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Q: My business is not doing too well; cash flow has been a constant problem lately. Am I still required to pay my employees their full 13th month pay? How about if I paid it on installment: half on December 15 and the other half on December 30--would that be alright? Everyone knows the economy has been bad lately; Surely, it would be understandable if some employers could not give their employees their Christmas bonuses in full.  

A: 13th month pay is a statutory grant, meaning it is provided by law (See PD 851), thus, its payment to all rank and file employees is mandatory regardless of their position, designation or employment status, and the method by which their wages are paid, provided that they have worked for at least one month during the calendar year.

Payment of the 13th month pay must be made not later than December 24 of each year. You may give it in installments, but all installments should be paid on or before December 24.  

If your business is in distress, you may be exempted from payment of 13th month pay. However, you first have to prove that you have suffered substantial losses. See if you qualify for exemption by filing a petition for exemption with the nearest Department of Labor regional office having jurisdiction over your business.
 

Reeza Singzon is a lawyer specializing in civil, commercial, and labor law. Before becoming a lawyer, she worked in media for more than 10 years, writing and producing news programs for TV and working as an editor and columnist for a newspaper. For questions or comments, Atty. Reeza may be reached at reeza.singzon@gmail.com.