The process involves determining the total basic salary earned by an employee within a calendar year and dividing that amount by twelve. This yields the mandatory benefit amount payable to rank-and-file employees in the Philippines. For example, if an employee’s total basic salary for the year amounts to 300,000, the payable benefit is 25,000.
This legally mandated benefit serves as a significant form of financial assistance to employees, particularly during the holiday season. It provides additional funds for household expenses and contributes to increased consumer spending, thereby stimulating economic activity. Established through Presidential Decree No. 851, it aims to alleviate the financial strain on employees during a traditionally expensive time of year and reward their contributions throughout the year.
