Are workers entitled to both 13th month pay and Christmas bonus?

Now that it’s bonus time of the year, many employers and employees are confused about the two terms: Christmas bonus and thirteenth month pay. I have written on this a number of times but in the interest of the season, I shall repeat it. This is to avoid unnecessary filing of labor cases with DOLE, NLRC, and even NCMB for unionized establishments.

Some people are going to receive their 13th month pay and they call it a bonus. Others have already received their bonuses and they call them 13th month pay. Many are lucky, they shall get both, like government employees who must have already gotten their one-month bonus and still look forward to receiving their 13th month pay before Christmas. Most of them don’t care what they call it, if it’s money, they’re happy to receive it and spend it like there’s no tomorrow. For purposes of academic discussion, people should know that the 13th month pay is a legally-mandated benefit. Employers have no choice, they need to comply with Presidential Decree No. 851.

On the other hand, Christmas bonus or any bonus for that matter is a gift from an employer as a recognition of outstanding performance at work, or in celebration of a corporate milestone like an anniversary or, granted to loyal employees who stayed and grew with the corporation. A bonus is also granted as an incentive to productivity or exemplary performance beyond the call of duty. A bonus isn’t a legal obligation but the 13th month pay is. All employers, even those employing helpers are required to pay the 13th month pay. There is no exemption. Even if there is only one employee, this law must be complied with.

When President Marcos Sr. issued PD 851 in 1975, he only intended to benefit the lowly rank-and-file workers. The letter and the intent of the presidential decree granting 13th month pay is very clear; only rank-and-file employees are entitled to this benefit. And so, how come managers and supervisors, even executives are getting this benefit? Well, they were granted either by mistake at the start or by intention, and the grant to them had been repeated and repeated, and under the principle of non-diminution, the same can no longer be stopped. A favorable practice when it becomes a company practice is, under the law and jurisprudence, considered as already embedded in the terms and conditions of employment. It can no longer be withdrawn unilaterally.

But a 13th month pay for rank-and-file can never be unpaid, otherwise, the employer can be sued for money claims with legal interests of 6%, and attorney's fees of 10%. The question always asked is: Are employers who had been granting bonuses before PD 851 still required to pay 13th month pay? The Supreme Court answered the question in the negative, not once, not twice but three times. PD 851 provides that those already granting pay "equivalent to the 13th pay" are no longer obligated to comply with PD 851. It was in the case of NFSW vs. Ovejera (114 SCRA 354, May 31, 1982), as well as in Dole Philippines vs. Leogardo (117 SCRA 938, October 23, 1982), as well as in Brokenshire Memorial Hospital vs. NLRC (GR L-69741, August 19, 1986).

However, if the grant of the bonus was made after 1975, then the intention of the employer is clear, that both the mandatory 13th month pay and the Christmas bonus should be granted. The key is the intention of the employer. It’s illegal to withdraw or stop a benefit that has been enjoyed for many years. In the case of Ricardo Vergara Jr. vs. Coca-Cola Bottlers Phils. Inc. (GR 176985, April 1, 2013), the Supreme Court reminded all that employees have vested rights over benefits granted by employers and accepted by the employees. The principle of non-diminution is founded on the constitutional mandate to afford full protection to labor.

This mandate is the basis of Article 4 of the Labor Code to resolve all doubts in interpretation and implementation of the Labor Code in favor of labor. There is a violation of the rule on non-diminution when the practice over a period of time is suddenly and unilaterally withdrawn, stopped, diminished, or made conditional. That’s what the law says and that’s how the Supreme Court interprets the law. Our role is to follow. For we are neither the maker nor the interpreter of the law. Any inquiry, see me in my YouTube channel Usec JBJ.