Quick answer: 14th month pay is not required by law. Only the 13th month pay is mandatory under Presidential Decree No. 851. A 14th month pay is a benefit some employers grant through a contract, a collective bargaining agreement (CBA) or company policy, usually equal to one month of basic salary. When you receive both, the first ₱90,000 of the combined 13th month, 14th month and other bonuses is tax-free.
13th month vs 14th month pay
| 13th month pay | 14th month pay | |
|---|---|---|
| Required by law | Yes, for rank-and-file employees | No |
| Legal basis | Presidential Decree No. 851 | Contract, CBA or company policy |
| Formula | Basic salary earned in the year ÷ 12 | Whatever your employer’s policy says |
| Deadline | On or before December 24 | Set by the employer (often mid-year) |
| Tax treatment | Exempt within the ₱90,000 ceiling | Exempt within the same ₱90,000 ceiling |
How companies compute the 14th month pay
Because the law is silent, check your employment contract, CBA or employee handbook. Common patterns:
- One month of basic salary, paid in full to anyone employed on the cut-off date.
- Prorated, using the same style as the 13th month: basic salary earned in the period ÷ 12.
- Tied to length of service, for example full pay after one year and prorated before that.
Example with a prorated policy: ₱30,000 monthly basic salary and 8 months of service in the year gives ₱30,000 × 8 ÷ 12 = ₱20,000. If the policy is a flat one month’s pay, the same employee gets ₱30,000.
You can estimate a prorated 14th month with our 13th Month Pay Calculator by entering the same salary and dates, if your employer uses the 13th month formula.
Is the 14th month pay taxable?
The 14th month pay is included in the ₱90,000 ceiling that applies to your 13th month pay and other benefits. Section 32(B)(7)(e) of the tax code, as amended by RA 10963 (TRAIN), covers the benefits under PD 851 and other benefits such as productivity incentives and the Christmas bonus, with a total exclusion of ₱90,000.
- Basic salary ₱30,000: 13th month ₱30,000 + 14th month ₱30,000 = ₱60,000. Fully exempt.
- Basic salary ₱50,000: 13th month ₱50,000 + 14th month ₱50,000 = ₱100,000. Exempt up to ₱90,000, ₱10,000 taxable.
Full explanation and the effect on your tax bracket: is 13th month pay taxable.
Can a 14th month pay become a right?
The law does not require it, but benefits promised in a contract or CBA, or given regularly and deliberately over the years, can become hard to withdraw under the Labor Code’s rule against reducing existing benefits. Whether a particular company practice qualifies is a legal question; ask HR or your DOLE field office rather than assuming.
Related reading
Sources: Presidential Decree No. 851 (13th month pay); RA 10963 via BIR (tax exemption). For estimation only — confirm with your HR department.