Rank-and-file entitled to 13th month pay

Dear PAO,
The IT company where I am working explained to us that we are not entitled to a 13th month pay. The reason for this, according to them, is that we fall in the category under Section 3, item (d) of P.D. 851 regarding 13th month pay since we are contractors and only paying 2% tax every month. Are we considered “persons in the personal service of another”?
RDM

Dear RDM,
Section 3 (d) of the “Rules and Regulations Implementing Presidential Decree No. 852” provides: The Decree shall apply to all employers except to employers of household helpers and persons in the personal service of another in relation to such worker.

Household helpers and persons in the personal service of another are those who are performing services in the employer’s home which is usually necessary or desirable for the maintenance and enjoyment thereof, or minister to the personal comfort, convenience, or safety of the employer as well as the members of his employer’s household (Section 2[d], Implementing Rules of Book III). Thus, to qualify under this category, it is necessary that the employee works at the employer’s home. Based on your problem, you may not be considered as a “person in the personal service of another” since the place of your work is in an IT company and not in the house of your employer.

Under the above guidelines, all rank-and-file employees are entitled to a 13th month pay regardless of the amount of the basic salary that they receive in a month, their designation or employment status, and irrespective of the method by which their wages are paid, provided they have worked for at least one (1) month during a calendar year. For purposes of determining the rank-and- file employees, the guideline under the Labor Code shall be considered. Under Article 212(m) of the Labor Code, a rank-and-file employee is one who is not falling within the definition of a managerial employee. A managerial employee is, thus, defined as one who is vested with the powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay off, recall, discharge, assign, or discipline employees, or to effectively recommend such management actions.

Thus, pursuant to the abovementioned provisions of the Implementing Rules, you may be entitled to a 13th month pay if you are a contractual worker at the IT company where you are working.

Please be reminded that the above legal opinion is solely based on our appreciation of the problem that you have stated. The opinion may vary when other facts are elaborated. –PERSIDA ACOSTA, Manila Times

Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to dearpao@manilatimes.net.