13th Month Pay in the Philippines Explained!
In this video, I'm going to be speaking about the 13th month pay and why you should start planning for it now.
Okay, so the 13th month for Western businesses, it's a bit like a Christmas bonus, except for if you work for a Filipino company, you expect to get the 13th month. Normally we'll typically, it's in December and it basically means double pay. So, if you've worked for a company for a year or over a year.
Then you would expect to get twice the pay in December. Now when it comes to outsourcing, you are not legally obliged to offer this. However, it goes a great way of hiring a really good Filipino if you offer them some of the benefits that they can expect if they were to be employed by a Filipino company.
So, when it comes to the 13th month, what I typically do is I give it to every single staff. If you've been over a year, well that's straight forward. You get paid in December. You get double that. So, what I usually do is spread it over the two payments because I pay everybody twice a month. So, on the 1st and 15th so just basically double up those payments 1st and 15th in December 13th month sorted.
Now if someone joins you say in June, July, and that's halfway through the year. So that's six months. So, what you typically do is take each month, so one 12th of a year. You calculate how many months is that they've been working for you up to December, and then you give them that. So, if they started in July, then expecting to get half of the pay extra.
So that's what you give them pretty straight forward. Pretty easy to do. Why it's important. Right. And why you should build it into when you're pricing out what you're paying staff is that because it's an expected thing for people who have jobs in the Philippines by giving it as an overseas boss, it's really, really appreciated and it's something that doesn't actually happen a lot because a lot of bosses don't know about it and they're the ones that have been working with Filipinos for some time or have some insight or are watching channels like this to gain more information.
What they actually do or know about this. And your Filipino staff generally speaking, are quite shy about bringing up the subject of pay, pay raises, bonuses, etc. You may have the odd hint from time to time, generally speaking, they won't confront you directly and see, or am I going to get the 13th month some mate?
But very, very few do. So, what I suggest is, and it's really good when you come to hiring staff. Is that you build that into the description of the job. So, when you say to people, this job pays 20,000 pesos a month, and we'll honor the 13th month, depending on your length of service. So, for example, if you've been here a year, you'll get the full pay.
If you've been here six months, you went half pay, etc. That really makes them think, wow, this is a switched-on employer from abroad who understands some of the local employment labor laws. And so, therefore you make your job more attractive. Now what that means in practice is that, say for example, you're paying someone 20,000 pesos a month, right?
So that's about I think that's about $350 dollars, something like that. Now, 20,000 pesos a month. If you are paying the 13th month means that you actually have to save aside, an extra one thousand, 666 and 67 cents of pesos every single month. To get to the December when you pay. Right now, when you get to my stage where you've got over 10 employees in the Philippines is quite expensive.
I have to say, you know, like when you're paying out double pay for everybody, it's quite a lot of money. Let's just see come that particular month from your paying out staff. So, it looks like, wow, what a massive amount of money I had to pay the specific month. But if you've already budgeted that into the overall cost of your staff.
You should be able to pay it. You should know it's happening, and it shouldn't be a big issue for you whatsoever. And the staff really, really like, I mean, there's all sorts of memes and stuff. I'm going to get one of the editors to blast up some of the memes. Just know just for them up to the side.
But yeah, some of the memes around the subjects really, really funny because it is quite a serious thing for Filipinos because it gives them that extra money for Christmas, Christmas being a very important time. A lot of them go off to see family and friends and so on during this time. So yes, it allows extra money for presents.
It allows, extra money for celebration, for food and so on. For this celebration, it's an added way that they can, you know, get the money. And not have to worry about that time of year. So yeah, so it's a really good thing. Now, as I said, you don't have to pay the 13th month if you are a company abroad. Right.
And some don't. But I would suggest that you do. I do. Most of the people who I know successful at hiring. People from the Philippines do is not a big hardship, especially when you're starting off with one employee. It's not a big hardship for a Western company to pay that 13th month. And as I said, if you build it into your costings of what it is to hire a member of staff, it really is nothing when it comes to paying them double that month.
So 13th month I'll be speaking about pay about other issues, employment stuff. Around the Filipinos and other videos, so watch it for them. If you liked what I'm talking about and you want to find out more stuff about hiring people from the Philippines and the different benefits in different things, they are looking for expect or with one an employer, then subscribe to the channel, like the video let me know that you watched and send the algorithm noise to YouTube to say, Hey, I like this type of video, and share it. Please refer your friends and so on. Bye.