Should you be worried about your Christmas Bonus this year? Part 1: “No Vax, No Bonus” and the difference between Christmas Bonus and 13th Month Pay

On 08 November 2021, Acting Cebu City Mayor Michael Rama announced the release of the Twenty Thousand Pesos (PHP 20,000.00) Christmas bonus to all City Hall employees provided that all of the said employees gets vaccinated against COVID-19. He said that the City Hall’s over 5,000 employees will only receive their bonuses once each and every employee has been vaccinated.

Malacañang, through former Presidential Spokesperson Harry Roque, defended this polarizing move by Acting Mayor Rama, stating that a Christmas bonus is not mandated by law, thus, is “discretionary”. He added that what is required for government employees is the payment of 13th and 14th month salaries.

The foregoing situation begs the question, what is the difference between the 13th month pay and the Christmas bonus? 

The 13th month pay is a form of monetary benefit equivalent to the monthly basic compensation received by an employee of the private sector, computed pro-rata according to the number of months within a year that the employee has rendered service to the employer. It is pursuant to Presidential Decree (P.D.) No. 851, which requires all employers to pay all their employees receiving a basic salary of not more than P1,000 a month, regardless of the nature of their employment, a 13th-month pay not later than December 24 of every year. The 13th month pay is equal to one twelfth (1/12) of the basic salary of an employee within a calendar year. In other words, the 13th month pay is mandatory by law for all non-managerial staff.

The following employers however are exempted from paying the 13th month benefit under P.D. No. 851: (i) Government and any of its political subdivision, including government-owned and controlled corporations, except those corporations operating essentially as private subsidiaries of the government; (ii) Employers already paying their employees 13th month pay or more in a calendar year or its equivalent at the time of this issuance; (iii) Persons in the personal service of another in relation to such workers; and (iv) Employers who are paid on purely commission, boundary, or task basis, and those who are paid a fixed amount for performing a specific work, irrespective of the time consumed in the performance thereof, except where the workers are paid on piece-rate basis in which case the employer shall grant the required 13th month pay to such workers.

On the other hand, Christmas bonuses are non-taxable benefits that are subject to the discretion of employers. It is optional, a contrast to the statutorily mandated 13th Month Pay. Furthermore, employers may opt to give it out before, during, or after December 24. It has become common practice for some employers to pay half at the beginning of the year and the rest in the days running up to Christmas. This means that unlike 13th month pay, the Christmas bonus is given out of the employer’s generosity and is not a demandable and enforceable obligation.

For government employees, additional pay during Christmas is based on Republic Act (R.A.) No. 6686, otherwise known as An Act Authorizing Annual Christmas Bonus To National And Local Government Officials And Employees Starting Cy 1988, as amended by R.A. No. 8441.

Under R.A. No. 6686, all officials and employees of the National Government who have rendered at least four months of service from January 1 to October 31 of each year and who are employed in the government service as of October 31 of the same year shall each receive a Christmas bonus equivalent to one month basic salary and additional cash gift of One thousand pesos (P1,000). The additional cash gift increased to Five thousand pesos (P5,000) by virtue of R.A. No. 8441.

The explanations made by Acting Mayor Rama and Malacañang become a little problematic because R.A. No. 6686 and R.A. 8441 expressly uses the term “Christmas Bonus” without stating any qualification, exemption, or disqualification. The failure or the denial to be vaccinated is not one of the qualifications contemplated by R.A. No. 6686, as amended by R.A. No. 8441.

In light of the foregoing, it seems that Acting Mayor Rama’s “No Vaccination, No Christmas Bonus” policy might be violative of the aforementioned laws.