13th Month Pay in the Philippines Explained!

Knowing the ins and outs of the local culture and expectations can make all the difference in attracting and retaining top talent when it comes to outsourcing. Today, we'll look at a critical feature of Filipino employee remuneration – 13th-month pay – and why Western organizations should start planning for it now.

For those who are unfamiliar, the 13th-month salary is equivalent to a Christmas bonus in Western countries. Employees in the Philippines generally expect it, and it is paid out in December, doubling their monthly wage. While this benefit is not legally required for international employers, it might make your job posts more appealing and help you employ excellent Filipino talent.

So, how exactly does it work? Employees who have been with your company for over a year receive double pay in December. For employees with the company for less than a year, the 13th-month compensation is calculated depending on the number of months worked. For example, if employees began working in July, they would be paid half the additional month's salary.

Why do Western businesses outsourcing to the Philippines need to offer 13th-month pay? As an international company, it demonstrates that you are educated about and respectful of local labor practices. This not only distinguishes you from other job posts but also develops a healthy workplace culture.

Make sure to include the 13th-month salary in your job description and indicate that it will depend on service duration. This minor change will make your job advertisement more appealing and reflect that you're a forward-thinking employer aware of local labor rules.

Let us now discuss finances. It is critical to factor the 13th-month pay into your financial objectives. Set aside an additional 1/12th of your employee's monthly wage, so you're ready for December. While this may appear to be a considerable price, especially for businesses with several employees, it is a worthy investment in the satisfaction and loyalty of your employees.

For Filipino employees, 13th-month compensation is more than just an extra payday. Christmas is an important time for them since it allows them to see family and friends. The extra money helps them buy gifts, partake in festive activities, and enjoy this time without financial hardship. Offering this perk gives your employees a sense of stability and respect that extends beyond their regular wage.

To summarize, while a 13th-month salary is not a legal requirement for international employers, it is an effective strategy for attracting and maintaining top Filipino talent. Understanding and respecting local employment practices will help you build a healthy work atmosphere, resulting in a more productive and dedicated staff.

If you'd like to learn more about recruiting from the Philippines, including the rewards and expectations that come with it, subscribe to my YouTube channel, like this video, and share it with your friends and colleagues. Stay tuned for more helpful information on outsourcing and developing successful connections with your Filipino employees.