need to plan on this 13th salary payment. Again, it's not a Christmas bonus. And usually if you want to pay a Christmas bonus, that would be a separate payment to people. So do you need to pay the 13th month? No, you don't need to because it's not legally required. Should you pay it? Yes. A lot of Filipinos based their entire month of December around this. Christmas is a big deal there. And they expect this 13th month money to be able to buy gifts and to take care of their family and maybe to do something that they've been waiting all year to do. It's all based on this 13th month. So should you do it? You. Yes, you really should. And what you should do is you should tell your worker upfront when you hire them, hey, I know about the 13th month. I just need to be reminded about it when December comes. That's what I do. Now here's a couple other things with this. Do you need to pay the 13th month if someone is hourly or if someone is part time? So the answer is no, you don't need to. But typically the 13th month is calculated on a pro rated basis. So based on how much you paid that person during the year, divide it by 12 and then pay them. So if you hired someone in April, they're going to work for you for eight months. So take their monthly salary times that by eight and then divide by 13, and that'll get you your 13th month bonus. So if they worked for 12 months, it's 12 months of salary divided by 12, which is one month of salary. Usually this is not paid. If someone started working for you like in October or November, and then you wouldn't pay a bonus until the next year. So 13th month, super important. Filipinos expect it. They need it. You're not required to pay it, but yes, you should be paying it. This is one of the things that I cover in the outsourcing lever, my new book, which I'm giving away for free@outrigourcinglever.com just pay shipping. I bought a whole bunch of copies of it already and I want to send it to you. It's like $7 for shipping if you're in the US it's. It's basically free. And I give you all kinds of stuff like this so you don't mess things up when you hire your Filipino va.
