13th Month Pay for the Freelancer

December is an exciting month for employees to look forward to with the holiday break (if you're lucky to be working in an office that observes this) and most importantly the 13th month pay!

In the Philippines the 13th month pay is mandatory for all rank and file employees regardless of their position and employment status. As long as you have worked 1 month you are entitled to this benefit.Now how does this fit in with freelancers?

According to Presidential Decree No. 851 (Thirteenth Month Pay Law) those excluded from the 13th month pay law are the following:


1) Managerial employees

2) Those covered under the civil service law

3) Those already receiving 13th month pay or its equivalent. Christmas bonus, mid-year bonus, cash bonuses and other payments amounting to not less than 1/12 of the basic salary are treated as equivalent of 13th month pay

4) Household helpers and persons in the personal service of another

5) Those paid on purely commission, boundary, or task basis, and those who are paid fixed amount for performing specific work except those paid on a piece-rate basis.

Freelancers would fall under number 5. However, this also depends on what has been agreed upon between employer and employee. There are some freelancers that receive a 13th  month pay, some that receive a bonus or some who don't receive anything in December but receive a bonus on their anniversary date.

13th month pay is computed as 1/12 of the basic salary of an employee within a calendar year. This does not include allowances, leave credits, overtime pay, night differential, holiday pay and the like.

13th Month Pay Rules

  • Should be given before December 24- some employers split this into two and give it as early as November while other present their 13th month pay to employees in one lump sum. 
  •  Non-taxable as long as 13th month pay and other benefits for the year do not exceed Php30,000. Being a freelancer gives you the freedom to work from home and at your own pace. The drawbacks are not receiving benefits such as the 13th month pay.
Arguably, the reason that employers hire freelancers is to save on costs. The 13th month law is not a common requirement in other countries and comes as a surprise to most out of country employers. However, there are some that offer this to further entice the best of the best to apply for their openings. 

Without a doubt this is a sure fast way to get an employee committed and have them stay happy with their jobs. 

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