What are the 13th and 14th months’ Pay

What are the 13th and 14th months’ Pay

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While 13th month pay is not uncommon concept, it is becoming popular in various countries across the globe. Thirteen and fourteen month pay are extra bonuses paid for to the employees in addition to their normal salary paid for a month. Such bonuses are usually given at the end of the year to help the employees financially support during holidays or festive. We will delve into what 13th and 14th months’ pay, when they are applied and how they are paid in this article.

What are the 13th and 14th months’ pay?

13th and 14th-month payment is the additional bonus payable to employee other than normal salary. They usually pay these bonuses at the end of the year as financial support for the holiday period. Christmas bonus refers to the thirteenth month of payment while the fourteenth month is sometimes called the end-of-year bonus.

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When does the 13th month pay apply?

In most countries, 13th and 14th months’ pay is not a required by law. Nevertheless, there are several countries where the employers have to compensate their workers for this kind of bonus. The 13th month’s pay, for instance, is a compulsory bonus provided to every employee by organizations in Brazil. The Philippines has 13 month’s pay as a bonus which is provided each employee in the company has worked for more than one year during the year.

Some countries do not make the 13th month’s pay mandatory. However, there exist some companies that give out these bonuses as a way of saying thank you to their employees who put in effort all year long.

How do you pay the 13th month salary?

The 13th and 14th month’s payment is paid additionally over and above the normal monthly salary for the employee. Depending on the company’s policies and labour laws of a particular place where the company operates, the procedure for disbursing such amounts can vary. Here’s a broad outline for issuing these payments:

Determine eligibility: Ensure to check your country’s labor laws and company policies to know who is entitled to the 13th and 14th month pay. In some instances, this can only be given to full-time staff or those that have worked for a specified amount of time.

Calculate the amount: The 13th and 14th month pay is usually computed as a ratio of their basic salary. For instance, for an American employee in the Philippines, the 13th-month pay calculation may simply represent one-twelfth of the employee’s total basic salary earned throughout the calendar year. 

Set payment schedule: The 13th and 14th month pay payment schedules may differ from country to country and employer’s policy. The 13th month pay can be given as a lump-sum at the end of the year or in two equal payments spread throughout the year. If it is required, the 14th-month pay may be remitted at another point in time like in the middle of the year or a certain festive season. Read Two-and-a-half months bonus for Selangor civil servants.

Record and report: Record the 13th and 14th month pay payment in the payroll system and indicate it in the payslips and other tax documents, if necessary.

Communicate with employees: Ensure your employees understand the eligibility, how it is calculated, the schedule for 13th month pay, and 14th month pay in order to prevent confusion.

Remember to consult local labor laws and company policies to ensure compliance with any specific regulations in your region. To know more about compliance, schedule a free consultation with FastLane Group.

Benefits of the 13th and 14th months’ pay

There are multiple employee and employer benefits associated with the pay for the 13th and 14th month.

The benefits of 13th and 14th months’ pay include:

Employee motivation: Additional pay will raise morale, motivation and satisfaction from work thus enhancing productivity. In turn, these employers can save a lot by providing such in-kind benefits package which can help improve employee retention and hence reduce turnovers.

Financial support: Additional payments could help workers deal with their financial responsibilities such as the high cost during the festive season or emergencies.

Retention and loyalty: Additional bonus paid by the companies makes their employees to be loyal and thus committed to the companies over an extended period.

Economic stimulus: This extra income will go a long way in stimulating consumer spending and hence a net growth for the entire economy.

Competitive advantage: The ability to give companies thirteenth and fourteenth months’ pay enables top notch talents to be sought after and retained thereby providing competitive advantage for an organization within its industry.

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A bonus is pay for the 13th and 14th months on top of monthly salary. In general, these bonuses are not legally mandated in many nations, but they have gained ground as one way for employers to acknowledge the year-long efforts of their employees.Encourages team motivation with bonuses like the 13th and 14th-month pays. Learn more about FastLane Group HR administrative and payroll services by scheduling a meeting with us. We assist in managing bonus payments.