Excluding Maternity Leave on 13th Month pay?

                 Christmas is now fast approaching and what we look forward to during this season is the celebration of the birth of our Lord Jesus.  And of course aside from that we also look forward to receiving our 13^th month pay.  But something bothers me about the computation of 13^th month pay.  Some of you may haven’t experience this yet for I will refer this article to women who already gave birth & have filed for maternity leave. I personally have given birth to my son last 2009 and that year I received my 13^th month pay in full.  I was also a payroll processor before from other company and also gave our employees who filed for maternity leave their full 13^th month pay.  Well the issue came up just recently when one of our sister company gave one of their female employee a pro rata of 10/12 on her 13^th month on the basis that there’s a ruling of excluding the maternity benefit from the computation of  13^th month.  We searched the internet for this ruling and we found this:

                   “The 13th-month pay of an employee is based on the "basic salary," which includes all remunerations or earnings paid by an employer to an employee for services rendered. However, 13th-month pay does not include cost-of-living allowances (COLA) granted pursuant to P.D. No. 525 or Letter of Instruction No. 174, profit-sharing payments, and all allowances and monetary benefits which are not considered or integrated as part of the regular or basic salary of the employee. Maternity benefits, like other benefits granted by the SSS, are are not included in computing the employee's 13th-month pay. Overtime pay, earnings and other remunerations are also excluded from "basic salary" in the computation of the 13th-month pay. The phrase "earnings and other remunerations," which are deemed NOT part of the basic salary, includes payments for:^[1]

§                     1. Sick leave

§                     2. Vacation leave

§                     3. Maternity leave

§                     4. Premium for works performed on rest days and special holidays, pay for regular holidays and night differentials.”

                Well maybe they’re right about their basis of computation. However, there is also a provision connected to it and here what it says:

             

 “However, if these items which are legally excluded from the computation of 13th month pay are included by the employer in its previous computations and such act ripens into a "company practice," then these items can't be excluded without violating the prohibition against diminution or elimination of benefits.

              To clarify what’s the principle of non-diminution is, I also searched for it in the internet and here what it states:

“any benefit and supplement being enjoyed by employees cannot be reduced, diminished, discontinued or eliminated by the employer. The application of the principle presupposes that a company practice, policy and tradition favorable to the employees has been clearly established; and that the payments made by the company pursuant to it have ripened into benefits enjoyed by them.

To ripen into benefits, the following requisites must concur:

1.                             It should have been practiced over a long period of time; and

2.                             It must be shown to have been consistent and deliberate.”

          Thus this means that if it has been a practice of the company to include the maternity leave in the computation of 13^th month either deliberate or by mistake, that benefit cannot be discontinued just like that. Here’s a sample case for that matter:

               “ For 2 to 3 years, Sevilla Trading, allegedly by mistake, added the night premium, maternity leave pay, etc., in the computation 13th month pay. The court ruled that the inclusion may no longer be withdrawn if it has already ripened into a company practice. Nota bene: There is no specific rule as to how many years are necessary to constitute “company practice”. (Sevilla Trading v. AVA Tomas, GR No. 152456.)  

          In the case of Sevilla Trading Company vs Semana, ibid., the employer kept the practice of including non-basic benefits such as paid leaves for unused sick leave and vacation in the computation of their 13th-month pay for at least two (2) years.

In all these cases, the grant of benefits has been held to have ripened into company practice or policy which cannot be peremptorily withdrawn”

        Well here’s for your reference in case someone of you is looking for answers to questions regarding with matters like these. Just sharing with you guys what I’ve learned. Hoping that I won’t be using this kind of argumentation the next time I’ll be filing for my maternity leave.