The 13th month pay is not tied to performance like a bonus but is a statutory requirement in certain regions, meant to provide extra financial support during the holiday season. It's calculated pro-rata based on the number of months an employee has worked during the calendar year. Employers should ensure compliance with local regulations regarding this pay.

Practical Example of 13th Month Pay:

An employee in the Philippines with a monthly salary of $2,000 who has worked the entire year would receive an additional $2,000 as their 13th month pay, typically disbursed in December.

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