Fact Check: Is 13th Month Pay Optional for Small Businesses?

The Claim

Every November, a specific post goes viral in Philippine Facebook groups. It says: "Did you know? If your employer has less than 10 employees, they are NOT required to give 13th month pay. Know your rights!"

The post is usually shared with concern. Some workers worry they have been scammed. Some small business owners cite it to avoid paying. The claim sounds official. It is not.

Why People Believe It

The confusion comes from a mix of two different things. First, there is Presidential Decree 851, which mandates 13th month pay. Second, there are exemptions listed in the original 1975 decree. People mix up old exemptions with current law.

One original exemption under PD 851 did cover "employers already paying their employees 13th month pay or its equivalent." Another covered distressed employers. But the blanket idea that small businesses with fewer than 10 workers are exempt — that was never actually in the decree.

The Facts

What PD 851 actually says:

Presidential Decree 851 was signed by President Marcos on December 16, 1975. It requires all employers to pay their rank-and-file employees a 13th month bonus. The coverage is broad: "all employers" who employ "at least one employee."

The Revised Guidelines on the Implementation of the 13th Month Pay Law, issued by the Department of Labor and Employment (DOLE), clarifies the current exemptions. These are:

1. The government and government-owned or controlled corporations
2. Employers who are already paying their employees 13th month pay or more in a calendar year
3. Employers of household helpers and personal service workers (covered under different rules)
4. Employers of those who are paid on commission, boundary, or task basis — and whose pay is not fixed

Note what is NOT on that list: a company size threshold. There is no exemption for businesses with fewer than 10 workers. A sari-sari store owner with one employee still owes 13th month pay.

How is the amount computed?

Total basic salary earned in a calendar year ÷ 12 = 13th month pay due

It must be paid on or before December 24 of each year. DOLE may also allow half to be given mid-year and half in December.

Verdict: FALSE

The claim is false. PD 851 covers all private sector employers regardless of business size. The only exemptions are specific categories — not a headcount threshold.

[SOURCE: PD 851 — Full Text (Official Gazette): https://www.officialgazette.gov.ph/1975/12/16/presidential-decree-no-851-s-1975/] [SOURCE: DOLE — Revised Guidelines on the Implementation of the 13th Month Pay Law: https://dole.gov.ph/13th-month-pay-guidelines/] [SOURCE: verify before publishing]

Dad Joke

Dad Joke: Why did the small business owner check PD 851 twice?

Because the first time, he only read the rumors. The second time, he actually paid his workers.

Sources

• Presidential Decree 851 — Official Gazette
• DOLE — Revised Guidelines on 13th Month Pay [SOURCE: verify before publishing]
• DOLE FAQ on 13th Month Pay Coverage [SOURCE: verify before publishing]

Correction Policy

If anything here is wrong, we will update this article immediately and add a labeled correction note at the top. We will also apologize with a dad joke. That's our policy.