Glossary · Hiring in the Philippines

13th-month pay

13th-month pay is a mandatory annual benefit in the Philippines, equal to at least one-twelfth of an employee's basic salary earned during the calendar year. Presidential Decree No. 851 requires it for rank-and-file employees, and it must be paid on or before December 24. It is a legal requirement, not a bonus.

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What it means in practice

Because the benefit is effectively a thirteenth monthly payment, Filipino professionals expect it and compare job offers on total annual pay that includes it. When you budget for a hire in the Philippines, think in annual terms rather than monthly salary alone.

Employers who contract talent directly sometimes leave the 13th month out, which can hurt retention around the holidays and create legal exposure if the relationship is really employment.

For the wider picture, including Philippine wages and other offshore markets, read the Offshore Hiring Costs 2026 report. Rekruuto quotes one flat monthly price per full-time hire, with recruiting, vetting, and pay included.

What to check when you budget for it

  • Budget the full year of pay, including the 13th month, rather than twelve monthly payments.
  • Calculate it on basic salary earned in the calendar year; allowances are often excluded, so confirm what counts.
  • Pro-rate it for someone who joins or leaves partway through the year.
  • Plan to pay it on or before December 24, so cash flow is ready in December.
  • If you hire through a partner, ask in writing whether their monthly price already covers it.
  • SSS, PhilHealth, and Pag-IBIG

    SSS, PhilHealth, and Pag-IBIG are the three mandatory social contributions for employees in the Philippines.

  • Night shift differential

    Night shift differential is extra pay required under the Philippine Labor Code for work between 10 p.m. and 6 a.m.: at least 10% of the employee's regular hourly wage for each hour worked in that window.

  • Fully loaded cost

    Fully loaded cost is the total an employer pays for a worker, not just the salary.

  • Employee retention

    Employee retention is a company's ability to keep good people over time.

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