Payroll Philippines: 13th Month and Nth Month Payments

Scope of Functions

It is a legal requirement that all companies provide their employees with a 13th month's pay equivalent to the employees' monthly basic pay. This function lets you calculate 13th month and any nth month payments in line with Philippine legal and business requirements.

The new function:

• Checks employee eligibility periods

The system compares the eligibility period with the actual employment period to determine whether the employee is eligible to receive a 13th month payment.

• Calculates 13th month pay based on either:

• An employee's basic pay on a specific date

The 13th month calculation is based on an employee's monthly basic salary as at a given date, for example, December 24th, 2000.

Note:

You must ensure that the employee's payment infotypes are maintained up to the date specified.

• An employee's average salary

The 13th month calculation is based on an employee's average monthly salary for the entire year, for example, the 2000 financial year.

Note:

As an employee's payroll results for the year are rarely available by the time the 13th month payment is calculated, selecting this method may result in longer processing times. In addition, this method requires you to project annual basic pay values through simulated payroll runs.

• Pro-rates the 13th and nth month payments

If an employee only works part of the year, the 13th or nth month payment is prorated according to the period worked.

• Processes the 13th and nth month payments during regular or off-cycle payroll

In addition, the function lets you generate a status report listing the personnel details, current and year-to-date figures for all the employees processed.

After you have configured the system according to your requirements, you calculate the amount to be paid by running the 13th Month Pay program (HPHCAWS0). The program generates a batch input queue that updates either the Additional Payments (0015) or the One-Time Pay Off-Cycle (0267) infotype with the 13th month or nth month bonus amount.

Effects on Customizing

To process 13th and nth month payments, you must configure the 13th Month and Nth Month Payments section of Customizing for Payroll Philippines.