We have also written an indepth article here

All ranked and file employees regardless of their designation or employment status who have worked at least one month during the calendar year are entitled to a 13th month pay.

The 13th month pay shall be in the amount not less than 1/12 of the total basic salary earned by the employee within the Calendar day.

Example: Let say an employee basic salary is Php15,000 per month and had worked for 10 months, the 13th month computation is:

(Php15,000 X 10 months) / 12= Php12,500.00

So PayrollHero keeps a record for every employee on how much has been accumulated for 13th Month benefits.

Every paycheck will take 12th of the employee pay (Either Base pay or Gross pay, depending on how the payment has been set up) and add this number to the accumulating account.

This example will use Base pay and show how the calculations are made:

This is the first Pay slip of the year so there is no previous amount accumulated. So the amount show is solely from this payslip.

The Second Payslip of the year is here:

So it will take the accumulated amount 636.99 (At this point it is only from the first payslip) and add to it the amount from this payslip (679.45).

This will give the new Accumulated amount and this process will continue till the end of the year (Every payslip will add 1/12 of the pay to the accumulated amount).

As you can see the 13th month pay is payable December 15th here. A payment should be set up so the entire accumulated amount is payed out to employees on this day.

Note: If using gross pay then the amount (That will be divided by 12) will include allowances and payments that are payable to gross.