Government employees will start to receive their 14th month pay (bonus) in June 2016, per proposed Salary Standardization Law IV for government workers.
Senate President Pro Tempore Ralph Recto made the announcement in a statement issued on Friday (January 29).
He said that bonus equivalent to one month pay is scheduled to be given to public servants in June this year as he called on the House and the Senate to break their impasse over a pay hike bill for state workers.
Under its section on “compensation system” of the Standardization Law IV, the measure seeks the grant of a “a mid-year bonus equivalent to one month basic salary to be given not earlier than May of every year.”
“This mid-year bonus becomes the 14th month pay. The traditional 13th month pay being the year-end bonus,” Recto said.
“In the past, the 13th month pay was given in ‘two gives.’ Half in May or June, so that government employees will have money for the school enrolment of their children, and the balance in December. The SSL IV makes what is given mid-year and year-end equivalent to a full month pay each,” he said.
He said that these two bonuses will be tax exempt for most state workers. By one estimate, both the 13th and 14th month bonuses of 970,943 employees – or 83% of the total national government workforce – will be tax-exempt.
“There‘s research which shows that those in the Salary Grades (SG) 1 to 16 will get these bonuses tax-free,” he said.
“The mid-year bonus translates to an eight percent increase in the annual pay of government workers and, if early calculations are correct, they will be getting it without any tax deduction,” Recto said.
The principal author of Republic Act No. 10653 which adjusted the tax-exempt ceiling for 13th-month pay and other benefits from P30,000 to P82,000 said that most employees holding SG 17 to 23 positions will also get their 13th month pay with no withholding tax.
The SSL IV also authorizes a “performance-based bonus” of up to two months salary which Recto said should be based “on conditions to be met, like meritorious service, exemplary performance and increase in productivity.
While he admitted that the SSL IV has some weaknesses, “it, however, has many good provisions, like the 14th month pay.”