Overtime, night diff, COLA, allowances, commissions — what goes in and what stays out.
ESTIMATE
Guide and estimates as of 3 November 2026, for information only — not legal or tax advice. Rules: PD 851 and its 1987 Revised Guidelines, DOLE Labor Advisory No. 16, Series of 2025 (issued late November 2025), the ₱90,000 exemption under RA 10963 (TRAIN). The 2026 DOLE advisory had not been published when this was written; the rules have been the same every year.
Only basic salary counts — the pay for the work you were hired to do in your regular hours, including days on paid leave. DOLE's advisories exclude overtime, premium and holiday pay, night shift differential, COLA and the cash value of unused leave, unless your contract, CBA or company practice treats them as part of basic pay.
The quick list
Pay item
Counts for 13th month?
Basic salary for days worked
Yes
Paid leave (VL, SL, SIL, paternity, solo parent)
Yes — it is salary for those days
Retroactive salary/wage-order differentials
Yes, for the months they cover
Maternity leave salary differential (RA 11210)
Yes
Overtime pay
No*
Night shift differential
No*
Holiday pay & rest-day/special-day premiums
No*
Cost of living allowance (COLA)
No*
Cash conversion of unused leave
No*
Rice, transport, meal, clothing allowances
No (not part of basic salary)
Commissions
Depends on how they are structured
Profit sharing, productivity bonuses
No
* Excluded under the DOLE advisories, but must be included if your employment contract, collective bargaining agreement, company practice or policy treats it as part of basic salary.
A payslip, line by line
Jomar works the night shift at a call centre in Davao. His November payslip:
Line
Amount
Counts?
Basic pay (2 cut-offs)
₱22,000
Yes
Night shift differential
₱2,420
No
Overtime (6 hrs)
₱951.92
No
Holiday premium (1 Nov, worked)
₱1,015.33
No
Rice allowance
₱2,000
No
Transport allowance
₱1,500
No
Gross pay
₱29,887.25
Of ₱29,887 gross, only ₱22,000 feeds into his 13th month. Over a full year that's ₱22,000 of 13th month pay instead of the ~₱29,900 he'd get by (wrongly) using gross pay. The allowances are attractive for monthly cash flow, but they do nothing for the 13th month, overtime rate or SSS credit.
Example payslip; the figures are illustrative.
Check your own figure
Put in only your basic monthly salary and unpaid days — the calculator does the rest.
The exclusions are a floor, not a ceiling. If your contract says the 13th month will be computed on “gross compensation”, or your employer has for years included COLA or a fixed allowance, that becomes an enforceable benefit. The Labor Code's non-diminution rule (Article 100) stops employers from unilaterally withdrawing benefits that have ripened into company practice — generally ones given deliberately and consistently over a long period, not by a one-off payroll error.
Commissions: read how you're paid
Commissions are the grey zone. In Philippine Duplicators v. NLRC (1993, affirmed on reconsideration in 1995), salesmen's commissions — a percentage of each sale, paid as part of their regular pay — were counted in basic salary. In Boie-Takeda v. De la Serna (1993), productivity bonuses for medical reps were not. Employees paid purely on commission are listed in the 1987 guidelines as outside PD 851. If you have a fixed basic plus commissions, ask HR how payroll treats them, in writing.
COLA and wage orders
Some regional wage orders grant increases as COLA, and some later integrate COLA into the basic wage. Once it's integrated, it's basic salary and counts. If your payslip still shows a separate COLA line, it's excluded.
FAQ
Is overtime included in 13th month pay?
No. Overtime pay is excluded from basic salary under DOLE guidelines, unless a contract, CBA or company practice includes it.
Is COLA included in 13th month pay?
No. Cost of living allowance is listed among the exclusions, unless it has been integrated into basic salary by agreement, practice or a wage order.
Are allowances included in 13th month pay?
Generally no. Rice, transport, meal and clothing allowances are not basic salary. Check your contract if a package is described as “inclusive of allowances”.
Are paid leaves included?
Yes. Salary paid for days on vacation, sick or service incentive leave is basic salary for those days. Only the cash conversion of unused leave is excluded.
Are commissions part of basic salary?
It depends on their nature. The Supreme Court counted sales commissions that were part of the wage structure (Philippine Duplicators, 1993/1995) but excluded productivity-type incentives (Boie-Takeda, 1993).
Presidential Decree No. 851 (1975) and the Revised Guidelines on the Implementation of the 13th Month Pay Law (1987): one-twelfth of basic salary earned in the calendar year, rank-and-file employees, at least one month of service, pay on or before 24 December.
DOLE Labor Advisory No. 13, Series of 2024 and No. 16, Series of 2025 (reported by PNA/SunStar, 29 Nov 2025): no exemption or deferment, “basic salary” definition and exclusions, compliance report through the DOLE online portal by 15 January.
National Internal Revenue Code Sec. 32(B)(7)(e) as amended by RA 10963 (TRAIN): 13th month pay and other benefits exempt up to ₱90,000 a year; graduated income tax rates in force since 1 January 2023. House Bill 7661 (₱150,000 cap) was still pending in November 2026.
Employee contributions used for tax estimates: SSS 5% of the monthly salary credit (₱5,000–₱35,000), PhilHealth 2.5% (5% shared, ₱10,000–₱100,000), Pag-IBIG ₱200.