Reality bites 13th month pay | Inquirer Business
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Reality bites 13th month pay

/ 04:01 AM October 20, 2020

With the holiday season fast approaching, businesses that have been adversely affected by the COVID-19 pandemic have to contend with the issue on how to pay employees their 13th month pay.

According to Labor Secretary Silvestre Bello III, payment obligation is fixed and admits of no exemptions. He took this stand despite the fact the implementing rules and regulations of the law that gave rise to that benefit—Presidential Decree No. 851—exempt “distressed employers” from that obligation.


He said his office would not accept any application for exemption from or deferment of the payment of the 13th month pay.

In an effort to mitigate the impact of his order, he said he would recommend that the government shoulder the 13th month pay of workers in micro and small enterprises badly hit by the pandemic.


That subsidy, assuming the Department of Finance can source it, would be between P3.7 billion and P13 billion, an amount that would further strain the already cash-strapped national budget.

And if by some miracle that money becomes available, its allocation and distribution would not be easy. What would be the criteria for entitlement to the subsidy? Will the money be given to the employers who will then handle its distribution? Or will it be paid out directly to the workers?

The confusion, delay and complaints of favoritism that marked the giving of the “ayuda” (assistance) in the early weeks of the pandemic do not inspire confidence the same problems will not be repeated in the proposed subsidy.

Compelling employers to pay the 13th month pay whether or not they have the financial capacity to do so is like squeezing blood from turnip. It ignores the fact that a pandemic has happened (and is still in progress) and brought down countless businesses to their knees.

It is wrong to assume the pandemic adversely affected only micro and small enterpri­ses. Businesses with higher capitalization have not been spared the debilitating effects of the coronavirus and the lockdowns imposed to minimize its spread.

In effect, Bello wants employers with limited paying capacity to either dip into their personal pockets or borrow money so they can pay the 13th month pay of their employees.

But what if employers have no extra funds to spare or are unable to borrow from banks on account of the latter’s strict credit requirements? Will the government sue them for nonpayment and garnish their properties to satisfy that money claim?


By ordering strict compliance with the 13th month pay obligation without any exceptions, Bello is raising false hopes among employees regardless of the financial capacity (or lack of it) of their employers.

When those expectations are not met, it is likely the otherwise smooth working relationship between the employees and employers would go awry and, in the process, worsen an already bad business situation.

No doubt, Bello’s populist stance on the 13th month pay has earned him brownie points with labor organizations and put the government in a good light with the country’s labor force.

Come Dec. 24, the deadline for giving the 13th month pay, and if the proposed government subsidy does not materialize, those brownie points would turn to brickbats. The unfulfilled promise would only add to the financial misery the pandemic has already caused.

This early, the government should acknowledge that full compliance by all employers with the 13th month pay obligation cannot be achieved.

Some businesses, and these are not limited to micro and small enterprises, will not be able to pay the 13th month simply because they cannot afford it.

And they should not be faulted for that inability as it was not their fault the government took its time in addressing the pandemic and failed to put in place the proper measures to mitigate its adverse economic effects.

The “reality bite” on the 13th month pay would be better felt now than later when it would be more painful. INQ

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