ECOP: Mandatory 14th month for workers will be difficult for small businesses

The Employers Confederation of the Philippines (ECOP) said Tuesday that mandating the grant of a 14th month pay to employees will be a burden for small businesses that are still recovering from the pandemic.

Interviewed on Dobol B TV, ECOP vice president George Barcelon said businesses have not fully recovered yet from the COVID-19 pandemic.

“Kaya tingin ko mahihirapan ang mga negosyente sa 14th month pay,” Barcelon, who is also the president of Philippine Chamber of Commerce and Industry (PCCI), said.

(That’s why I think it will be difficult for businesses to comply with the 14th month pay requirement.)

Kabayan party-list Representative Ron Salo proposed House Bill No. 520, which seeks to grant the 14th month pay to all employees in the public and private sector regardless of the employee's status of employment. 

Under Salo's bill, the 13th month pay already required by law will be paid to the employees on or before May 31 of each year in anticipation of the school enrollment of the employees' dependents.

The 14th month pay, meanwhile, will be given to the employees on or before November 30 of each year in time for the traditional Christmas celebration.

Barcelon said that while several companies are already giving 14th month pay to its workers depending on the financial performance, making it compulsory will make it a burden especially for MSMEs.

“May leeway sa mga negosyante, depende sa tao kung maganda ang performance, malakas ang kanilang negosyo, they can afford the 14th month pay. Pero as a requirement, mahihirapan sila lalo 'yung MSMEs,” he said.

(There are leeways for business depending on the robustness of their performance, they can afford the 14th month pay. But as a requirement, it will be a burden for MSMEs.)

Under Salo’s proposal, employees employed for less than one year, the 14th month pay will be prorated according to the number of months served.

The bill also says the 14th month pay should not be any less than an employee's monthly basic salary.

The 14th month pay is also proposed to be excluded from the computation of the employee's gross income, provided that it will not exceed the allowed exemptions pursuant to the National Internal Revenue Code or its Implementing Rules and Regulations. — RSJ, GMA News